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COLLEGE SAVINGS 101

5 ways to cut college costs

Posted: 2014-04-30

by Kathryn Flynn

5 ways to cut college costs

College funds arenít just for the wealthy. In fact, according to Sallie Maeís How America Saves for College 2014, families with a household income less than $100,000 are more likely to feel that college is an investment in their childrenís future than those who earn more. These families are also more willing to make the financial sacrifices necessary in order to pay for college.

However, because of reasons like higher costs of living, unexpected expenses and reduced earnings, some families are saving less than in previous years. Many assume that their children will qualify for financial aid to pay for the costs. While many low-income families will qualify for grants to cover costs of tuition and fees, they are still left to pay for things like room and board on their own. According to the National Postsecondary Student Aid Study, even families in the bottom 25% income levels end up with a hefty bill north of $10,000.

Estimate your financial aid eligibility.

The last thing you want is to have your child graduate burdened with student loans. Here are five ways anyone can put away extra money for college, regardless of income:

1. Make room in your budget and commit to a monthly goal.

Take a good look at your monthly expenses. Is there anywhere you might be able to cut back? Common culprits are usually dining out, gym memberships and cable and wireless bills. You donít have to go cold turkey, even a small sacrifice here and there can add up. Try to find an extra $25, $50 or even $100 a month to get started.

Once you are comfortable with an amount, treat deposits as a regular monthly bill. Consider setting up a 529 college savings plan with automatic contributions. Not only will this help you commit to your goal, but you will also be eligible for federal tax savings that will help boost your account value over time.

How much do you need to save?

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