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High college costs are commonly a pain point families are tormented by when planning their student’s future. According to the College Board, the average price tag in the 2017-2018 school year was $34,740 at private colleges, $9,970 for state residents at public colleges, and $25,620 for out-of-state residents attending public universities. A moderate private college costs $51,000.
Over the last two decades, students and families have acquired tremendous debt financing college costs. The consequence has been a generation of college students graduating with thousands of dollars in debt and paying down their student loans at the expense of purchasing homes, investing in stocks, and starting a business.
During the senior year of high school, families will complete a Free Application for Financial Student Aid (FAFSA) form to determine eligibility for college financial aid. If you are a middle-to-upper-income or higher earning family, you may not qualify for need-based aid. Therefore, it’s important to plan early on how to make college costs more affordable and less financially burdensome. Below are often overlooked ways to finance college costs.
- Start a 529 Plan
A 529 college savings plan is an investment account that you can use to pay for college expenses. The plan is typically sponsored by states and comes with tax advantages. For example, earnings from the plan grow tax deferred, withdrawals can be made for education expenses tax-free, and some states, such as New York, allow account owners to get a state income tax deduction. To learn more about 529 Plans and its benefits, please consult with your tax advisor.
- Attend a Public College
Many states offer scholarship programs that can pay for college for in-state residents who attend public universities and make a commitment to work in a hard to fill sector such as teaching or technology, or remain in the state for a certain number of years after graduation. For example, New York has the Excelsior Scholarship which allows full-time students whose families earn $110,000 or less to attend a State University of New York or City University of New York college tuition-free. In Maryland, the “Last-Dollar Program” lets in-state students attend community college tuition-free as long as their families earn less than $150,000 a year. A list of states with tuition-free programs can be found here.
- Qualify for Merit-Based Aid
Many states offer scholarship programs that cover the cost of tuition for in-state residents who attend public universities and make a commitment to work in a hard to fill sector such as teaching or technology, or remain in the state for a certain number of years after graduation. For example, New York has the Excelsior Scholarship which allows full-time students whose families earn $110,000 or less to attend a State University of New York or City University of New York college tuition-free. In Maryland, the “Last-Dollar Program” lets in-state students attend community college tuition-free as long as their families earn less than $150,000 a year. A list of states with tuition-free programs can be found here.
- Apply for Company Scholarships
Many companies offer scholarship programs for employees and their children and relatives to help them pay for college tuition. Check with your company’s website or human resources department to find out if any programs exist and your potential eligibility.
- Negotiate for Financial Aid
After your student applies and receives a financial aid award letter. If the cost is more than you can pay for college, consider negotiating for more aid. Read the SOCP blog article that details step-by-step how to get thousands off tuition costs.
College is expensive, but there are steps you can take to control the cost of college.