How to Reduce the Cost of College
For some, owning a home is the “American dream.” But for many parents, sending their children to college is the American dream. Many families have had to give up that dream because college tuition and related expenses continue to skyrocket. However, parents and students can take some simple steps to help pay for college.
Consider Two-Year Schools
Consider schools that provide the same or similar level of education for the first two years of college, like a community or junior college. The tuition cost for a community or junior college can be about half of a public, four-year university. Since these lower cost options can provide a comparable academic experience and generally have smaller class sizes, they are difficult to overlook. Plus, these institutions have made great strides to improve their academic quality and provide a smooth transition to a four-year university.
Explore Funding Options
Investigate various scholarships, grants and loan options available to your children. To determine availability, first complete the FAFSA form and consult a high school guidance counselor and the university’s financial aid office. Also, look for online scholarships your child may qualify for.
Supplemental loans with potential tax benefits should be considered and used with caution. It is estimated that 70 percent of college graduates have $38,000 in student debt, which equates to monthly payments of approximately $382 for 10 years. Because many students do not understand the long-term impact of taking out student loans, parents need to have a good, honest discussion with their child and give examples of the cost of a loan compared to a car payment or apartment rent.
Colleges will often negotiate their costs. Because the number of college-age students has decreased in recent years, colleges compete to fill seats and often reduce the price to avoid having empty seats. The negotiation process often involves writing a letter, submitting extra tax forms, and providing additional teacher recommendations.
Expect Your Child to Have “Skin in the Game”
While students long for the college experience of going to class at noon and binge-watching Netflix all night, expect a more disciplined approach from your student from the outset. In addition to traditional part-time jobs, many college students have other opportunities available to them, like resident assistant and work-study programs, and paid internships. Not only does working during college instill time management skills, it can also provide valuable experience that sets your child ahead of the pack as they enter the working world.
Live at Home
Your child could live at home while attending college, especially for the first two years. While this can be a sensitive subject for parents and students alike, depending on the circumstances, the option should be seriously considered. Since the average room and board expense at a public four-year university costs $10,800 annually, living at home for even two years can save a lot of money.
Look for Tax Breaks
Tax breaks exist for those currently paying for college. These include the American Opportunity Credit, Lifetime Learning Credit, tuition and fee deductions. They each have income limits, maximum amounts and other eligibility rules, but can have an impact on the bottom line for many middle-income families. Also, many states offer a tax deduction for those with a college savings plan. Consult your tax adviser for assistance on this.
Don’t Break the Bank
The cost of a college education constitutes one of the biggest expenses a family can incur. However, your child can get a college degree without breaking the bank by looking for cost-effective ways to pay for it. The American dream of a college education remains possible.