College on the cheap: How to keep education costs down
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As children get close to graduating from high school, parents and students find themselves asking how much does college cost?
One thing is certain, as college costs continue to rise, parents and students struggle to find ways to make it more affordable.
Attending a 4-year university while living on campus can cost more than $80,000. The average 2016 college graduate has $37,172 in student debt — a 6 percent increase from 2015. While most people are aware of grants and scholarships, there are other options to help lower the cost of college.
|National average yearly cost of college in 2016|
|Type of institution||Cost of tuition and books||Cost of on-campus room and board|
|2-year in-state community college books and tuition||$4,839||Not available|
|4-year in-state public university||$9,966||$10,096|
|4-year private nonprofit university||$33,656||$11,183|
|4-year private for-profit university||$16,854||$9,566|
Source: National Center for Education Statistics
Ease college costs with tax-free savings
Saving for college is easier when it’s tax free. States offer 529 college savings plans, which are exempt from federal taxes. There are two types of 529 plans: prepaid tuition plans and investment plans.
With a prepaid tuition plan, it allows you to secure today’s college tuition rates for attending college later. As you contribute money to the plan, you purchase units, which represent tuition at today’s prices.
Prepaid tuition plans have some drawbacks. States run these plans, so you must spend the tuition in the state where you signed up for the plan. You also can’t pay for room, board, books and fees through the prepaid tuition plan.
With a college investment savings plan, it offers tax-free investment choices that include mutual funds, bonds and mixed assets. Age-based plans automatically adjust the asset mix as your child gets closer to college age.
When selecting a 529 investment plan, pay attention to fees. Like other mutual funds, fees vary greatly among plans. Actively managed plans are likely to carry higher fees, while those connected to index funds offer lower fees.
Take college classes outside your state university
Some states offer programs that allow high school students to take college classes and earn dual credits. In addition, some states offer tech prep programs. Students can transfer these credits to a technical college after they graduate from high school.
Another way to cut costs is by going to community college for the first two years of school for significantly less than spending that time at a 4-year university. Even so, there are pros and cons to starting out at a community college.
Among their advantages, community colleges offer open enrollment policies, ensuring students who aren’t accepted at 4-year universities can attend school. Class sizes are much smaller than at public universities. Instructors teach the classes, as opposed to teaching assistants who often fill in for professors at universities.
As to the disadvantages, transferring credits from a community college to a 4-year university is sometimes tricky because of the 4-year university’s tougher enrollment requirements.
To resolve the problem, some community colleges and 4-year universities have articulation agreements, which spell out which courses students need to complete to transfer to the university.
Another disadvantage comes up because community college classes are sometimes taught by part-time faculty. This limits a faculty member’s availability if students need assistance.
Attend a university close to home
Another option to reduce costs is for students to live at home and attend a university or its branch campus close by. With room and board averaging more than tuition and books, this can significantly reduce costs.
Still, there is a downside. Because students aren’t on campus in the evenings and on the weekends, they have trouble connecting with other students.
It’s also important to factor in the cost of gas, insurance and parking when deciding whether commuting will save money.
Going to college abroad
When looking for options to make college affordable, you need to get creative. There are schools in Europe that offer free tuition. Some teach entire programs in English. Students are usually responsible for their housing costs.
Not only will your student have an extremely inexpensive education, but you’ll have an excuse to visit Europe.
Attending college can be pricey, but there are ways to hold costs down. You can pick up college credits while still in high school or attend community college.
You also can save money using a college savings plan for when you attend school, and you can attend a university that’s close to home to avoid room and board costs.
Each of these alternatives has its pros and cons, so carefully research them before deciding which is right for you.