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August 6, 2019

Balancing SC&F

Find your balance of savings, cash, and financing to pay for college.

Find your equilibrium with savings, cash, & financing for college costs

Find your equilibrium with savings, cash, & financing for college costs


The College Board reported that the average net price 4-year private college for tuition and fees and room and board after grant aid and tax benefits goes for about $ $27,300. Since the average college parent with only $18,000 savings for college according to Sallie Mae's 2018 "How America Saves for College" report, this means the next step is to look at cash. If a family uses all that savings in the first year, then there is still $9,300 left to pay for the first year. That $775 cost per month for the first year may feel doable for some families, but future years may not when the annual costs are more like $30,000 by the senior year with the 3% average increase in college costs according to the College Board.

For most of us, paying that amount of $2,500 in cash from income for the cost of attendance at your local private college is not doable. So that means SC&F – savings, cash and financing. Finding your family’s personal balance of SC&F is important.

I wish I saved

We all wish that we had been more diligent about savings for college. Yes, you heard about 529 plans. Perhaps you even set up one. Life just got in the way. The cost of team sport uniforms, travel, heck even the celebrations all took their toll. The enrichment options like the Mad Scientist camp from the YMCA, the weekend writer’s workshop at the local university, and the Life as a Photographer series at the museum were endless and expensive. Plus, you were trying to maximize your 401 (k) match from your employer and still wanting to have family travel memories that would last a lifetime.

According to Financial Health Network (formerly the Center for Financial Service Innovation), 72% of Americans are financially coping or are financially vulnerable. Just know that you were no different. “Could have, would have, should have” don’t help now. Now it’s time to use that money and, if still possible, grow it in a short-term, conservative fashion so that it can be used to pay for college costs.

Pay4 suggests that you even distribute your savings over the 4 years of college costs for several reasons. First, if these funds are not in tax free vehicles, then you will limit the tax bill for the dividends. Second, funds remain flexible if there is a change in your kid’s college direction that lengths the time in college or alters the costs along the way. Finally, you can maximize your student’s access to Federal Student Direct Loan funds. Each year, there is a limit by grade level that a student can borrow. If your student doesn’t take out a Direct Loan their first year, they can’t get those low-interest loan funds later.

I wish I could pay more cash

Everyone has their unique set of income and monthly expenses. In fact, 47 percent of Americans say their spending equals or exceeds their income according to Financial Health Network. Just remember that when a daughter or son goes to college, they are not eating, using utilities, or buying shampoo at home. The USDA’s Expenditures on Children by Families report breaks down the cost from birth until a child to be between $12,350 and $13,900 for the average household. This means you may be able to reallocate some of that $1,029 to $1,158 per month you were spending into college costs.

Pay4 encourages you to look at your bank and credit card statements to find out what you are spending so you can gauge how much can be allocated. Plus, consider if you can reduce some household monthly expenditures that were really designated for your kid like a gym membership, the MLB cable channel package, and additional driver for your car. Once you reduce these costs, you can use those current day income dollars to paying for college costs.

I wish I could find the most affordable college financing

The average undergraduate who borrowed graduates with $28,500 in student loans, and the average financial aid package in 2017-18 included $4,510 in federal student loans according to the College Board. In addition, parent of undergraduates who borrowed averaged $16,450 annually in Federal Parent PLUS Loans. Know that financing is a solution many families opt for to pay for college costs. Typically, the lowest costs student loan is the Federal Student Direct Loan. What a lot of families don’t know is that there are a variety of different loan types to help pay for college that may be exclusively in the student’s name, the parents name, or a co-signed responsibility. Depending on your credit score, some loans may be more affordable.

To view a series of customizable funding pathways to finance not just one year, but all four years of college in less than one minute, check out Pay4Education’s decision tool that helps families balancing SC&F. We ask a few questions about the family's financial resources, the college's net cost, and credit strength so parents and students can make smarter, personalized financial decisions about college costs. You can see the estimated monthly payment while in school and after graduation. Plus, you can see the total amount borrowed and the total financing costs. Being able to balance SC&F has never been as easy to calculate and recalculate as you see the effects of additional cash from income or savings.

Photograph of Colleen Krumwiede
Colleen Krumwiede
Co-Founder & Chief Revenue Officer

Colleen MacDonald Krumwiede is a financial aid expert after over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education.  She guides go-to-market strategy and product development at Pay4 to transform the way families afford college.


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