5 ways to cut college costs

http://www.savingforcollege.com/articles/5-ways-to-cut-college-costs

College funds aren’t just for the wealthy. In fact, according to Sallie Mae’s 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 children’s 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 don’t 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?

2. Save money from part-time jobs.

This may not go over well at first, but it could be a great opportunity to explain the importance of saving money and the value of a college education to your child. Try working on a compromise, where maybe you take 50-75% of earnings from part-time and summer jobs and deposit them into a 529 account. Review the account regularly with your child and go over the benefits of compound interest and tax-free growth.

3. Enroll in AP College Credit Courses.

In addition to looking great on your transcripts, AP classes can also save you a substantial amount of money. According to the College Board, over 90 percent of colleges in the U.S. offer college credit, advanced placement or both for qualifying AP exam scores. If your child earns enough credits to place out of a college course, you could save thousands of dollars in tuition, books and fees.

4. Look for supplementary scholarships.

Start by getting your child involved in extra-curricular activities at an early age. In addition to academics and sports, things like volunteering will also stand out on a scholarship application. Get involved with your own community and keep an eye out for local scholarships.

Find more scholarship resources here.

5. Have your child attend a school nearby to save on room and board costs.

Again, this idea is not always received well by teenagers but they should understand that living at home for a year or two is much better than decades of paying back loans. Try using our 529 Savings vs. Loans Calculator to see how much loans can actually cost you in the long run. It’s always better to save money and earn interest rather than to borrow money and pay interest.

What types of changes have you made to your family budget to accommodate college savings? What expenditures could you do without?