The cost of higher education has increased rapidly over the past decade, leaving many students and their families struggling to find ways to pay for college. As a result families often give in to student loans which only add stress and burdens to the new graduate just when they are starting out. Fortunately, there are numerous creative ways to pay for college that can help students begin their lives without the burden that debt creates. In this article will explore some creative ways to pay for college that help students avoid debt and the difficulties that come with it.
Creative Ways to Pay for College
1. Paying for College with Scholarships
Apply for scholarships. Google search this like it is your new job! You’ll find a lot of options for your current interests and background. Many scholarships have specific requirements but if you put in the time and effort you can get scholarships to cover much of your tuition and living expenses while at the university. Look, you can spend 40 hours applying for scholarships that might yield a $10,000 scholarship or 40 hours a week getting paid $15 an hour to deliver pizzas to make money for college. The math is simple here. Applying for scholarships is worth the time and effort.
2. Reduce Costs By Going First Two Years at Your Local Community College.
Huge savings here. If you want to go to college without student loans start out at your local community college. You can attend a full year while living at home for in many cases less than $5,000. It is easy to cash flow while working. In many cases, your FAFSA award may cover it all. That is a free 2 years of college. We love free! At the end of 2 years, you’ll be a junior in college and still debt free! Then with all that money you save at community college, you can head off to the in-state university for your major courses.
3. Cut Tuition in Half by Staying In-State for College.
I know the boujee college the next state over is the first to have a lazy river running thru campus, but why are we going to college, to begin with? If you can pay cash for all that boujee, great. But if you are going to college on a budget choose a university that is in your state. In many cases, tuition and fees will be half of the out-of-state with the cool mascot.
4. Work! Get a job While You Are In College.
Some part-time work will help you pay tuition as you go instead of borrowing. If you will stay in state for school, start out at your local community college to save money, apply for scholarships and take advantage of the FAFSA, you should have no trouble filling in the remaining gaps with some part-time work while you study.
5. FREE Tuition Through Parental Employment at a Participating College or University
It isn’t as far-fetched as it sounds. If you live near a college or university and at least one parent has a flexible career, consider seeking full-time employment at the institution. Most colleges and universities offer free tuition to dependents of full-time employees. And you don’t have to be an administrator or professor to get the deal. One janitor was able to put 5 children thru Boston College tuition-free thanks to this strategy. If either parent has flexibility in their profession, you can literally turn an average job at a college or university into a high-compensation endeavor simply by planning ahead. Check with your local college or university for their rules and policies before making any career changes.
Tax-Advantaged Ways to Pay for College
6. A 529 College Savings Plan
A 529 plan can be used to save for certain educational expenses for any student in your family, including yourself. These educational expenses include college or other post-secondary education (qualified higher education expenses), as well as tuition for elementary or secondary public, private, or religious schools. The person who opens the 529 plan account is called the account holder or the saver. The person the account is opened for is called the beneficiary or the student. The account holder and the beneficiary can be the same person.
You can invest in almost any state 529 education savings plan or even in multiple plans regardless of where you live. You should compare plans to determine which one(s) is right for your family, but a good place to start your research is your state’s plan. Many states offer tax incentives or other benefits for their residents. These benefits vary depending on the state and the 529 plan. In addition, state and federal laws that affect 529 plans could change.
You should consider what sort of incentives your state plan may offer, but you also should understand the fees charged, including those of the underlying investments. Sometimes, the tax incentives or other benefits that are offered to state residents do not outweigh the fees charged by the in-state plan. You should understand all of the limitations or restrictions of any plans you are considering. There may be reasons other than fees and residency benefits that make one plan more desirable for your family, such as investment choices or the ability to change the account holder or beneficiary.
7. Coverdell education savings accounts
A Coverdell education savings account (Coverdell ESA) is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses but also to qualified elementary and secondary education expenses. There are certain requirements to set up a Coverdell ESA:
- When the account is established, the designated beneficiary must be under the age of 18 or be a special needs beneficiary.
- The account must be designated as a Coverdell ESA when it is created.
- The document creating and governing the account must be in writing, and it must meet certain requirements.
8. Uniform Gifts to Minors Act (UGMA) Accounts
Uniform Gifts to Minors Act (UGMA) allows individuals to give or transfer assets to underage beneficiaries. The act, which was developed in 1956 and revised in 1966, is commonly used to transfer assets from parents to their children. The amount is free of gift tax, up to a certain amount. The assets are usually placed in UGMA accounts on behalf of minors, eliminating the need for an attorney to establish a special trust fund. UGMA funds are also subject to special tax treatment.
9. Uniform Transfers to Minors Act (UTMA) Accounts
The term Uniform Transfers to Minors Act (UTMA) refers to a law that allows a minor to receive gifts without the aid of a guardian or trustee. Gifts can include money, patents, royalties, real estate, and fine art.
A UTMA account allows the gift giver or an appointed custodian to manage the minor’s account until the latter is of age. It also shields the minor from tax consequences on gifts, up to a specified value.
10. Prepaid Tuition Plans (not recommended)
In addition to traditional 529 education savings plans that allow savers to open investment accounts to save for an education, some states and a group of private colleges also offer 529 prepaid tuition plans. Prepaid tuition plans allow savers to purchase units or credits at participating colleges and universities for future tuition and mandatory fees at current prices. Both types of 529 plans offer tax benefits and have a similar impact on financial aid for post-secondary education.
Prepaid tuition plans usually have residency requirements, restrict where you can redeem the credits (usually public, in-state colleges and universities) and what the credits can cover (often tuition and mandatory fees only). Moreover, these plans do not allow you to prepay for tuition at elementary and secondary schools. If the student doesn’t attend a participating college or university, the prepaid tuition plan may pay less than if the beneficiary attended a participating college or university. It may only pay a small return on the original investment. When considering a prepaid tuition plan, you should understand the restrictions and limitations of the plan, including the extent to which your money is guaranteed and what happens to your money if the beneficiary doesn’t attend a participating college or university.
Education savings plans are typically more flexible. They usually don’t have residency requirements, offer different kinds of investment options, and can generally be used at any college or university for tuition, mandatory fees and room and board, as well as for tuition at elementary and secondary schools. But, as with any investment, education savings plans also expose your saved money to investment risk, including loss of principal.
Other Creative Ways to Pay for College
11. Consider a Trade School or Techincal Degree Instead of a 4-Year Degree
You can give your prospective college student a great gift by working with them to identify their work style. Many students have gone to college, achieved 4-year degrees, and ultimately discovered that their preferred work style is hands-on repair work or another interest that simply requires special training instead of a degree. This has never been more on display than with those who have aptitude and enjoyment of programming languages. The demand for programmers is so high that skilled persons can secure 6 figure jobs without a 4-year degree. If you or your student will take time to identify their future goals they can avoid the time and expense of a 4-year degree.
12. Join the Military
Not only does joining the military allow you to serve your country, but it’s also a great way to pay for college. If you serve before attending college, you’ll receive GI Bill benefits that pay all of your tuition and fees at a public university (or up to $17,500 at a private university). You can also obtain sizable scholarships by joining your college’s ROTC program with the intent to serve after graduation.
13. Employer Reimbursement Programs
UPS is well known for offering attractive tuition assistance programs. Wal-Mart is offering generous options as well. These two US corporations are not the only ones either. If your goal is to find creative ways to pay for college, you should definitely seek out and consider employer reimbursement programs. They are well worth the time.
Final Thoughts on Creative Ways to Pay for College
Many students head to school with dreams of freedom, football games, and a fun new social scene. While these things are not bad, they are counter-productive if they get in the way of using creative ways to pay for college. Deciding not to work with an employer who offers generous tuition reimbursement because it might interfere with your social life is obviously problematic. If you can get your student to take a mature approach to investing in their future there are numerous creative ways to pay for college without taking on debt.
