Financial Rescue 9-1-1: When College Savings Fall Short
Here are the scary facts: the average cost of four years of college now runs about $50,000 (in-state public colleges) and up to $160,000 (private), including tuition, room and board, books, living expenses and transportation. Just because money hasn’t been set aside in a college fund is no reason to give up on higher education.
Many avenues are available that can help cut—or even eliminate—today’s college costs.
First, a reality check: You don’t have to have the whole amount at the beginning of the first semester. While it’s nice to know money will not be a problem later on, figure out what you can do now and build.
Parents should also not wait until the last minute to discuss this problem with their college-hopeful student. Knowing early how much parents can or cannot help will allow teens time to improve grades and look for additional options.
Open a 529 Plan—Improve Your Taxes
Even if a kid is on his way to college—or already enrolled—parents can take advantage of the tax benefits associated with a 529 Plan. This is a tax credit that can be used regardless of whether a family itemizes their return.
In Oklahoma, parents can get up to $2,500 in tax credits against both federal and state returns. Beyond this option, parents with deductible students can gain from both the Hope Scholarship and Lifetime Learning tax credits.
Free online scholarship directories help find money based on student goals and talents, and can mean significant awards for even average students. A few of the best are: finaid.com, scholarships.com, and fastweb.com. The Princeton folks also have a focused scholarship search engine at collegebound.com.
Students can save their parents bucks, and accumulate early college credit, by taking classes ahead of high school graduation.
Tulsa Community College allows high-school seniors with an ACT score of 19 or higher, or juniors with 21 or higher, to apply for admission and attend classes.
Oral Roberts University allows seniors to attend 6 hours a semester. Scholarships available for half or all tuition, based on ACT or SAT scores, but funds are limited.
Tulsa University offers concurrent enrollment with permission from high school or parent if student has an ACT score of 24 or higher. Concurrent application must be completed, and transcript required. Tuition runs half the normal rate per credit hour.
Broaden Your School Search
Some experts suggest students apply to at least a half dozen schools. While there can be an application charge per school, you can’t talk to a college about financial aid packages until your application is in the system. And different private institutions can have vastly different programs to help students.
Many private colleges take the common application, allowing students to fill out one general application for several schools. Each school, however, will have separate supplementary materials such as essays and letters of recommendation.
Tuition Free Universities
Ten free, fully-accredited universities in the U.S. allow students to exchange campus employment for tuition after passing entrance exams. However, these programs are highly competitive. For example, the nearest such school, College of the Ozarks near Branson, MO gets 3,000 applications annually for just over 500 available openings.
Employer Tuition Assistance
Many employers offer scholarships to both employees and dependents, so ask your company’s human resources personnel. These scholarships are usually not restricted to either public or private institutions, but most require students maintain a certain GPA.
Federal Work Study
Based on their FAFSA, students can receive up to $2,000 annually for working on their college campuses. Paid by the hour, which may be higher than minimum wage, the school pays students directly, but the amount cannot exceed individual’s Work-Study award. Find out about this through the college’s financial aid office.
Get a College Job
Besides needs-based Work-Study, most college towns have jobs that are typically filled by students. Schools in urban settings can have even more opportunities to make higher salaries. It’s recommended that a student work no more than ten hours a week so grades do not suffer, but some students successfully work more.
Work for a University
Usually limited to private universities, working at a local college can get an employee and his or her family free, or discounted tuition. And this isn’t just for faculty members; this benefit is given to anyone working in the offices or even the cafeteria.
Much like the idea of frequent flyer miles, two programs, Upromise and Littlegrad help parents save money toward college in rebate programs. By buying from growing numbers of participating companies and restaurants, families can accumulate $12,000 to $20,000 in an average 15-year participating life.
If you don’t have 15 years until the kids go to college, you at least have the four while they’re attending, which can still save your family thousands. Have family and friends sign up, with your student as the beneficiary, and save more and at a faster rate. Upromise requires you shop through a web portal, but Littlegrad does not. Check out their web sites at upromise.com and littlegrad.com to sign up and get the details.
There are federal programs to help students pay college expenses. Before entering college, students can accumulate money for college through ROTC—see goarmy.com — or by joining any branch of military service. After entering college (and the student loans are in place), volunteering for community service programs such as Americorps after graduation pays up to $4,725 for graduate school or student loans, with annual living allowance of $9,300 and health insurance.
Teaching and nursing students with federal Perkins loans can get their loans forgiven over 5 years after graduation if they work full time in their field within inner-city areas. A similar program for medical students puts doctors in small, rural communities that need medical professionals.
Tapping into home equity is also an option. While you don’t want to stretch your family too thin, it is a way to get money and be able to deduct the interest paid. These loans operate like any other consumer loan, and are second liens on the family home.
Applying is similar to a first mortgage, but the process is easier, usually running only 10 to 15 business days. Loan repayment begins immediately, with most at fixed-rates that span 10 to 15 years, but the interest rate typically runs higher than for a first mortgage.
With a variable-rate, home-equity line of credit, or Heloc, homeowners are given a borrow-able amount, and use a part of the amount as needed. Accessing the funds is easy. All one has to do is write a check, charge a credit card or use an ATM card against the credit line, with interest charged only on the money as it is actually borrowed (accessed). But not all credit lines are designed the same, so to avoid surprises, make sure to ask what the terms are before signing on.
Don’t Use Retirement Money
With so many choices out there, parents should not even consider using retirement money to fund their children’s college costs. While you might feel guilty, financial experts that include Jean Chatzky, Chris Farrell, and Suze Orman say “Get over it.”
If all else fails, students can always get loans to pay for college— loans you can help pay to assuage guilt. But while they have a long time to pay off those loans, there are only limited years for you to amass necessary retirement funds.
Saving for college gets easier the earlier you plan, but what do you do if there isn’t enough—or any—money saved for college? Before deciding college is simply out of your reach, here are ten things to consider:
Regardless of the cost or sacrifices, a college education is a valuable investment for the future.
While early saving is best, it’s never too late to start, and tax credits associated with 529 plans are double-duty savings tools.
The better your grades, the better your choices. While saving can help, a student’s academic success can make a huge difference.
File the FAFSA for financial aid—even if you think your family makes too much to qualify, and contact your high school guidance counselor and college financial aid officer for additional help.
Don’t let the college price tag scare you. Most students do not pay full tuition costs, and the pricier the school the better the financial aid program.
Do web searches for need-based and merit-based scholarships. Books on this subject are also readily available in libraries and bookstores.
Don’t limit your number of colleges; the broader the search, the more opportunities.
Carefully consider all aid packages, weighing all options, and don’t be afraid to negotiate with the different schools.
Look to state schools. In-state students have options others do not have for tuition savings and special honors programs.
Think about two years at a community college first, then transfer to a more expensive four-year school.