How to finance a college education

How can you afford to finance a college education when prices, as opposed to income, seem to keep rising? While paying for college can be challenging, it can be a lot easier if you start early and know what you’re up against.

Key takeaways

  • Since college costs rise faster than income, creating a strategy for paying for college is critical.
  • Tuition is increasing at roughly twice the rate of inflation.
  • State public school tuition is much less expensive than private school fees. Two-year colleges are even cheaper and can be a good option for students to start their higher education.

For the 2020-2021 academic year, undergraduate tuition and fees, not including room and board, for a public four-year college in the state increased 1.1% from the prior year to an average of $ 10,560, according to the College Board. . At a private four-year nonprofit college they increased 2.1% to $ 37,650. Two-year college tuition averaged $ 3,770 for district students, a 1.9% gain.

The financial aspects are overwhelming, and finding a strategy to pay for college is a lot of work. Here are some tips to help you fit your higher education costs into your budget.

1. Choose your school Wisely

The data shows that in-state public schools, or a public school in a surrounding state that reciprocates for reduced tuition, costs much less than an out-of-state public or private school. If you are not satisfied with the quality of the public schools where you live, consider moving to a state with the school of your choice and establishing your residence.

To establish residency, you will have to meet strict requirements that vary by state and sometimes even by school, but this may be worth the savings. Most states require that you live in the state for at least one year to be eligible, but there may be other criteria to meet.

In California, for example, it is difficult for students without a parent living in California to establish residency before the age of 20. In addition to living in the state for 366 days immediately prior to applying for resident status, prospective students must provide documentation showing intent to make California their permanent residence status, such as a driver’s license, owning property, or stable employment and financial independence.

If you can wait and meet these criteria, then you can attend quality schools with in-state fees.

2. Scholarships and research grants

One money-saving strategy that doesn’t require postponing college is to apply to schools where you have unique characteristics that you are looking for. For example, you may have an ethnic background that a school is looking for, a compelling academic experience, or you play a sport or musical instrument that makes you stand out. Schools that see you as a valuable addition due to unusual ability, or that have legacies that support students with your characteristics, may provide a scholarship. Also look for grants nationwide, like the Pell Grant, to see if you qualify to apply.

Another tactic is to work in a field where you may get paid to go to college. Some companies offer tuition reimbursement or support for advanced training. The same goes for the military, and some of those benefits are also available to spouses and dependents of service members.

A third technique is to seek a revenue sharing agreement. These plans loan you money now, in exchange for a portion of your future income over a specified period of time. These plans differ based on your major and your university. Some plans have been accused of racism in their offers.

3. Think about the cost of living

Please note that housing and other living costs will vary by location. If you choose to live off campus, your living expenses are usually much lower. Geographically, an apartment in New York City will be much more expensive than an apartment in the Midwest, and the college where you earn your college degree can sometimes influence where you end up working and living after school.

So, consider where you want to live after graduation and the cost of living there. If possible, it should be a place where you would like to live, where the cost of living is affordable, and where your school is a recognizable name that allows you to get more out of your diploma. Various branches of the University of California may be considered excellent schools in the West, but they may not enjoy the same high regard in New York.

4. Don’t get any job to pay for school

Make your summer and after-school jobs count by looking for a high-paying job. To find a high-paying job, especially in the summer when you can be free during business hours, look for office jobs through temp agencies. Temp agencies do most of the job search work for you, and the office jobs they offer tend to pay above minimum wage, provide work experience closer to the situations you will encounter after college, and can provide you with connections that will help you land a meaningful internship or your first paid position. Plus, despite what the name implies, you can find both short-term and long-term jobs through temp agencies.

If you can’t get a high-paying job, get a job that keeps your living expenses low. If you work in a bakery, for example, any unsold product at the end of the day may be fair game for employees, as the business cannot sell yesterday’s bread. Another possibility is to find a job on campus that offers benefits. If you can get a job at your school’s residential life office, you may be able to get a discount on housing during the school year or summer.

If you’re still in high school, get to work now and save all your paychecks for college. Presumably you still live at home, which is inexpensive, and you probably don’t have high living expenses that affect your earnings like you will later on. Check to see if your high school has a program that will allow you to leave school at noon every day to go to work during your senior year. This will increase your job options, including the possibility of a higher paying job, and allow you to work longer hours.

5. Be flexible with your schedule

Some college programs, like engineering, are more intense than others, making it quite difficult to work at school. For these programs, consider attending school part-time so that you can continue to work part-time. Even if your program isn’t overly demanding, attending school part-time can help spread your tuition costs and free up more time to work. However, part-time students may not have the option of living on campus, which can make it difficult to participate in the social aspects of college. Also, if you have student loans that require you to be in college at least part-time, be careful to meet these requirements so you don’t trigger prepayment on your loans.

Another option is to take a year or two after high school to work full time so that you can save enough money to make school affordable. If you don’t want to put off college, you can take your classes in the evenings and on weekends and work full time during the week. This strategy will mean that your degree will take more than four years to complete, but it may be easier to budget for, and you will gain valuable work experience as you go.

6. Qualify as an independent student

With the high cost of education, some parents may not be able to make meaningful contributions to their children’s higher education. If you are older and meet the requirements, you may qualify as an independent student as defined by Higher Education Law, which has a different definition of “dependent” than the Internal Revenue Service (IRS). Being an “independent student” under the Higher Education Act means that you may be eligible for financial aid because the financial aid formulas applied to this group do not take parental contributions into account. The requirements to qualify as an independent student are as follows:

  • 24 years or more before December 31 of the award year
  • Orphan or under judicial guardianship
  • Veteran of the Armed Forces or on active duty
  • Graduate student or professional
  • Married
  • Dependents other than spouse
  • Student for whom a financial aid administrator makes a documented determination of independence due to other unusual circumstances

How fast is tuition growing versus wages?

Salaries have been growing in the 3% range for several years, while tuition increases about 8% each year.

How is someone supposed to be able to afford a college education?

Create and implement a strategy, with the most important rule to start saving early. Other rules include catching up on savings programs like 529s and researching loans and grants.

Does the location of the school make a difference?

Tuition in state is considerably less expensive than out-of-state and much less than in private schools. Attending a two-year community college in your district is another way to save costs in the first two years of higher education.

The bottom line

Although you may need to make some sacrifices to continue your education, such as starting school later or staying in the state, you can still have the experience you want and earn a degree that leads to a financially successful and stable future.

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About the author

Mark Holland

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