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Special section Save more, spend less in '07

Here are 10 ways to pay for college without relying on loans.

10 alternative ways to cut college costs

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"If your adjusted gross income is above $87,000 (for married taxpayers filing jointly), you've got to start thinking about this stuff because once it reaches above $107,000, you're not eligible for the Hope credit," he says. The good news is that if there is more than one child attending college simultaneously, the family is eligible for multiple Hope credits.

The Lifetime Learning credit picks up right where the Hope credit leaves off. Families may deduct $2,000 maximum per year for all eligible undergraduate, graduate and professional degree expenses incurred in the household. Obviously, you can't claim both the Hope credit and the Lifetime Learning credit for the same student in the same year.

Also, the Lifetime Learning credit is calculated differently; only 20 percent of expenses count toward the credit, so you'd have to rack up $10,000 worth in one year to get the maximum $2,000 credit.

A few states, including New York and South Carolina, also offer state tax credits for tuition expenses. To find out if tax credits are offered in your state, contact your state department of higher education.

3. Get rewarded for your service
Don't let your good deeds go unrewarded. Americorps, the Peace Corps and Teach for America all offer educational service awards to students seeking cash and a way to make a difference in the world. The best part? Unlike other scholarships and grants, these service awards won't affect your federal financial aid eligibility whatsoever. Organizations including the National Health Service Corps, the Army National Guard and the National Institutes of Health all sponsor loan forgiveness programs that turn borrowed cash into free dough in exchange for post-graduate service.

4. Work for the college itself
Susan Hall is getting her undergraduate degree for free at one of the most expensive schools in the nation. So did all three of her children. Hall, an employee of the University of Richmond for the past 18 years, is taking advantage of her school's tuition remission program which allows her, her spouse, and any of her dependents to attend the university for free, provided that they have the grades and test scores to make it into the school. "This benefit has allowed me to give my children the greatest gift I possibly could: a debt-free college education," says Hall.

Most universities offer some form of tuition remission to their full-time employees and many extend the benefit to part-time employees as well. If you can't land a staff position at the school of your choice, don't forget that many companies offer tuition reimbursement packages. A study conducted by the Society for Human Resource Management estimates that 67 percent of all employers offer financial assistance to employees seeking an undergraduate degree.

5. Transfer from a community college
Think of it as fire sale for education: You buy two years at full price, get two for half-off or more. According to Finaid.org, the average community college tuition rate is 40 percent of the average tuition rate at four-year public colleges and 10 percent of the average tuition rate at four-year private institutions. By attending a community, junior or technical college for a year or two, you'll not only save money on tuition, you'll also save on room, board and transportation by sticking close to home. The key to getting the most bang for your buck in the community college system, says Susan Nesbitt-Perez, is to make sure your credits are transferable and keep your eye on your four-year college goal. "Research has shown that students who have a clear plan of achieving a four-year degree through a two-year program, do," she says.

 
-- Updated: Dec. 29, 2006
 
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 RESOURCES
Tax credits help with education costs
Education loans provide a tax break
The skinny on levelized tuition plans
 TOP PERSONAL FINANCE STORIES
Video: Tax breaks for students
Tax breaks for students
Combine 529 plan with other credits




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