college

10 timely tips to pay for college in 2014

College is still expensive and financial aid is still tricky to land, but help is available. From crowdsourced student loans to tuition freezes, here are 10 ways to pay for college, reduce college costs, boost your savings and score more financial aid in 2014.

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1. Look out for tuition deals.

As the White House pushes higher education institutions to control their expenses, more colleges are seeking ways to help families understand and minimize their costs, says Daniel Reed, vice president of federal issues for the California Association of Student Financial Aid Administrators and senior financial aid officer for Point Loma Nazarene University in San Diego.

"I think the trend is going that way towards freezing tuition or at least reducing the amount of tuition that increases by year," he says.

Several public school systems, including the University of California and Iowa State systems, have already proposed tuition freezes for the upcoming year. Antioch College in Yellow Springs, Ohio, is even going so far as to offer a full four-year scholarship to all admitted 2014 students.

2. Prepare for changes in federal aid.

One financial aid change in 2014 will impact dependent children of unmarried and same-sex parents. Under 2013 law, the Free Application for Federal Student Aid -- the document that the federal government uses to assess financial need -- has based a family's financial aid package primarily on the income and assets held by the student and, if unmarried, the parent or legal guardian who claims them as a dependent. This means that in cases of unmarried parents and same-sex marriages that aren't federally recognized, financial information on only one parent has been assessed.

Starting with the 2014-2015 school year, the FAFSA will collect information on both legal parents, regardless of marital status or gender. Though the Department of Education states that "most students will be unaffected," the change could dramatically impact federal aid packages for some students to pay for college, says Barmak Nassirian, director of federal policy analysis for the American Association of State Colleges and Universities, a research and advocacy nonprofit for approximately 420 public four-year institutions.

"When you factor in more aid resources, resources that have historically been excluded, you actually drive down the amount of aid eligibility that the applicant is entitled to," he says.

3. Keep the grades up.

Federal aid may be harder to get for some students, but aid that isn't based on financial need is increasing. The National Center for Education Statistics reports that the proportion of undergraduates receiving merit-based aid more than doubled from 1996 to 2008 and the average merit award rose from $4,000 to $4,700. Some research and advocacy organizations like the Education Trust and the New America Foundation criticize the shift in merit awards as primarily benefiting wealthier students who have greater access to resources that can make them more academically competitive.

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High school might seem like four years of fun, but if you want to cut down some of your college costs, those straight A�s might be more important than your prom date or dress!

Getting good grades and taking higher-level classes are both easy ways to reduce your cost for college. Colleges offer financial aid based solely on grades, not income levels. Look for scholarships early on and meet with your academic adviser to find classes that are more academically challenging.

Need another way to minimize college cost? Knock out a few classes early. Advanced Placement and Dual Enrollment programs are a great way to complete courses that will count toward a college credit while you�re still in high school. Not only will these kinds of programs lower your college cost, they could also make a difference in the college you choose.

And, choose your college carefully. If financial aid is something you need, apply to schools that offer a lot of it. Parents, start creating a college-saving strategy with your teen.

"There used to be twice as much need-based aid as non-need-based aid at public colleges and universities, and now they're about even," says Michael Dannenberg, director of higher education and education finance policy for The Education Trust.

For students of all income levels, increased funds for talented students to pay for college means an increase in the value of top-notch grades and academically challenging courses. To increase merit aid eligibility, students should keep their grades up, start the search for aid awards early and work with their academic advisers to build a rigorous high school curriculum.

4. Take income-driven assistance.

With college costs increasing, it's no shock that many borrowers can't pay their student loans. The Department of Education reports that almost 15 percent of all federal loan borrowers default on their student loans within three years of beginning repayment. That's why the government is increasing its outreach to inform qualified borrowers of their income-driven repayment options.

"If you're going to miss payments and this program that exists is sitting there for you that could literally make the difference between you defaulting or staying current, I think that's a huge benefit for a family," says William Wozniak, director of marketing for ISM College Planning in Indiana.

Under the income-driven repayment plans, eligible federal loan borrowers can have their monthly student loan payments capped at 10 percent or 15 percent of their discretionary income and forgiven after 20 or 25 years of consecutive payments, though they'll have to pay taxes on the amount forgiven. Borrowers who work in public service professions will have their debt dismissed after 10 years of repayment without tax consequences. Borrowers can estimate their monthly income-based payments at StudentAid.ed.gov.

5. Read the 529 plan fine print.

Changes also are afoot for some 529 plans. Regulated by individual states, the popular college savings vehicles all provide financial aid advantages and federal tax-free growth on funds, but each has its own fee structure and state tax incentives.

In 2014, some plans will undergo significant changes. For example, North Carolina will end the up to $5,000 state tax deduction it historically has offered to residents who hold in-state plans. Pennsylvania is lowering fees in its 529 plans while Wisconsin is considering a move to increase its state tax incentives.

If you're considering opening a 529 plan, read the terms carefully and do some comparison shopping, says The Education Trust's Dannenberg.

"(A family's) own state's 529 may not be the best choice for a family because of the different fees associated with different plans," he says.

6. Think outside of traditional lenders.

Federal student loans almost always provide better interest rates and borrower protections, but if you need a private loan supplement, new crowdsourced funding sites could potentially provide lending alternatives or better loan terms than traditional financial institutions. While sites like PigIt.com provide a platform that allow "dreamer" college students to raise educational funds by offering incentives like work or gifts in return, Upstart.com offers crowdfunded loans in exchange for a percentage of the borrower's income over the next five to 10 years. The catch with crowdfunded finance is that not everyone gets their campaign fully funded.

"When people put out there that they want to be a doctor or they want to do this or they want to do that and they're at a strong school and they're going to do wonderful things and they have high GPAs, I think those students probably fare better in who's going to get money," says ISM College Planning's Wozniak.

Before starting a campaign, students should make sure to read the site's fine print and compare online financing options to loans offered through the federal government, banks and credit unions.

7. Choose your college carefully.

"A big part of what your price will be is the college you choose, and right now college selection choices are too often underinformed if not irrational," Dannenberg says. "People would be well advised to not simply associate price tag with quality ... That's not true when it comes to higher education."

One of the easiest ways to score financial aid is to apply to schools that offer lots of it to students like you. The National Center for Education Statistics' College Navigator tool can help you find institutions that offer substantial aid packages to families in your income bracket while The Education Trust's College Results Online database can identify colleges that are similar to your dream school in net price and academic competitiveness.

8. Think ahead.

With higher tuition prices and more student debt on the line, Point Loma Nazarene's Reed says that it's even more important for families to financially plan ahead. That means not only creating a college savings strategy early and taking advantage of compound interest, but also having a serious chat about how much debt the family can handle.

"A lot of people tend to think 'someday I'll pay this back,' but really should be thinking about 'should I take out this much money,' and seeing in my chosen career path what my starting salary is," Reed says. "I know that's a hard conversation to have with an 18-year-old traditionally coming into a college experience, but the more we can encourage students and families to think ahead, the better off they'll be on the repayment side."

According to the National Association of Colleges and Employers, the average 2013 college graduate had a starting salary of $45,327, with humanities and social science majors ranking lowest with average salaries of $37,791 per year, while engineers bring home more than $62,000 annually. Students can find starting salary information for their majors at NACEweb.org

9: Research post-college education.

Having a clear idea of your professional prospects after graduation is even more important for students pursuing credentials beyond the undergraduate level and taking on higher levels of debt. An analysis of Department of Education data by the financial aid site FinAid.org shows that among students holding $100,000 in student loans or more, 9 of 10 were graduate or professional students.

But problems arise when job prospects and post-graduate salaries can't justify the debt. A study by the American Bar Association reveals that just over half of 2012 law graduates found full-time, long-term jobs in the legal profession. The National Science Foundation also has documented a significant drop in academic positions for doctorate degree holders. Architecture grads, who oftentimes spend five years or more obtaining their undergraduate degree, face post-college unemployment rates on par with those who enter the workforce with less than a high school diploma, reports Georgetown University's Center on Education and the Workforce.

An advanced degree still pays off for most working professionals, but doing research on the future job market before enrolling and having a concrete idea of your career prospects can help ensure your ability to pay back hefty loans.

10. Investigate cheaper alternatives.

If you can knock out some college credits in advance, do it, Dannenberg says.

"It pays to pursue dual enrollment, advanced placement courses and so forth in order to limit the number of credits one might need to get a degree at the post-secondary level," he says. "Right now, the average bachelor's degree student completes (his or her) degree in five years, not four."

In addition to dual enrollment and advanced placement classes, high school students also can take International Baccalaureate, or IB, and CLEP exams to score college credits at a heavily discounted rate. Another way to reduce the tuition blow is by researching transfer and articulation agreements that allow students to attend a cheaper two-year school for the first few years, then transfer to a pricier four-year institution.

"There are plenty of students who discover these arrangements and can not only minimize costs, but actually upgrade where they would end up graduating from," says Nassirian from the American Association of State Colleges and Universities.

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