By Katy Hopkins

Whether college is a few months away or years down the road, you have financial options

Paying for college is rarely easy. Ideally, it's a longterm process of building and using a collection of savings, institutional aid, free money, and -- if necessary -- loans.

But with so many avenues for financing your education, it's often difficult to sort out what might work best for you, given your situation and time frame. Whether you'll be moving into your dorm room in two months or you're starting to save now for your toddler's college education, here are four often-overlooked considerations that may lessen your financial burden:

Exhaust your federal options:

Because federal loans (Stafford and Perkins) are cheaper and have more flexible repayment options, students with financial need should always exhaust their federal options before looking to private loans, says Kevin Walker, cofounder and CEO of It's an often overlooked route, he adds, because some families mistakenly assume it's a complicated process for a loan they may be too well off to qualify for anyway.

"Some families might believe, 'We're upper middle class; our income is upper level so we wouldn't qualify,'" Walker notes. "Whether you're Bill Gates's kid or a child of a family with zero income, you can get a federal Stafford loan."

And, if college is around the corner and you've yet to apply for federal aid, it's also a mistake to assume you're too late, Walker notes. You can still fill out the FAFSA and work with your college's financial aid office to evaluate your payment options. Sites such as SimpleTuition, the Department of Education, and Sallie Mae offer more information on federal loans and help students navigate the private loan sector, if necessary.

Consider 529 plans:

If you have some time before college, a 529 savings plan may be an attractive route for you. Named after Section 529 of the Internal Revenue Code under which it was created, a 529 plan allows users to select from a variety of funds in which to invest, including real estate and money market accounts. In 34 states and the District of Columbia, parents with a 529 plan qualify for an income tax deduction or credit on contributions.

These savings plans with tax advantages were effectively created to lessen the number of investment choices families have to make, says Mark Kantrowitz, founder of But it seems the message hasn't been fully communicated; in a recent parent survey conducted by Sallie Mae, about half of all respondents who aren't using a 529 plan didn't know the option existed. That lack of information was the most commonly cited reason parents didn't use the college savings plan, according to the 2010 study, How America Saves for College, which surveyed 2,092 parents around the country with children under the age of 18.

"This is not rocket science," Kantrowitz says, adding that parents and students should be able to navigate the options. Ideally, a 529 savings account will be opened when a child is young, so savings can accrue over time according to an age-based investment allocation. Then, any risky investments have a decade or more to recover.

Though 529 plans -- and the accompanying fees -- vary by state, eligibility is not determined by residency. You can opt to enroll in Ohio's plan if you live in Virginia, for example. Consider your state's plan first, Kantrowitz recommends, then look elsewhere if its fees aren't lower than 1 percent or if it doesn't offer an attractive income tax deduction.

Regiment yourself:

No matter how far away college is for you or your child, it's crucial to start adhering to a savings plan now. Though it might feel painful at first, research shows that students and parents who stow away set levels of college cash at specific intervals are more inclined to feel confident about their ability to pay for college.

"It's something called perceived self control: When people save regularly, they start to really feel that they have greater control over their lives and their future, and it leads them to build a much higher level with capability in dealing with financial matters and their financial future," says Ben Mangan, president and CEO of EARN, a financial aid nonprofit organization, which founded

To make the process easier, get yourself on a manageable plan, focus on the savings goal each month rather than the large end figure, and have your savings stowed away automatically, FinAid's Kantrowitz advises. "Once you get started," he says, "you become accustomed to not spending that money."

Explore last-minute options:

If you are beginning college this fall, don't assume it's too late to find scholarships, SimpleTuition's Walker says. Use these next few weeks to scour the Internet, community listings, and your high school's counseling office for any last-minute sources of aid or scholarship money that went unused in the traditional school year award period. Other scholarships have deadlines throughout the calendar year. In an online scholarship search, specify what state you live in to help you find local results, Walker recommends.

Students can also use the Web to find summer contests, such as the one being held through July on Mangan's site, In an effort to create a community of financial aid users, the newly launched Web site is offering $5,000 to the highest user-rated video of how to pay for college. If you have other tips not listed, the site welcomes video success stories of students who have mastered the financial aid process, too.

Though these types of contests won't garner money for the majority of students who enter, the process can at least be informative -- and possibly therapeutic, Mangan notes."We've found that people sometimes feel hopeless about this," he says. "The simple act of sharing their story and knowing they're not alone gives them a sense of relief from the burden they feel in carrying the education debt."


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College Tuition - 4 Overlooked Ways to Pay for College