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.

Use Crowdfunding To Get Back On Track with Your Finances

 

The 2012 Jumpstart Our Business Startups Act, or JOBS Act, loosened securities regulations to encourage funding of small businesses and required the SEC to propose crowdfunding rules. The JOBS Act limits annual individual investments in crowd funded startups to 5% of an individual’s income or net worth - or $2,000 if the individual’s income or net worth is under $100,000. Business startups can raise up to $1 million through crowdfunding each year, must report to the SEC at least annually and maintain audited financial statements if they raise more than $500,000 in a year.

Crowdfunding involves funding a project or venture by raising small amounts of money from people online around the world or when people network and pool their money together, via the Internet, in order to support efforts initiated by persons or organizations.

There are 4 types of crowdfunding:

1.      Reward-based crowdfunding – used for motion picture promotion, free software development, inventions development, scientific research, and civic projects

2.      Equity-based crowdfunding - support efforts initiated by individuals or organizations in exchange for equity in the company, a good example is the TV show “Shark Tank”

3.      Donation-based crowdfunding - raise money for any reason including personal matters, such as healthcare costs, or social causes.

4.      Credit-based crowdfunding - peer-to-peer lending or crowd-lending, a company or individual lends money and receives interest for the loan

The most common type used for personal needs is donation-based crowdfunding. Crowdfunding was originally designed to fund start-up businesses but many now use it to pay for personal expenses such as:  weddings, student loan debt, unemployment, financial crisis, buying a home, college tuition, paying medical bills or anything you can think of. It is also used by people who have bad credit and cannot get traditional loans or people who have loans and cannot pay them back.

The top ten crowd funding websites are:  Gofundme, Kickstarter, Indiegogo, Causes, Giveforward, Crowdrise, Youcaring.com, Firstgiving, Fundly, and Fundrazr. Crowdfunding websites charge a fee usually a percentage of the money rose plus additional fees.  Crowdfunding fees for some of the most popular websites are:

1.      Kickstarter - 5% of funds raised, plus 3-5% transaction fees but you lose the funds if the goal isn’t met

2.      Indiegogo - on the all-or-nothing plan, 4% of the funds; flexible funding plan, 4% if you reach your goal, 9% if you do not reach your goal. Transaction fees are an additional 3%

3.      GoFundme – take 5% from each donation (the total donation) you receive. You can use either WePay or PayPal to process your payment - both charge fees ranging from 2.9+% to 3.5%.

4.      Fundrazr - 5% for completed or an incomplete campaign plus 2.2% +$.030 transaction fees

Here are 4 ways to use crowdfunding to pay a personal debt:

1.      Tell your story. Explain why you need the money, what you have already done on your own – what has worked and what didn’t work and how the money will be used.

2.      Set a Realistic Financial Goal. Set a practical fundraising goal that you can achieve in a reasonable time period.

3.      Develop an Elevator Pitch. Explain your cause in two to three sentences or within 60 seconds.

4.      Market. You will have to market your campaign to reach your fundraising goal. Tell everyone you know and invite them to visit your website. You will have to constantly update the campaign to give people a reason to keep visiting your website.

5.      Taxes. Money raised may be considered income and you may have to pay taxes on the amount raised. Treat the money as additional income or as you would business income and plan accordingly for taxes.

6.      Reward. Offer rewards or gifts for large donations to encourage greater participation.