The ballooning cost of college has many parents and students on edge. If you’re trying to figure out how to afford a good college education, there are solutions. Don’t let the rising price tag of college keep you from moving ahead with the education you’ve been dreaming about for yourself or your children. If you make plans and smart decisions today, you won’t have to raid your retirement account, overpay for college, or take on decades of expensive debt.
How Much Does College Really Cost?
The first step is to consider how much college really costs. That’s difficult to pin down because there are many variables like:
- Which school(s) will accept you?
- Will you live at home or on campus?
- How many years will it take you to graduate?
- What additional fees will your program require?
- How much will college costs increase each year?
- Can you qualify for awards that don’t have to be repaid?
- How much can you expect to receive in student financial aid?
- How much will your college savings account grow over time?
There’s a new online calculator at cnnmoney.com/collegecosts that gives you an estimate of the cost of over 2,000 four-year schools. The estimate takes your household income and inflation into account, as well as the percentage of students who receive scholarships or grants at a given school.
Because you can’t know the answer to every question about the cost of college ahead of time, it’s kind of like planning for retirement. A few of the same rules apply: get an early start, take advantage of tax-favored college savings accounts, and allocate your investments more conservatively as freshman year approaches.
How to Cut the Cost of College
Here are 5 strategies you can use to dramatically minimize the cost of college tuition:
Tip #1: Start at a Community College
In most cases, credits earned at an inexpensive community college can be applied toward a degree at a larger, more prestigious school. Spending the first 2 years of college at home can also save a huge amount when compared to the inflated cost of room and board on most college campuses.
Find out the articulation agreement between the community college and the school where you hope to transfer, so you know which credits would be accepted at your dream school and the grades you have to achieve to get in. Remember that your diploma only names the school where you graduate!
Tip #2: Lock in the Cost
If you want to skip a regional college and get a full four-year college experience, consider using a prepaid 529 savings plan to lock in the future cost of college at today’s rate. Many state schools and private colleges allow you to prepay, which could mean getting a great education at a substantial discount if the cost of tuition continues to rise. Prepaid plans don’t put your funds in the market—so they aren’t subject to any investment risk—but they are subject to the solvency of the state or institution’s program.
If your child decides not to go to college or wants to attend a different school than the one you prepaid, you can transfer the value of the account or get a refund. To learn more about prepaid 529 plans for public and private colleges visit finaid.org and privatecollege529plan.com.
Tip #3: Graduate in Less Time
Though most kids would hate to cut their college experience short, if you complete the coursework for your degree in less time, it will cost less. You might be able to get a bachelor’s degree in 3 years instead of 4 and save a bundle on room and board, tuition, and fees. Unfortunately, the average student takes more than 4 years to graduate, which drives up their overall cost of college. So use the following strategies to accelerate your college graduation:
- Work harder in high school so you qualify for Advanced Placement (AP) classes that give you college credit before you even arrive on campus.
- Work harder in college by taking a heavier load of classes each year.
- Be clear about the school and degree you want—changing either one mid-stream can result in having to take more classes that keep you in school much longer.
Tip #4: Apply Strategically
If your child applies to colleges where his or her grades and SAT scores rank in the top 25% of students, they’ll have an advantage. That’s because colleges proactively recruit students who can benefit their overall student body. Families who earn too much to receive financial aid should apply to colleges that award high percentages of merit aid that does not have to be paid back. Visit collegedata.com to find information that reveals which colleges may be the best match for you or your child.
Tip #5: Pay As You Go
I recently interviewed Zac Bissonnette—the author of Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching Off My Parents—to get his tips. Zac challenges conventional wisdom about choosing and financing college and recommends that no one take out student loans. Instead, he advocates that students work during high school and college, and families cut back their lifestyle, to pay for college as you go.
Zac is a really sharp guy who just graduated from the University of Massachusetts. You can listen to our conversation and learn much more about how he got a great education without paying a boatload or taking on any debt! Be sure to listen to my full interview with Zac Bissonnette while it’s available at SmartMovesToGrowRich.com.