The average cost of getting a higher education has more than doubled in the past twenty years, with experts estimating a student enrolling this year will pay an ultimate price of around $500,000 just to earn a bachelor’s degree.
That expense can be downright prohibitive for many Americans.
In fact, the average price for college in the U.S., including tuition, supplies, and daily living expenses, topped $35,000 per student per year, according to the latest research from the Education Data Initiative.
Fortunately, several approaches exist to lower the cost of paying for college.
Open a 529 College Savings Plan
One way to defray the price of college is to start saving early with a 529 College Savings Plan.
A 529 plan is a tax-advantaged savings account that can cover qualified expenses at eligible colleges and universities.
Family members or friends typically contribute to a 529 plan, and the money in the account grows tax-free. Distributions from the 529 plan are also tax-free when utilized to pay for qualified expenses like tuition, room, and board.
“529 plans are popular because of their flexibility and their tax-free growth when you spend the money on education,” claims Michael Raimondi, a wealth manager with Clarus Group. “Certain states also give you deductions for your contributions.”
Pursue Scholarships and Grants
Did you know there are sources of free money to help students pay for college?
Scholarships are awards of financial aid that do not have to be repaid. Grants are typically need-based sums that do not have to be repaid either. In 2019-2020, prospective college students received an average of $7,626 in grants and scholarships, covering about 25% of their tuition and fees.
There are a variety of scholarships and grants available, so it’s essential that you do your research and determine which of those you may qualify for. One excellent resource for finding free funding sources is College Aid Pro, which offers a tool to help families free of charge that can pinpoint the best financial aid and scholarship opportunities for their students.
Participate in a Work-study Program
Work-study programs are federally funded and provide part-time jobs for eligible students. The money earned through these programs helps cover the cost of tuition, fees, books, and other expenses.
To participate in a work-study program, you must first complete the Free Application for Federal Student Aid (FAFSA). Once your college awards you financial aid, you will then be able to apply for work-study positions.
Ask About Payment Plans
Many colleges and universities offer payment plans that allow students to spread the cost of tuition and fees over the course of the semester or academic year. These plans typically require a small down payment and then monthly payments until the remainder of the balance is paid off.
Interest is usually charged on the unpaid balance, so it’s essential to be aware of this before signing up for a payment plan.
Attend Community College First
One way to make college more affordable is to start earning your degree at a community college. For the first two years, you take the same classes as you would at almost any university or college, and then transfer those credits to a more expensive four-year institution.
Community colleges typically have lower tuition rates than four-year colleges and universities, which can be a great way to save money.
“Many community colleges offer university transfer programs that make it seamless to earn an Associate’s degree and then transfer to a four-year school,” said Jay Rishel, Certified Financial Planner with Overman Capital Management. “Students can expect to save upwards of 40% of their expected college costs.”
Hire a College Financial Advisor
Rather than navigating the maze of education funding options, consider hiring a local financial advisor who specializes in helping their clients find the optimal way to send their children to college.
While many financial advisors are knowledgeable on college planning topics, you may want to choose a financial advisor who has earned their Certified College Financial Consultant (CCFC) designation, especially if you have multiple children heading to college in the next several years.
“A CCFC understands that different strategies will apply to different clients, especially those who are business owners, divorced and blended families, high net worth individuals, and grandparents,” said Ross Riskin, founder of the American Institute of Certified College Financial Consultants. “A CCFC is well-versed on the ins and outs of the comprehensive education planning process and is prepared to provide guidance no matter where the client is on the timeline.”
Pathway to a Rewarding Life
High-quality education offers a pathway to a more rewarding life, both materially and spiritually. It can be expensive, but there are several ways to pay for college, so don’t let the cost deter you from getting the education you want and deserve.
If you’re willing to do your research and put in the work, you may find ways to finance your education without breaking the bank.