It is also true that there are many ways to reduce the
bottom-line price by thousands of dollars, tens of
thousands, and even more. There is, alas, no magic
wand; it takes hard work and sacrifice—by the parents (and grandparents and extended family in some cases), and by the student.
Here, then, are the core strategies for a family with a college-bound student:
1. Save early, often, and intelligently.
2. Aim for a scholarship.
3. Seek financial aid.
4. Learn how to borrow wisely.
5. Grab a do-it-yourself discount.
6. Take advantage of special programs.
7. Make the most of regional price variations.
8. Consider state colleges and community colleges, and
commuter enrollment or off-campus housing.
9. Consider foreign schools that offer substantially lower costs.
10. Choose a job that offers employee and legacy scholarships.
11. Put your child to work.
12. Spend less money after acceptance.
Save early, often, and intelligently.
The smartest thing you can do is to start putting aside money as soon
as your child is born. Every dollar put aside on that first day is going to
be worth about $4 eighteen years later; if it is invested in a plan in which
interest accumulates tax free, or withdrawals can be made without paying
tax—or both—the fund is going to be even more valuable.
Let’s just say you or your parents or other family members have $25,000
available on a child’s date of birth and can set it aside in a college fund; when
the first college bill arrives there will be something close to $100,000 ready
and waiting. (Where in the world will you get $25,000? Well . . . do you
really need a new car right now, or could you make do with a well-maintained
used machine for a few more years?)
However, I promised to be realistic: not everyone has that kind of
money sitting around unallocated. Chances are good that you’re a young
couple, new to the workplace. There’s a new baby, and there may be a down
payment on a house in your future. And even at a young age, you should be
making contributions to your retirement fund.
But you need to start putting money aside, even just $100 a month to
start. Think of that as $3.33 per day; that might mean cutting down your
intake of Grande Double Latte Half-and-Half from two to one a day.
Then keep on putting money aside on a regular basis, and look for
ways to double and then triple that amount. If you can put away $250 per
month—less than the equivalent of an extra car payment—for eighteen years
in a tax-free investment that earns a fairly conservative 7 percent, you will
have saved about $105,230 with relatively little pain.
The next part of the equation is to invest intelligently; it’s not as simple
as stashing money in a bank account. Later on, I’ll show you how to set aside
the most money with the least tax consequences, and I’ll tell you why it’s not
always advisable to put your child’s name on the account.
Aim for a scholarship.
Encourage your child to do good, and be good.
Nearly every college and university offers substantial grants to
incoming students with exceptional accomplishments in high school and in
the community. Some extra effort in studying, or a bit of tutoring can help a
student earn an academic scholarship.
You don’t need to be at the top of your high school class to win a special
scholarship based on your background, achievements, work experience, and
skills. A student who can present a great story of community volunteer work
and assistance to others can earn a citizenship award from a college.
Seek financial aid.
Need-based grants from federal, state, and private sources help lowincome
applicants pay for college. But you don’t need to be at the poverty
level to receive assistance; there are some programs that soften the bite of
interest on student loans. If you’ve got special circumstances or an unusual
financial story, contact the financial aid office and ask for reconsideration of
the financial aid offer.
And if you are caught in the middle class—earning too much for most
need-based programs and not quite rich enough not to care—there are some
things you can do to improve the parents’ or student’s chances of receiving certain
types of aid.
Learn how to borrow wisely.
If you need to take out a loan to pay for college, you’ll find out in Chapter
9 how to get the best available deals, including interest-free subsidized loans
and reduced-rate unsubsidized plans.
We’ll also explore tapping into the equity in your home—an easy source
of money in the proper circumstances, but not the best solution at every
point in the changing economic cycle. And even if you don’t need a loan, I’ll
show you how in certain situations it makes more sense to use someone else’s
money for a while.
Grab a do-it-yourself discount.
At most colleges, the standard tuition charge covers up to eighteen
credits per semester; most students take only five courses for fifteen credits.
If a student takes an extra course each semester, he or she will be eligible to
graduate midway through the senior year, saving about 12 percent of the cost
of a college degree—as much as $15,000 at a private school.
Another money-saving strategy: take Advanced Placement courses in
high school. If the student receives a high enough score on an independent
national test, colleges will grant credit; two AP course credits combined
with three extra courses over the first three years of college will also allow
graduation a semester early.
And don’t overlook taking summer courses at a community college.
Credits are almost always much less expensive there than at a four-year school,
and room and board—well, you’re paying for those already when the student
is home for the summer. You can read about these strategies in Chapter 15
and in the chapters from our roundtable of experts.
Take advantage of special programs
At many schools around the nation, there is the list price and the sale
price. In the next article, you’ll learn how a smart shopper can obtain discounts
for prepayment or for in-state attendance, and also how to enroll in prepaid
guaranteed tuition and other subsidized or special financing programs. In
addition, I’ll explain how many states offer grants or loan forgiveness to
students who enroll in certain courses of study and then promise to work in
that state for a period of time after graduation.
You’ll learn about the financial advantages of monthly payment plans,
and you’ll see how you can get a free vacation along with a college education
by earning frequent flyer miles on tuition payments.
Make the most of regional price variations.
You can shop for a college education at a high-priced school in the
Northeast or California, or you can buy a first-class education at a lower-cost
college in the South or Midwest. Our roundtable of experts will explain some
of the advantages in considering colleges in different parts of the country.
Consider state colleges and community
colleges, and commuter enrollment or
off-campus housing.
The best of state colleges and community colleges offer a quality
education without a name-brand price. One great strategy is to spend two
years at a community college or a state college and the last two at a prestigious
private school; your diploma will be from the private college or university.
We’ll discuss which public college systems offer the best education and
the best deals, and show where they may even make sense for out-of-state
residents. Living at home can save thousands on room and board. Off-campus
housing can offer a discount, too.
Consider foreign schools that offer
substantially lower costs.
You may be able to save tens of thousands of dollars by enrolling at a
quality school in Canada, Europe, and almost anywhere else in the world.
Choose a job that offers employee and legacy scholarships.
When a parent accepts a job, consider the value of all of the benefits
offered by the employer. Is there a college scholarship program from the
employer, a labor union, or an industry association? If your skills are of value to
a university, consider the value of free tuition programs offered to the children
of employees.
Put your child to work.
Students can earn thousands of dollars at summer and part-time jobs in
high school, and part-time and summer jobs after college begins. Before they
spend every dime on video games, Manolo Blahnik sandals, or a celebratory
trip to Europe, consider asking your child to put aside some money toward
college expenses.
Here’s one strategy: ask students to pay for their own walking-around
expenses. Do the math this way: There are roughly forty weeks in a college
academic year. If you and your child agree that $50 per week is enough, ask
that he or she put aside $2,000 for each of four years in college. If the child
would like an extra $20 per week, the response is: put away $800 more.
Put the money in a debit account and instruct the bank to dole out the
agreed-upon funds once a week. Not only does this take some pressure off the
parents, but it also helps the student understand that college is not free and
that their sacrifices have a benefit.
Spend less money after acceptance.
Consider the full cost of college, including transportation, books, school
supplies, and clothing. Then think about how to be a savvy shopper for each
of these costs. There are discount programs for bus and train tickets, online
sources for used books, discount Web sites for art and science supplies, and
many other ways to pay less for just about anything.
The college dorm may be convenient, but it may not be as cost-effective
as sharing an apartment. If you’re an entrepreneurial type, how about buying
an apartment or house near the college, collecting rent for four years, and
fixing up the place to sell when graduation time arrives?
Students have to eat, but not all board plans make sense; don’t pay
for twenty-one meals a week if your child skips breakfast every day.
Read More: A DOZEN WAYS TO CUT COLLEGE COSTS NOW
