The average cost of higher education has more than doubled over the past twenty years, with experts estimating that a student enrolling this year will pay an ultimate price of around $500,000 just to earn a bachelor’s degree.
This expense can be downright prohibitive for many Americans.
In fact, the average price of college in the United States, including tuition, supplies, and living expenses, has exceeded $35,000 per student per year, according to the latest research from the Education Data Initiative.
Fortunately, several approaches exist to reduce the cost of paying for a college education.
Open a 529 college savings plan
One way to defray the cost 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 eligible 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 exempt when used to pay eligible expenses such as tuition, room and board.
“529 plans are popular because of their flexibility and tax-free growth when you spend money on education,” says Michael Raimondi, wealth manager at Clarus Group. “Some states also give you deductions for your dues.”
Search for scholarships and grants
Did you know that there are sources of free money to help students pay for their education?
The scholarships are financial aid scholarships that do not have to be repaid. Grants are usually need-based sums that also do not have to be repaid. In 2019-20, 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 is essential that you do your research and determine which one you may qualify for. A great resource for finding free funding sources is College Aid Pro, which offers a free tool to help families who can identify 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 to eligible students. Money earned from these programs helps cover 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 grants you financial aid, you can then apply for work-study positions.
Ask about payment plans
Many colleges and universities offer payment plans that allow students to spread tuition and fees over the semester or academic year. These plans usually require a small down payment and then monthly payments until the rest of the balance is paid off.
Interest is usually charged on the outstanding balance, so it is 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 courses as at almost any university or college, then transfer those credits to a more expensive four-year institution.
Community colleges generally 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 easy to get an associate’s degree and then transfer to a four-year school,” said Jay Rishel, certified financial planner at Overman Capital Management. “Students can expect to save up to 40% of their expected tuition.”
Hire a College Financial Advisor
Rather than navigating the maze of education financing options, consider hiring a local financial advisor who specializes in helping clients find the best way to send their kids to college.
Although many financial advisors are familiar with college planning topics, you may want to choose a financial advisor who has earned the Certified College Financial Consultant (CCFC) designation, especially if you have several children who will be going to college. university over the next few 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 in the ins and outs of the comprehensive education planning process and is ready to provide guidance no matter where the client is on the timeline.”
Path to a fulfilling life
A high quality education paves the way for a more fulfilling life, both materially and spiritually. It can be expensive, but there are many 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 can find ways to fund your education without breaking the bank.