These 6 steps will help you plan to pay for college.

As the old saying goes, in parenting, the days are long and the years are short. It may feel like it was just yesterday that your child took their first steps, and now they’re talking about college. With all the emotions that come with your little one leaving the nest, thoughts of the impact on your nest egg can be a bit overwhelming. These six steps will help you make a game plan and feel more prepared.

1. Sit down with your child to consider potential scenarios.

Is your child set on a four-year college? A specific trade? Talk with your child about what they want to study and consider all of the options available to them: community college, trade school, four-year universities and service programs like AmeriCorps. Also discuss whether they want to attend full-time or part-time. Once you have an idea of the type of institution they’re interested in, they can narrow their focus and make a list of schools to which they want to apply.

2. Estimate how much their education will cost.

Once they’ve created a list of schools, make a spreadsheet of the tuition and expenses for each. There can be a significant difference in cost between in-state and out-of-state or public and private schools. Be sure to include room and board, textbooks, and transportation costs when appropriate. It’s also wise to estimate lifestyle expenses like entertainment and clothes, then set expectations for what you will and won’t help pay for.

3. Begin researching what financial aid your child may be eligible for.

There’s plenty of aid available to students applying for college — the key is to find it. Here are the primary sources of assistance:

1. Federal aid in the form of grants, loans and work-study programs (more on these below)
2. State aid in the form of grants and scholarships
3. Institutional aid from the schools themselves, which can include grants, scholarships and tuition discounts
4. Private scholarships offered by private organizations, companies, foundations and non-profits
5. Employer-sponsored aid offered to employees and sometimes the children of employees
6. Military aid such as ROTC scholarships and the GI Bill
7. 529 College Savings Plans which are state-sponsored plans that offer tax advantages for saving for college

There are several scholarship search tools available, including the U.S. Department of Labor’s free scholarship tool. Scholarships can be awarded on a variety of factors, including merit, group identity (high school seniors, women, etc.) and even characteristics like left-handedness. Make sure to start the process early -— ideally during the summers of your child’s junior and senior years of high school, and avoid any scholarship services that charge a fee for their services.

4. Fill out the FAFSA.

If you plan to apply for financial aid, fill out the Free Application for Federal Student Aid, known as the FAFSA. The FAFSA determines how much federal financial aid a student is eligible for based on several factors, including what their parents can contribute. Most colleges also use the FAFSA to determine how much aid they can provide a student. We discuss the FAFSA in more detail in Step 6.

Note that the Department of Education completed a major overhaul of the FAFSA for the 2024-2025 academic year. While the overhaul was intended to ease the process for students and families, but unfortunately, serious delays and glitches may have made the process more difficult for many students, likely impacting overall enrollment for the 2024-2025 school year. It is unclear whether the issues will be resolved for the 2025-2026 school year, which may potentially place more burden on parents and students.

5. Figure out how much you and your child can pay out of pocket.

If you have a 529 Plan or some other college savings fund, determine how much of it you want to apply toward your child’s education. If you’re considering offsetting some of their expenses with your income, it’s a good idea to create a budget to determine what you can contribute. Your child can also work full-time in the summer or part-time during the school year to help cover some of the expense. The more you can pay upfront, the less you’ll pay in student loan interest in the future.

6. Consider loans to cover any gaps.

Once you’ve considered all potential funding sources, you may still have a gap to cover in the form of loans. There are two types of student loans: Federal, by filling out the FAFSA, and private. Federal loans typically offer the lowest interest rates and several protections for borrowers. The FAFSA can also qualify your child for subsidized loans, in which case the government would pay accrued interest for the loan while your student is in school. With unsubsidized loans, the student is responsible for paying the accrued interest.

If a federal student loan does not fully fill the gap, you may consider private student loans offered by banks, credit unions, state agencies and schools. These loans are not subsidized by the federal government. Interest rates, repayment options and other features will vary from lender to lender. Make sure you evaluate a number of lenders before making a decision.

Graduating from high school is a rite of passage that brings with it all kinds of emotions, as is the process of deciding what to do next. Remember that there are resources and tools to help you set your kids up for success, and lean on experts for financial advice. Your tax advisor may have tips you haven’t thought of, and a personal banker can help you review your situation and find the right course of action for your situation.