When you hear student loan debt has reached $1.7 trillion collectively nationwide, it’s easy to forget about the actual people who deal with this burden every day of their lives. Plenty of borrowers have monthly payments they can easily afford, yet others have so much debt they worry they’ll never pay it off. Further, the Brookings Institution says around 6% of student borrowers have more than six figures in student loan debt.
If you’re worried about getting stuck in this unfortunate position, or you have a dependent or family member who will soon head off to school, you should know that you don’t have to live this way. By planning ahead, you can save money on college tuition and fees, or perhaps even living expenses while working toward a degree.
Still, the key is making the right decisions before you borrow a ton of money for college. Fortunately, saving money on higher education isn’t as hard as people make it out to be.
Contribute To A 529 College Savings Plan
Having the funds for college tuition and fees becomes a lot easier when you start saving early, and that’s especially true in states where a tax incentive is offered on 529 plans. Joe Orsolini of College Aid Planners says you should check early on whether your state offers any tax credits, which you may be able to use as quickly as 5 business days after making a contribution.
“Passing your tuition payments through the 529 plan before making payments effectively gives you an additional tuition discount,” he says.
Plus, the tax savings can be substantial. As an example, the state of Indiana offers a 20% tax credit on the first $5,000 you contribute to a 529 plan each year. This is $1,000 back directly from the state for each year you max this out.
Go To Community College First
Many students would love to dive right into higher education at a four-year college or university, yet you don’t have to complete your core curriculum at a more expensive school.
Melanie Gillespie, director of financial aid at Tri-County Technical College in South Carolina, says students should consider going to community college for two years if their goal is minimizing costs.
“Depending on what state you live in, your family income, and the number of people in your family, you may even be able to attend for free,” she says. “This will reduce your loans to only your final two years for a bachelor’s degree, and even then, you may qualify for aid to help you borrow less.”
Not only that, but you may be able to continue living at home while you attend community college in-person or online, which could yield even more savings. Just make sure your credits will transfer to the four-year school you want to attend later on.
Plan Your Degree First
Too many students head off to college without having an idea of the degree they want to earn, or the career they hope to work in later on. Unfortunately, this often means they spend time earning credits they don’t need or languishing in college without any sort of path.
Jen Price, Ph.D., LMSW, who is the best-selling author of Generation E.D.G.E.: The Student’s 4-Step Guide to College & Career Success, says families should explore careers and select a best fit major prior to starting college.
When students explore careers through coursework and electives in secondary school, volunteering, extracurricular activities, internships, and part-time employment, they gain valuable insight into what interests them and the ways in which they excel, she says.
For families that are able, Price also recommends career testing.
“Assessments, like the one I use, look at the intersection between interest, abilities, and aspects of their personality,” notes Price. “Examining multiple dimensions as opposed to one provides even greater insight. If a student likes what they do, does it well, and it suits their personality, they are more likely to succeed in their career over time…and enjoy their work.”
Price Shop For College
Price also says you shouldn’t just select a college you want to attend and apply. You should also make sure the schools you’re considering are a good financial fit.
“Sometimes students select a college based on where their family has a tradition of enrolling or where their best friend chooses to enroll,” she says. However, a better strategy is to select a school that will meet their academic, professional, social, cultural, geographic, and financial needs.
In addition to comparing college costs for tuition and fees, students should look for schools that award aid in a way that is most advantageous to them. Price offers the example of a student with a high GPA, class rank, and test scores. In this case, they might do better financially if they focus their search on schools that meet their core needs and wants “plus awards hefty merit-based awards for their academic prowess.”
By and large, Price also says solid A and B students should probably focus on public, state institutions or consider starting off in community college.
Any of these scenarios can help you pay less and borrow less while earning the same degree.
Only Pay For The Courses You Need
Higher education consultant Matt Newlin, Ed.D. says you can also minimize your tuition costs by planning your course schedule one to two semesters ahead of time.
“Don’t take unnecessary courses and avoid summer courses unless you absolutely need the credits,” he says.
Also, be strategic with the courses you take, and make sure every dollar you spend on credits gets you closer to earning the degree you actually want.
In the meantime, Newlin says to review your tuition and fee bill every semester and make sure you have been charged correctly. Occasionally, schools will make a mistake and overcharge a student if they add and drop courses frequently, he says.
“Make sure your bill reflects your course load each semester.”
Find Everyday Ways To Save
Beyond trying to reduce the cost of college tuition and fees, students should look for ways to lower their living costs. Jan Jahosky of College Finance says one way to do that is to live off-campus with a lot of roommates.
If you don’t mind a bit of close, communal living, you can “dramatically lower your room and board expenses each year by sharing with more people,” she says. “This savings comes not just from sharing rent, but also from sharing meals and generally living frugally.”
Sam Hawrylack, a personal finance expert and co-founder of How To FIRE, also points out that where you decide to attend college can be a major factor.
If you’re thinking about attending college in a city like New York, Los Angeles, Boston, Miami, or Washington, D.C., it’s going to cost a lot more than attending a college in Little Rock, Arkansas, Mobile, Alabama, or Tucson, Arizona, she says.
“You can save yourself hundreds, if not thousands, of dollars simply by choosing to attend a school in a place with a low cost of living. This is especially true if you can get any college scholarships.”
- Education notebook – Northwest Arkansas Democrat-Gazette
- California – Ravenwoode: Offering appreciation to health, education officials – Lake County News
- Education News – Texarkana Gazette
- US Department of Education Releases “COVID-19 Handbook, Volume 2: Roadmap to Reopening Safely and Meeting All Students’ Needs” | US – U.S. Department of Education
- The more you learn, the more you earn: education and poverty alleviation in Thailand – UN News
- Dep’t of Education issues emergency order waiving test requirement for seniors, series of adjustments – Florida Politics
- D.C. mayor proposes boost in education spending as she calls on schools to fully reopen in the fall – The Washington Post
- Faculty invited to apply to General Education Scholar Program | Penn State University – Penn State News
- US Department of Education Announces More Biden-Harris Appointees | US – U.S. Department of Education