How to Successfully Pay for College

September is College Savings Month. For many students college is a dream deferred due to the high price tag of college tuition. College expenses can include: tuition, fees, room/board, books, supplies, transportation, food, clothing, personal expenses, etc. College tuition rates increase at twice the rate of inflation. The first two years of college are the most expensive. A four-year college education can cost over $120,000.

According to the Federal Reserve, college graduates earn 66% or $830,000 more than high school graduates over their career. Unfortunately, the high price tag prevents many students from attending college or dropping out prior to graduation. In addition, the unemployment rate for high school graduates is more than three times that of college graduates. The key to paying for college is determining who will pay tuition – you, your parents or relatives.  Even just contributing $50 every month for 18 years would result in $23,482.  Use these 21 helpful tips to pay for college without going broke.

Plan/Research

1. Don’t wait until the last minute. If your parents can’t pay for you to go to college then you have to develop a plan.
2. Plan for college costs early. If you will have to pay for college yourself get a part-time job as soon as you are old enough to work and put at least 50% of the money in a high interest savings account. 
3. Read books on how to apply and get scholarships.
4. Talk to your parents, school counselor and current college students who received scholarships and ask for pointers on obtaining scholarships.
5. Attend a college that offers free tuition.

Save

1. Use money from birthdays, graduations, special events and Christmas and put into a high interest savings account.
2. Work every summer while in high school and college. Apply for internships. Save at least 50% of your money to help defray college costs.
3. Use 529 plans. Using matching contribution plans provides even more funding for college.

Financial Aid

1. Apply for financial aid using the FAFSA and other resources. 
2. Apply for at least 50-100 college scholarships, for every 10 you apply for you will receive one.
3. Join the ROTC to earn scholarships and stipends for college.
4. Enroll in the military and use the GI Bill.
5. Contact the school’s financial aid office and get to know your financial aid counselor.

Take a Different Route

1. Use college co-ops, fellowships or work-study to pay for college.
2. Take classes in high school to earn college credit.
3. Attend college as a part-time student.
4. Work full-time and use company tuition benefits to pay for all or a portion of your college tuition.
5. Use crowdfunding sites such as scholargifts.com, kickstarter.com, gofundme, indiegogo.com, gradsave.com, givecollege.com, upstart.com, crowdtilt.com, pigit.com, tuition.io to pay tuition.

Scale Back

1. It is nice to attend an Ivy League school but the tuition will cost you. Choose an affordable college.
2. Consider attending a less expensive school or attend a 2 year college then transfer to a 4 year university.
3. Avoid eating out every day. Create a budget to track spending and reduce expenses.
4. Avoid using credit cards for every day purchases. Use credit cards for emergencies only.

How the Pell Grant Changes Will Affect You

Congress is reviewing a budget proposal for 2013 that includes changes to federal Pell Grants. College tuition increases 3 times the rate of inflation making it more difficult each year for students to attend college.


As of July 1, 2012, students who did not receive a high school diploma or GED but demonstrated their ability to attend college will no longer be eligible for a Pell grant. This change will affect approximately 65,000 students according to the Association of Community College Trustees. Only students with a high school diploma or GED will be eligible for Pell Grants.

The change also affects low-income families. The maximum income for low-income families has been reduced from $32,000 to $23,000 which will affect approximately 12,000 students starting July 1, 2012.

Students who previously received the minimum Pell Grant award or 5-10% of the maximum Pell Grant amount will no longer be eligible to receive the grant.

Under the Pell Grant full-time students can use the grant for up to 18 semesters. Starting July 1, 2012, the grant can only be used for full-time students up to 12 semesters.

Since this is an election year, write Congress to voice your concerns and push for increased financial aid for college students.

College or Retirement

Nowadays many parents struggle with deciding to plan for retirement or save money to pay for their child’s college education. Yearly college tuition costs can range from $5,000 to $50,000 per year.

Parents should not have to make the choice to plan for retirement or save money to pay for their child’s college education. Your child may not be financially secure enough to take care of you when you get older which is a major reason why parents should plan for retirement. You will need to save money for 30-40 years to have enough to cover your living expenses when you retire.

Planning for retirement or saving money to pay for their child’s college education is an emotional choice. The decision to do one or the other should be a rational choice. If you save money to pay for a college tuition that could total between $20,000-$200,000 that is less money that you can contribute to your retirement account.

Think about worse case scenarios, if you child drops out of college you are stuck with a bill, less money in your retirement account and will have to take care of a child who is unemployed. If your child changes their major or transfers to another school, this will extend the time they are in school and increase tuition costs. You can’t control what your child does but you can control yourself. If you take out a home equity loan you will also be stuck with another bill.

Parents should plan for retirement because college tuition can be paid for with financial aid, savings bonds, 529 plans, part-time employment from 9th through 12th grade and summer jobs during their college education put the money in a high interest savings account.

Suggest that your child apply for financial aid which can be either grants, scholarships, or loans. If a child has to participate in paying for college they will be more responsible with their money, understand the value of money and the value of a college education.

Talk to a financial advisor to get advice on how to save for both and the options available to you. A financial advisor can help you determine what age your what to retire, how much you will need during retirement, how much you need to save to pay for your child’s college tuition. You can withdraw money from your retirement account but if your child decides not to attend college, you will have to pay a penalty on the money taken out of your account. If you lose your job or quit your job you may have to pay your loan in full and pay taxes and penalties on the money that was not repaid.

You cannot plan to pay for college tuition when your child is in high school. Planning early is the key. If you save just $5 a month towards your child college tuition when they are born that equals to $260 a year. You may have to tell your child that you cannot afford to pay for their college tuition.

If your child does not get financial aid, encourage your child to go to a state college to cut down on costs. You may have to make sacrifices, live in a modest home, live below your means and buy more needs vs. wants. Ask friends and relatives instead of giving your child a gift to make a donation to their college tuition. Whatever you decide make sure you don’t go into debt and make your current or future financial situation worse.