Consider your financial options for college

Although college costs are rising, you can get financial help from a variety of sources.

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Whether or not you can afford to pay for college from current income or savings, you may want to consider some of the alternatives, such as applying for financial aid or loans.

There are four sources you can draw from to pay for college:

Existing income and assets from the parent and student
College savings accounts such as a 529 or custodial account
Financial aid such as scholarships or federal student aid
Loans or lines of credit

Combining some or all of these sources can help you keep on track with your other investment goals—retirement, for example—and can provide tax benefits.

Read the descriptions below on the types of funds that may be available. You can also view a side-by-side loan comparison.

Scholarships. These are the best funds available because, unlike loans, the money does not need to be paid back. However, many scholarships might only be granted for one year.
- Search for scholarships at CollegeBoard.com—you might be surprised at how many are available.
Federal student aid. Federal aid comes in many forms: loans, grants, needs-based aid or not. These are the best loan options because federal loans—even those not based on financial need—have low fixed interest rates and let you defer payments while in school.
- Fill out the Free Application for Federal Student Aid at the FAFSA website, whether or not you think you will qualify. Again, you might be surprised.
Other education loans. These loans are easy to apply for and decisions are made instantly:
- Parent Loan for Undergraduate Students (PLUS)—sponsored by the federal government and may not require a FAFSA application. Offers a fixed interest rate, but the parent must start repaying the loan immediately
- Private student loans—available for students, parents, or most commonly students with parent as a co-signor. Offers variable interest rates based on your credit score, and repayment can be deferred until student completes college.
Home Equity Line of Credit (HELOC). Money can be drawn from a home equity line of credit as needed, so you pay interest only on the outstanding amount borrowed. Plus, the interest is usually tax deductible.

How much aid can you expect?
Eligibility for financial aid is determined largely by your Expected Family Contribution (EFC). This represents the amount of college expenses the Federal Student Aid office estimates you can pay. Learn more at the Federal Student Aid website.

Calculate your EFC. Try the calculator at CollegeBoard.com.
The amount of aid you are eligible to receive is the difference between your EFC and the cost of attending a specific college.

Note that your EFC does not change based on what school your child chooses to attend, so you should not exclude a school simply because of cost—especially before applying for financial aid.

What assets are considered with your aid?
EFC considers both the parents' and student's income and assets, excluding home and retirement assets. Standard formulas consider 20% of the child's assets but only 5% to 6% of the parents' assets.

Assets of the parents include:	Assets of the student includes:
Cash, savings, and checking accounts Non-retirement investment accounts 529 savings plans Education savings accounts (Coverdell) Does not include your home	Cash, savings, and checking accounts Non-retirement investment accounts Custodial accounts (UGMA/UTMA)

Investors should consult their own tax and interment advisors about their specific situation prior to taking action. We believe the information provided is reliable, but Charles Schwab & Co., Inc. and its affiliates do not guarantee its accuracy, timeliness or completeness.

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