Where to Find Money for College
College Tuition is Expensive, but College Funding is Within Reach
Aug 11, 2009
The severe stock market downturn of 2008 hit many 529 college savings plans and other investments hard, leaving parents wondering how they will make up the shortfall when their children start college in a few years. Even if the college fund hasn’t performed as well as expected, there are still several alternatives available to pay for college. As many parents and aspiring college students have discovered, the current economy calls for extraordinary amounts of flexibility, creativity, and perseverance.
College Costs Are Going Up
In addition to money set aside in college funds, such as 529 college savings plans and Coverdell education savings accounts (ESA), parents of college bound students often consider college scholarships and student loans as alternative sources of college funding. With the rising cost of a college education, these parents and students may well need these additional sources of cash for college.
According to The College Board, the average annual tuition and fees at a private college or university for the 2008-09 academic year was $25,143. Annual tuition and fees at public four-year schools was much less daunting, averaging just $6,585. The College Board also reports that over half of students attending four-year institutions paid tuition and fees of less than $9,000 per year.
High school guidance counselors, college financial aid offices and admissions offices are well versed at providing information about scholarships and student loans. The Internet is another rich source for identifying potential scholarships and lenders for student loans. Many high school juniors and seniors treat the search for scholarships as a part-time “job.” They dedicate several hours each week to identifying and applying for as many scholarships as they can.
For students seeking either government guaranteed or private student loans, the first step is to complete the Free Application for Federal Student Aid, or FAFSA. Even if family income levels may disqualify a student from receiving a needs-based loan, the FAFSA is an important source of verifiable financial information for private lenders as well.
Alternatives to Student Loans and College Scholarships
Not everyone qualifies for a scholarship or a student loan, or sometimes plain old procrastination gets in the way of good intentions, leaving the prospective college student strapped for cash. Others enter college and get a couple of years under their belts, only to find themselves caught short financially before completing their degrees. What then?
When a scholarship or loan is not a viable alternative, there are several other ways to pay for college. Additional funding methods may include decisions to:
- Delay the start of college. Some students work for a couple of years and save extra money before starting classes. This delay also buys time for 529 college savings plan and Coverdell ESA investments to recover a bit from market downturns.
- Work part-time while attending college classes full-time. There will be less time for studying and extracurricular activities, but the student can stay on schedule to complete a degree within four years.
- Work full-time and attend college part-time. Larger employers may offer a tuition reimbursement plan, further reducing the out-of-pocket costs to the student. The required trade-off is often taking longer than four years to complete an undergraduate degree.
- Live at home the first two years. Local community colleges are often much less expensive than four-year schools. Students can live at home while taking prerequisite and core curriculum classes (English, math, etc.) that are required of all students. They can transfer these credits to a four-year school and then live on campus full-time during the junior and senior years. The cost savings from this approach can be significant.
- Work a second job to generate extra cash for college. This suggestion is meant for parents of college students. While the additional work may not be all that attractive, it just might get the student moved out of the parents’ home and on his or her own much faster.
Some of these approaches will require flexibility and a bit of imagination. However, they all will achieve the result of obtaining a college education over time. When one considers the potential for significantly higher lifetime earnings, an investment in knowledge leading to a college degree is a worthwhile investment indeed.
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