Creative Ways To Lower College Costs
What if you didn’t start investing when your child was a toddler? It’s never too late to get started. Still, before you throw in the towel, consider these creative – and pragmatic – ways to lower college costs.
1. Research scholarships.
There are many scholarships that are not taken advantage of for one reason: parents and future students were unaware of them. The good news is, not all scholarships are tied into grades or athletic achievement. Check out:
• The admissions office of the college or university your child plans to attend
• Trade associations or unions (for instance, the AFL-CIO website)
• Corporate programs – particularly through larger businesses (check with human resources)
• Local chambers of commerce
• Religious organizations
2. Look into college grants.
Grants are ideal sources of college funding because the money received does not need to be repaid. Unlike scholarships, grants are primarily need-based and are usually awarded by federal and state governments.
Federal Pell Grants, for example, are the nation’s oldest source of tuition assistance for low or moderate income undergraduate students. The maximum Pell Grant award for the 2006-2007 academic year is $4,050.
There are also Federal Supplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants, and National SMART Grants for those in computer, life, or physical science programs.
3. Ask about tuition discounts and flexible repayment programs.
Some schools may offer a discount if you pay the entire semester’s bill up front, or if you allow the money to be directly debited from your bank account. Others enable you to spread payments over 12 months. And you may have special pull if your son or daughter goes to your alma mater: certain schools offer special discounts for alumni children.
4. Work part time during college years.
Your son or daughter may choose to take a part-time job to help defray college costs. One option is the federal work-study program: an employment program for some, but not all, financial aid recipients. Through FWSP, the federal government pays from 50% to 100% of the eligible student’s wages and programs vary greatly.
5. Consider a student loan.
Student loans represent more than 56% of financial aid; the reason is that they typically carry low interest rates. Another plus: the student can apply for the loan without parent involvement.
One of the most common student loans are Stafford loans – awarded based on financial need and guaranteed by the federal government. They can be obtained from a bank, credit union, or directly from the government and are both need-based (subsidized) and non-need-based (unsubsidized) loans.
The other is PLUS loans -- available to parents whose children are attending full time or half-time college as undergraduates. They are awarded based on credit history and cost of college attendance.
6. Have grandparents pay directly to the college.
Payments that grandparents make directly to the college aren’t considered gifts for purposes of federal gift tax rules. So if you’re a grandparent – or someone with parents who are financially able to contribute – you don’t have to worry about tax implications for yourself.
*Many loans impose financial need requirements.