"Welcome to college and what could be the best years of your life. Now, please pay us $76,970.85."
Ouch! Let that sink in for a second. That figure is the total estimated cost of four years of college at a public university starting in 2008-2009, and as the years roll by, this figure is only going to grow. The number is estimated to jump to over $151,000 by 2018, according to FinAid, a nonprofit educational organization. For students attending private schools, it only gets worse. The average total cost of four years at a private university will balloon to over $300,000, beginning in 2018.
TUTORIAL: Save For College With A 529 PlanIf you are a student or parent, you probably already know the harsh reality of this situation: the high costs of college can make a bachelor's degree cost-prohibitive, leaving many with the unsavory choice between a tall stack of student loan bills or not getting a degree at all. Your options don't have to be so extreme, however. Here are some practical ways to reduce, and in some cases even eliminate, college costs. (For related reading, see Avoid The "Generation Debt" Trap.)
Saving only a little each month from an early age goes a long way. In fact, investing $50 per month from a child's birth to age 18 at an 8% annual rate of return would result in $24,004.30 saved for college. Either a 529 Plan or a Coverdell Education Savings Account is a good vehicle for this strategy. (To learn how to establish these plans, read Choosing The Right Type of 529 Plan and Clearing Up Tax Confusion For College Savings Accounts.)
Two newer items that have come out in recent years are prepaid tuition plans and CollegeSure certificates of deposit (CDs). The availability of prepaid tuition plans varies from state to state, but essentially these plans allow parents or relatives to prepay and lock-in tuition rates, foregoing future price hikes. The main issues with these plans are transferability to other states, to other children, and to private schools from public schools.
For a private-school alternative to state-sponsored, prepaid tuition plans, consider the CollegeSure CD, offered by the College Savings Bank in Princeton, NJ. This CD provides an annual percentage yield tied to the annual increase in college costs. If the tuition is higher than the plan specifies, the plan will make up the difference. Additionally, principal and interest up to at least $100,000 per depositor are guaranteed by the Federal Deposit Insurance Corporation. (For additional options, read Pay For A College Education With Retirement Funds.)
Get College Credit Without the Tuition Bill
No, this isn't a diploma-by-mail scam - it's real. By taking Advanced Placement (AP) and College Level Examination Program (CLEP) tests, students can earn college credit for significantly less than what they'd pay in tuition and room and board at even the cheapest schools.
AP tests are given to high school students, while CLEP tests are usually offered to students after they arrive on campus. Both tests are administered by the College Board, the same company that gives the SAT exam. In 2008, CLEP tests cost $70 each and AP exams cost $84 each. The College Board's website provides details about the 37 AP exams and 34 CLEP exams given in various subject areas.
Consider that the minimum college credit given for passing an exam is three hours, while some subjects, such as foreign languages, allow a student to earn up to 15 credit hours (depending on the university requirements). That's the equivalent of an entire semester of college for only $70! At such a low rate, it's worth a try.
As for AP exams, students need not limit themselves to exams in classes offered at their high schools (if AP classes are available at all). Many local libraries and bookstores offer test preparation books for those willing to study on their own. While this method can't fully replace classroom learning, some motivated students may find prep books to be more effective as they are geared purely toward passing the exams.
So, for example, if you took Spanish in high school or speak it as your first language, why repeat it in college? Take the AP or CLEP test in Spanish and receive college credit for your knowledge.
Smart Kids Start at Community College
For the first two years of college, many prerequisites are similar across most schools and programs. Often, local community and city colleges offer the same classes at much lower tuition rates than bigger state schools or private schools. To save money, students should take community college classes either while still in high school or for the first year or two of college. Before enrolling, make sure the credits will transfer to your schools of choice. Continuing to live with parents while getting prerequisites out of the way will also save a significant amount of money over paying college room-and-board costs.
Start with an Associate Degree
If it's not realistic to spend four years in school right now, students can start with an associate or technical degree that can be completed in less time and for less money. Having some type of degree can allow them to start working at a reasonable wage sooner rather than later. It may also lead to a position where an employer will pay for the rest of the student's college tuition, sometimes including a master's degree. Two-year colleges are a great source of information about these options. (To learn why you shouldn't skip out on college, read Invest In Yourself With A College Education.)
Scholarships Begin in Middle School
It's a simple fact that students who get good grades are offered more scholarships when they graduate from high school than average students. However, to get good grades in high school you have to start with a foundation. It's never too early to start down the path to earning academic scholarships. While middle school grades do not directly affect college applications or scholarship opportunities, preparation for high school begins in middle school with foundation classes in math, science and language. A solid grasp of these subjects will definitely help one's grade nine GPA.
Another way to stay ahead of the learning curve in high school is to put extra study time into learning the basics of upcoming classes. An easy way to do this is to get a copy of the textbook from the school and go over it in the summer. If the school does not lend books over the summer, it may be possible to find an inexpensive used copy online. This advance preparation makes everything the student sees in class the following year a review, making mastery of the subject much easier.
Apply for In-School Scholarships
Many college departments have their own scholarships for enrolled students who distinguish themselves. ROTC, military and merit-based, university-wide scholarships are other options to consider. More scholarships are available to incoming freshman than to any other group, but there are many scholarships available to those already studying a particular subject or participating in certain activities. Talk to the financial-aid office of your chosen school as early as possible to learn about any available options. Remember, it never hurts to ask.
Only Borrow from Uncle Sam
If all else fails, use government-sponsored student loans to pay for a college education. The interest rates are usually reasonable (and for some loans, the interest is paid by the federal government while the student is in school). The government's Free Application for Federal Student Aid is a good place to start looking for government-sponsored financial aid, as is the financial aid office of your college or the college guidance counselor's office at your high school. (To learn how the U.S. government can help parents save money for a child's education, read Investing In Your Child's Education.)
The Bottom Line
Students should find a plan that works for them and get started on it as soon as possible. Those who enter college with their tuition fully paid don't get in that position by accident. By employing one or more of these options, college can become very affordable. (For further reading on this subject, see Preparing Parents' Pockets For College Tuition.)
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