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Tom: You have a great topic for us today: Paying for college.

Mellody: It is that time of year, Tom. College acceptance letters have gone out, and parents and graduates are starting to take a hard look at schools, and an even harder look at their ability to pay for college. And it deserves a hard look! College tuition prices have risen nearly 500% since the mid 1980s, and crushing student loan debt has become a common experience for many college graduates. I am here today to help everyone out there ask the right questions and make the right moves that will allow families to deal with the college costs.

Tom: What are the most important actions we need to take to prepared to pay for college?

Mellody: There are a lot of moving parts here, but the most important among them is filling out and submitting your free application for federal student aid, or FAFSA, along with the relevant individual school or state applications. To find out when the deadlines are for your school or your state, you can go to Why is the FAFSA, in particular, so important?

It ensures that you are able to receive federal student financial aid. Some of this aid can come in the form of grants, like Pell Grants, which are awarded based on need to undergraduate students for the most part, but they are the most accessible pot of free money for college. But the FAFSA is also needed for any federally backed student loans, like Stafford or Perkins loans, or to qualify for the federal work-study program. I mention it because so many people miss out on federal aid. Nearly half of high school students do not fill out the FAFSA. Because of this, U.S. high school graduates leave nearly $3 billion in free federal grant money on the table each year. So the first step is filling out financial aid applications, especially the FAFSA.

Tom: What other actions are important?

Mellody: The second big piece is determining what you can contribute as a family. Many people do not consider their finances until they have to, and as a result they are left reacting to financial demands rather than being proactive. Now is a good time for families to sit down and take a hard look at the numbers. What have you saved for college? What will you be able to contribute toward tuition or other costs? Will your child be able to work during school to cover some of the costs? Building a spreadsheet of the costs, and then working out budget to have an idea of how far money goes will prepare you to make educated decisions about paying for college.

Money Mondays: How To Pay For College  was originally published on

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