Simple Strategies to Help Pay for College

It’s often said that a college degree is one of the best investments you can ever make. But for many prospective students, the rising costs of higher education are a daunting prospect. According to the College Board, the average annual cost of tuition and fees at a four-year private college exceeds $25,000, and prices are only expected to increase in the years to come.

Luckily, there are strategies you can follow to help minimize the burden. The first steps are calculating the true cost of college, familiarizing yourself with savings plans, and learning about various forms of financial aid, such as grants, loans, and work-study programs. From there, you can begin to make informed decisions about your future and embark on your educational journey without breaking the bank. Follow these seven simple tips to get started.

1. Crunch the numbers. Even if you’ve done the math in your head, it’s important to calculate all the costs on paper before you commit to a degree program. Chances are, you’ll need to adjust your original estimates. In addition to tuition (and room and board, if it applies), most schools tack on hidden charges, such as enrollment, activity, library, and technology fees. Some students may be required to pay for a campus health insurance plan, while others may need to invest in a car for transportation. In all cases, you’ll have to buy books, which can be expensive if you’re taking a full load of classes. For a more complete picture of what a college education will cost you, check out our College Savings Calculator.
2. Start saving now. No matter what the price, you’ll probably need to start saving for college as soon as possible. Keep in mind that there are several plans that may help, depending on your goals and timeframe. If you still have a number of years until you plan to start college, or if you’re saving for your child’s education, a Roth IRA may be a good investment option, since it enables you to withdraw funds penalty-free for your educational expenses. If you’re planning for young children, a Coverdell IRA, 529 College Savings Plan, or State Education Savings Plans may also be a possibility. Remember, however, that tax incentives come with certain requirements and restrictions, so be sure to discuss these plans with a financial professional.
3. Find out about financial aid. For most first-timers, financial aid seems like a dizzying maze of confusing terms and endless paperwork. But the term “financial aid” simply refers to various types of funding designed to help students pay for their educational expenses. These include both need-based and merit-based programs and may come in the form of grants, loans, scholarships, or work-study programs. Keep in mind that while most financial aid programs are somewhat flexible, the money distributed through them must be used to pay for educational expenses only. For more information, check out our Student Financial Aid 101 article.
4. Learn about loans and grants. Need-based programs provided by the U.S. government fall under the umbrella of Federal Student Financial Aid. These include Stafford, Perkins, and PLUS loans, as well as FSEOG, SMART, and ACG grants. To qualify for federal financial aid, you must fill out the Free Application for Federal Student Aid (FAFSA), which will be used to estimate your ability to contribute. In addition, the Federal Work Study (FWS) program can be a terrific option, enabling students to earn funds for college through part-time employment. All FWS jobs are required to pay at least minimum wage, and some may pay more, depending on job grade and experience required.
5. Seek out scholarships. In some cases, students who aren’t eligible for need-based financial aid may qualify for merit-based scholarships based on academic excellence, community leadership, or athletic or artistic achievement. Although scholarships like these can be excellent opportunities, just keep in mind that scholarship scams are on the rise, especially on the Internet. In fact, every year, thousands of prospective students are defrauded by such scams. If you spot a scholarship offer that requires your credit card upfront or comes with a “money-back guarantee,” consider it a red flag. For more information on how to avoid scholarship fraud, visit the FTC’s comprehensive guide.
6. Save on textbooks. For most college students, textbooks are a necessity, but they can also be a major expense. Fortunately, you can save some costs by shopping around. Instead of heading directly to the student bookstore, check out co-ops or other student organizations for book sales. You may also be able to find many of your college textbooks on the Internet at a significant discount; some online sellers even allow you to sell back your books to recoup some of your investment. If you have no other option than the student bookstore, be sure to buy used books, which are substantially cheaper than their brand-new counterparts.
7. Stick to a budget. Whether you’re fresh out of high school or returning to the classroom after spending years in the workforce, you may find that one of the biggest challenges of college is not overspending while you’re enrolled. For that reason, it’s critical to create, and adhere to, a detailed written budget. To crunch your numbers in only a few clicks, check out our handy Budget Calculator. If you’re a parent who’s planning to send their child to college in the near future, be sure to visit our Money Management for Students center, which offers helpful tips and expert advice on issues such as how to manage student credit cards.

Keep in mind that even though college costs are on the rise, numerous studies confirm that higher education continues to be a worthwhile investment that generally pays off in the long run. So the sooner you begin planning for your higher education, the better. To learn more about saving for college, check out our comprehensive guide, and be sure to read our Student Financial Aid 101 article for more information.