A Lesson in College Financing

by Vince Liuzzi
Executive Vice President and Chief Banking Officer
DNB First


If you’re a parent, you already understand that raising kids is not cheap. You probably also know that with soaring tuition costs, providing your child with a college education may be one of your greatest financial challenges. The truth is, however, that most of us don’t fully understand the shocking impact of educational costs until the first tuition bill arrives.

Or maybe you do. Take out a number two pencil and test your knowledge by answering the following question:

According to the College Board, what was the average cost of tuition and fees during the 2014-2015 school year?

a)  $31,000 at a private institution
b)  $9,131 at a public college for in-state residents
c)  $22,958 at a public college for out-of-state-residents
d)  All of the above

If you answered, “d) all of the above,” you’re correct and probably have had a little education of your own in college costs. Of course, that question is not so challenging compared to the most pressing one of all:

How can you finance your child’s education?

The good news is that there are some good options available, which include:

  • Financial Aid/Grants/Scholarships. Even if you think your child may not qualify for Financial Aid, it’s important to at least apply. You can do so by filling out the Free Application for Federal Student Aid or FAFSA (as it’s commonly known) at https://fafsa.ed.gov. There are also a number of grants and scholarships available, so it pays to research them and have your child apply for as many as they can.
  • 529 Plans. Created by Section 529 of the Internal Revenue Code, these college savings plans provide a tax-advantaged way for you to save for your child’s education. With 529 plans, earnings are not subject to federal taxes when used for qualified educational expenses, such as tuition, books, and room and board. 
  • Home equity credit. If you’re a homeowner with equity in your home, you can obtain a home equity line of credit. A home equity line provides the benefit of potential tax savings (consult your tax advisor) and the ability to borrow and repay funds over time.

Of course, the college financing option that’s right for you depends on your unique financial situation. That’s why it’s important to research all the available options, and practice what you preach to your own children: “Do your homework.”


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