Paying for College
Sending your children to college is one of the finest gifts you can give them -- the doorway to a life of greater confidence, prosperity, and happiness. Yet today's college costs are at an all-time high, and still growing.
At Norway, we want to help. We've got the financial tools you'll need -- including tax-free withdrawals on Education IRAs, and tax-deferred NextGen College Investing Plans -- plus advice and expertise to show you how to plan successfully. See what our website has to say, then drop by your nearest Norway branch soon. Together, we can do it!
For the past 40 years, college costs have climbed significantly faster than the rate of inflation — and could continue to do so.
A big number
Across the U.S., public colleges cost an average of $10,500 a year for tuition, fees, books, and room and board. It's even higher in New England, at about $12,000 a year. Private colleges often cost twice as much, and select schools, three times as much.
When saving or investing for college, the key principle to bear in mind is that interest rates multiply the value of your account more the longer they're compounded. This means you should start saving or investing early -- preferably when your child is born.
Take a closer look
Suppose you contribute just $50 a week, or $7 a day. That's barely the cost of two lattés for you and your spouse. Yet remarkably, if your investment averages a 6% rate of return, your account will grow to more than $77,000 in 18 years! Thanks to the tax advantages offered in some of today's specialized college investing plans, your account could grow even faster.
Use this calculator to find out the amount you need to save each month in order to pay for college.
However, if you wait to start saving or investing until your child is nine years old, for example -- halfway to college -- then your $50 a week will only grow about a third as large, to approximately $28,500, because you didn't take full advantage of time and compounding.
Enjoy the pomp and circumstance!
Whatever you do, take a clear-eyed look at the road ahead. And do it soon. Because one day, your children will be stepping across the platform to receive their diplomas -- and you'll be glad you could help make it possible.
Federal Financial Aid 101
Before you know how much you need to borrow, you'll need to find out how much federal aid you or your student is eligible for. We've provided some helpful information below to get you started!
The FAFSA: Five valuable letters
The Free Application for Federal Student Aid (FAFSA) allows the U.S. government to determine a student's financial need. Any student interested in federal aid must fill out the FAFSA. Depending on the cost of attendance and available resources, a student may be eligible for government-subsidized loans like the Stafford loan. That means that if eligibility requirements are met, the government will pay the interest on a subsidized Stafford loan until a student graduates!
By filling out the FAFSA, you automatically apply for the full range of available federal loans (excepting PLUS loans. The Perkins, Stafford and PLUS loans are all standard federal loans, each with its own characteristics.
Grants and scholarships -- free money!
Federal grants like the PELL and FSEOG are awarded based on financial need as calculated by the FAFSA. If you qualify, take them -- they don't have to be repaid!
Students, don't discount scholarships! There are many different types available for all kinds of people. Finding one that's just right for you can be a valuable source of income for your family. FastWeb is a good place to start your search.
Don't be afraid to get help.
You're not alone! Read up -- and knock on doors. Norway Savings is proud to offer a range of college investment plans to help you pay for your child's education. When the time is right, we hope you'll come see us. To speak to a Norway associate about planning for college, visit your local Norway branch. We’ll help you make paying for college a reality!