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The Cost of College in Pennsylvania

There are many great choices for colleges in PA, including the only Ivy League school in the state, the University of Pennsylvania. Students come from all over the world to join our renowned schools, from Carnegie Mellon in Pittsburgh to Temple in Philadelphia. Lehigh University, the University of Scranton, Marywood University, Keystone College, Kings College, Wilkes University, Misericordia University and Penn State University are also popular options, along with the large number of smaller liberal arts colleges throughout the state.

While the choices of schools can vary, so too do the costs associate with attending. The average annual costs in the 2021-2022 school year were $24,162, which is around $9,000 more than the average across the country. This makes Pennsylvania the fifth most expensive state to attend a higher education institution in.

When you’re thinking about how to pay for college tuition, considering a community college, at least for the first year or two, could help save you and your teen money. Many students choose to attend a community college like Lackawanna College, Luzerne County Community College, or Northampton Community College, to complete their prerequisite courses, before transferring to a bigger school in their sophomore or junior year.

Aside from tuition costs, it’s also important to remember that your child will need to pay for books and school supplies, room and board if they choose to live on campus, along with transportation and any other living expenses they may have.

Paying for College Costs

Student Loans

For most students, federal student loans are their primary method of paying for college. These can be applied for through the FAFSA, or Free Application for Federal Student Aid. Any money borrowed through this system must be paid back with interest, but there are various loan repayment options available that your child can choose from once they graduate.

There are various direct loan types that your teen can take out through the federal aid program, with annual awards determined based on financial need. It’s important to only borrow what’s needed as these loans are provided with interest and will need to be paid back after your teen starts working.

Private loans can also be used to cover costs that federal loans don’t. These loans are financed through a bank or private loan institution. Many private loans require payments to be made before graduation, but some do offer deferred payments until after. They can have both variable and fixed interest rates, but they are typically higher than federal loan rates.

Grants

A grant is a needs-based form of financial aid that doesn’t need to be repaid by you or your teen, unless they withdraw from school before they graduate.

There are numerous grants available based on your teen’s financial needs and the program they intend to complete in college, such as Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants.

Scholarships

Many scholarships can be merit based, but there are also a large number of nonprofit and private organizations that help students pay for college without financial aid or loans. This is free money that students are eligible for based on their academic results so far, or other qualifications that the organization lays out such as medical conditions, areas of study, or particular skills they may have.

You can find scholarship information online, with many schools outlining the available options in Pennsylvania directly on their financial aid websites. If you have a list of schools that you’re looking into, always investigate what options they have for scholarships.

Work Study Programs

If financial aid doesn’t cover all or most of your teen’s college costs, or you still need additional assistance, work study programs may be a good option. These allow students to work part time and earn money towards their educational expenses.

Both on campus and off campus work can qualify for these programs and some options off campus can be tied directly to your student’s program of study. Funds for these programs are limited, so it’s always a good idea to research jobs in Pennsylvania that qualify before school starts.

529 College Savings Plan

A 529 college savings plan is an educational savings plan that parents can start when their child is a baby. These plans are sponsored by states and come with tax advantages, with funds up to $10,000 a year allowed. Parents save money on behalf of the beneficiary, usually their child, and funds can be used for qualified educational expenses.

You can open a 529 savings plan at any point but the earlier these plans are opened, the better. Any money you can set aside for your child’s college education will be helpful. You can also contribute while your child is in college and they can use those funds to pay back loans once they graduate. You should also encourage your child to open their own savings account at this time so they can prepare for their post-graduate life.

Leveraging Home Equity

Parents may be in a unique position where you can leverage your home equity to help your children pay for college. Equity is the value you have in your home, minus any loans still outstanding on it. When you take out a home equity line of credit (HELOC), you use this value as collateral against your loan.

Most HELOC providers will only allow you to borrow up to 80% of your home’s equity, so keep this in mind when looking at this as an option for paying for college. There are two different equity options available—a line of credit or a home equity loan.

A loan operates like any other traditional loan where you take out a lump sum and pay back a fixed amount on this each month. A HELOC is more like a credit card, where you’re approved for a set amount but can take any funds up to this amount whenever you like. Once these are paid off, that amount frees up again to be reused until the term length of your HELOC is reached.

Using a HELOC to Pay for College

There are a number of reasons that a HELOC may be a good option for your child’s college tuition. Firstly, this takes the burden off your child and they can focus entirely on their studies and establishing their life as a young adult post-graduation, without the worry of paying back student loans.

A HELOC can also be more affordable and flexible than other financing options, particularly if you have a large amount of equity in your home, a good credit score yourself, and a steady financial situation.

HELOCs allow you to borrow money as needed, which means that the only interest you’ll be paying is on what you actually borrow. This can work out much cheaper than a home equity loan, as if you don’t need that entire lump sum, you’ll still be paying interest on the full amount.

Get Ready for College with Citizens Savings Bank

Citizens Savings Bank is here to help you and your child get ready for the exciting adventure that college brings. Contact us today to discuss your options or get started in applying for a home equity line of credit today. Subject to credit approval.

You can explore our other savings options to help your child prepare for their post-academic life and start their independent financial journey successfully. Consult a tax advisor regarding the deductibility of interest.

Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1.800.692.6279 or email [email protected]. Member FDIC. Equal Housing Lender.