With college tuition soaring, families and students nationwide face the daunting challenge of funding higher education. Traditional savings plans, scholarships and financial aid often fall short of covering the total cost of college, leading many to seek alternative solutions.
Enter the innovative strategy of starting a rental property business — a venture that promises financial returns and teaches valuable lessons in entrepreneurship and management.
This approach addresses the immediate financial needs for education and sets the foundation for long-term financial independence. By investing in real estate, students and their families can create a stream of income that helps bridge the gap between scholarships and savings, making the dream of a college education a more achievable reality.
So, what are the best college towns for rental properties? Let’s take a look.
Approximately 10.6 million American tax filers declared rental income — among 17.7 million properties, about 7.1% of 1040 filers are possible landlords.
The best college towns for rental properties: Athens, Boulder, College Station, Madison, Gainesville, Ithaca, Chapel Hill, and Ann Arbor.
The Best College Towns for Rental Properties
You want just the right combination of steady demand, robust rental market in a neighborhood close to campus. Here’s a quick view of the best college towns for rental properties and the top colleges for real estate:
The Power of Real Estate Investment
- Athens, Georgia (University of Georgia): Athens is known for its vibrant music scene and thriving college community. The University of Georgia attracts a large student population, creating steady demand for rental properties.
- Boulder, Colorado (University of Colorado Boulder): Boulder offers a picturesque setting with access to outdoor activities and a progressive culture. The University of Colorado Boulder contributes to a robust rental market driven by students and young professionals.
- College Station, Texas (Texas A&M University): College Station benefits from a stable economy and a growing population due to Texas A&M University. The college town’s relatively affordable housing market and strong rental demand make it attractive for real estate investors.
- Madison, Wisconsin (University of Wisconsin-Madison): Madison boasts a dynamic arts scene, outdoor recreational opportunities, and a diverse population. The University of Wisconsin-Madison sustains a strong rental market, particularly in neighborhoods close to campus.
- Gainesville, Florida (University of Florida): Gainesville offers a warm climate, cultural attractions and affordable living costs. The University of Florida’s large student population creates a consistent demand for rental properties in the area.
- Ithaca, New York (Cornell University and Ithaca College): Despite its small size, Ithaca benefits from its picturesque surroundings and the presence of Cornell University and Ithaca College. The student population contributes to a competitive rental market, particularly in areas close to campus.
- Chapel Hill, North Carolina (University of North Carolina at Chapel Hill): Chapel Hill features a charming downtown area, access to research opportunities, and a strong sense of community. The University of North Carolina at Chapel Hill drives demand for rental properties in the area.
- Ann Arbor, Michigan (University of Michigan): Ann Arbor offers a blend of cultural amenities, a thriving arts scene and a highly educated population. The University of Michigan’s prestigious reputation attracts students and faculty members, supporting strong student rentals in a robust rental market.
What are the advantages of real estate investment? Real estate can offer investors incredible potential beyond simply investing in college.
Passive Income Generation
Real estate investments offer the opportunity to generate passive income through rental properties. Rental income from tenants provides a steady stream of cash flow without requiring active involvement in day-to-day operations.
Diversification and Stability
Real estate investments can serve as a diversification strategy within an investment portfolio. Diversification means you spread opportunity and risk in your portfolio.
Unlike stocks and bonds, real estate values tend to be less volatile, providing stability and a hedge against market fluctuations.
Tangible Asset Ownership
Real estate investment involves tangible asset ownership, providing a sense of security and control over the investment. Property ownership allows you to leverage physical assets to generate income and build wealth over time.
Real estate properties have the potential to appreciate over time, increasing your net worth. Strategic property selection in high-demand areas or emerging markets can lead to significant capital gains in the long term.
As you make mortgage payments and property values increase, you can build equity in your real estate holdings. Equity accumulation allows you to leverage your properties for future investments or access liquidity when needed.
Real estate investment can be a key component of retirement planning, providing a source of passive income during retirement years. Rental properties can be a reliable income stream to supplement retirement savings and social security benefits.
Tax Deductions and Benefits
Rental property owners are eligible for various tax deductions, including mortgage interest, property taxes, maintenance expenses and depreciation. These tax benefits can reduce taxable income and increase cash flow from rental properties.
Real estate investors can use depreciation deductions to offset rental income and reduce tax liabilities. Depreciation allows investors to allocate a portion of the property’s value as an expense over its useful life, providing significant tax savings.
Hedge Against Inflation
Rental properties hedge against inflation, as property values and rental income tend to increase over time. Real estate investments offer protection against the eroding effects of inflation, preserving the purchasing power of investment returns.
By highlighting the advantages of real estate investment, including passive income generation, long-term wealth accumulation, and tax benefits, investors can better understand the potential rewards and opportunities associated with owning rental properties.
Understanding the Basics of Starting a Rental Property Business
Before diving into the world of real estate investment, it’s crucial to understand the basics of starting a rental property business.
This journey begins with thorough market research to identify promising locations, understand the initial capital requirements and familiarize oneself with the legal landscape of property management. Planning and education are pivotal in this journey; prospective landlords must educate themselves on property selection, financing options and tenant management to ensure the success of their venture.
Key considerations include:
- Assessing your financial readiness
- Understanding the responsibilities of property management
- Developing a solid business plan
It’s not just about purchasing a property; it’s about creating a business model that aligns with your college funding goals. Engaging in this business requires learning and adaptability as the market constantly evolves.
For students and parents alike, embarking on this path offers a hands-on learning experience in financial planning and real estate, providing a means to fund education and valuable life skills that extend far beyond the classroom.
7 Steps to Launch Your Rental Property Business
Launching a rental property business requires meticulous planning and a step-by-step approach to ensure success. Here’s how to get started:
Step 1: Begin real estate research.
Begin with comprehensive research to identify lucrative rental markets. Look for areas with strong demand, such as nearby colleges, which can be particularly appealing to students and parents.
Step 2: Financially prepare.
Assess your financial situation to determine how much you can invest without jeopardizing your or your child’s education savings. Ideally, you will have paid off the main home you live in and can use cash to pay for your investment property. Otherwise, if you must borrow to finance the property, ensure that everything makes sense financially. It should not be an emotional decision but a business decision.
Step 3: Choose a property.
Choose a property that matches your goals and budget. Consider factors like location, condition of the property and potential rental income. Properties near campuses can be ideal due to the constant demand from students.
Step 4: Consider legal and tax requirements.
Understand the legal requirements for landlords in your area and consider the tax implications of owning a rental property. Consulting with a real estate attorney and a tax advisor may be beneficial.
Step 5: Decide on your management strategy.
Decide whether you’ll manage the property yourself or hire a property management company. A management company can save time and stress as a busy parent, though it will impact your profits.
Step 6: Market your rental.
Develop a marketing strategy to attract tenants. Utilize online platforms, local advertising and college bulletin boards to reach potential renters.
Step 7: Balance responsibilities.
For college students and parents handling the opportunity together, balancing the responsibilities of managing a rental property with academic and personal commitments is crucial. Effective time management and organization are vital to ensuring your educational and business ventures thrive.
Financial Planning: Budgeting for Your Business and College
Effective financial planning is critical when balancing the start-up costs of a rental property business with college expenses. If you choose to balance real estate with the cost of your child’s college education, check out some strategies to manage your finances effectively:
- Outline all anticipated expenses for both your rental business and college costs.
- Include initial investment, ongoing maintenance, tuition, books and living expenses.
- Prioritize the allocation of rental income toward covering college expenses, reinvesting in your property and building a contingency fund for unexpected costs.
- Don’t overlook traditional financial aid options. Scholarships, grants and student loans can supplement your income from rental properties, reducing the financial burden.
- Regularly review your budget. As your rental business grows, you may find opportunities to increase your rental rates or reduce expenses.
- Consider how your rental business can support you financially, even after your child has graduated from college. Long-term planning can help ensure your investment provides sustained income and contributes to your financial independence.
By following these steps and focusing on immediate and future financial goals, students and parents can effectively manage a rental property business while covering college education costs.
Pros and Cons of Using a Rental Property to Fund College
Using a rental property to fund college expenses via FAFSA can have several advantages and drawbacks.
In addition to the tax benefits and asset appreciation benefits already mentioned, other benefits include:
- Stable income source: Rental properties can provide a steady income stream through rental payments, which can help cover tuition fees, accommodation costs and other educational expenses.
- Long-term investment: Investing in rental properties offers the potential for long-term wealth accumulation and financial stability, which can be beneficial for funding college education and future endeavors.
- Ownership control: Unlike other forms of financial aid or loans, owning a rental property provides individuals with a tangible asset and a degree of control over their financial situation.
What are the downsides? Unfortunately, you’ll want to consider these potential downsides to investing in real estate for college costs:
Rental Income Can Fund Education, but Be Wise
- Initial capital requirement: Acquiring a rental property often requires a significant initial investment, including down payments, closing costs and ongoing maintenance expenses, which may pose financial challenges for some individuals or families.
- Market risks: The value of rental properties and the rental market can be subject to fluctuations, economic downturns and changes in local market conditions, which may affect the property’s profitability and ability to generate income.
- Property management responsibilities: Owning and managing rental properties involves various responsibilities, including property maintenance, tenant management, legal compliance and financial record-keeping, which can be time-consuming and require specific skills and knowledge.
- Tenant issues: Dealing with problematic tenants, rental vacancies, property damage and legal disputes can be stressful and may impact the financial viability of the rental property as a source of funding for college education.
- Cash flow variability: Rental income may not always be consistent or sufficient to cover all college expenses, especially during vacancy periods or economic uncertainty, which could require you to pull alternative funding sources or financial planning strategies.
Rental income provides a steady, passive revenue stream.
Many have leveraged this strategy successfully, such as buying a duplex for your daughter near campus so she could live in one unit while renting out the other.
This approach can cover her tuition fees and provided living expenses, illustrating the tangible benefits of integrating real estate investment into education funding strategies.
This practical application of entrepreneurship in real estate offers a viable pathway for students and parents aiming to mitigate the high costs of college education. However, it also comes with financial risks, management responsibilities and market uncertainties that you should carefully consider before pursuing this option.
Pursuing higher education is an investment in your child’s future. It demands careful financial planning and consideration. With tuition, textbooks, housing and other expenses steadily rising, adopting a savvy approach to saving money for college is imperative. We all know what, right?
The solution: This guide will walk you through a comprehensive strategy designed to bolster your financial readiness for college, ensuring that you are academically and financially prepared when the time comes.
Early Planning: The Keystone of Financial Preparedness
The adage “the early bird catches the worm” holds profound truth in the context of saving for college.
- Begin by setting clear, achievable financial goals: Whether your child’s in their first year of high school or a bit closer to college, it’s never too early to start. An early start provides a longer runway to accumulate savings, leverage compounding interest and explore various funding sources and scholarships.
- Understand the cost of various colleges and potential career paths: Research your child’s target institutions’ tuition rates, living expenses and additional fees is crucial. This way, you can forecast the financial commitment required and tailor your savings accordingly.
- Consider the return on investment of different degrees and careers: Having a clear understanding of your child’s ROI can significantly shape their career choice. Some fields offer higher starting salaries, which could help your child pay off student loans more swiftly, influencing your savings strategy.
- Engage in conversations with family members about expectations and contributions: These discussions can help align your student’s financial goals with your family’s, ensuring everyone pursues the same objective. It can provide clarity and set realistic targets.
- Explore income-generating investments or high-yield savings accounts early: Utilizing this strategy can significantly boost your savings over time. The power of compound interest means that even small amounts saved early can grow substantially, providing a larger financial buffer when your child starts college.
Proactive planning prepares you financially and educates your student on the value of money and the importance of investing in their future. Understanding these principles early on can pave the way for a lifetime of sound financial decisions.
Budgeting: Your Financial Blueprint
Crafting a detailed budget is your roadmap to financial discipline. You can summarize “money saving tips for college students” to your child till you’re blue in the face, but you may still need to employ a budget. You can achieve this by:
- Assessing your current income and expenses: Identify potential areas for savings — perhaps minimizing discretionary spending on entertainment or dining out. Allocate a portion of your income or allowance towards your child’s college fund. Tools and apps designed for budget tracking can be invaluable, helping you stay on course and adjust as necessary.
- Adopting a zero-based budget: Beyond basic budgeting, consider adopting a zero-based budget where every dollar goes to a specific purpose, including savings, expenses and investments. This method ensures you make the most of your income and not overspending, allowing you to reach your college savings goals.
- Regularly review and adjust your budget: As your financial situation changes, align your budget with your current lifestyle to stay on track with your saving journey. Life’s circumstances can shift, and your budget should be flexible enough to accommodate these changes while prioritizing your savings.
- Seek guidance: Consider getting a financial advisor in your corner to offer different perspectives and ideas for saving more efficiently or cutting unnecessary expenses.
- Set aside an emergency fund: You can prevent your college savings plan from derailing due to unforeseen expenses. Unexpected events, such as a car repair or medical bill, can impact your savings ability unless you have a financial buffer, which can equate to three to six months’ worth of expenses in an emergency fund.
Embracing budgeting as a lifestyle choice rather than a temporary measure can instill lifelong financial management skills. This mindset shift is crucial for saving for college and achieving long-term financial stability and success.
Education Savings Accounts: A Smart Investment
Consider opening a dedicated savings account for your child’s college fund. Education savings accounts (ESAs) or 529 plans offer tax advantages that can amplify your savings. These accounts allow your investments to grow tax-free, provided you use the funds for qualified educational expenses.
Research the specifics of these plans in your state or country, as benefits and limitations can vary. When considering ESAs or 529 plans, it’s also wise to look into the impact of these savings on financial aid eligibility. Understanding how different financial aid algorithms assess savings vehicles can help make strategic decisions that optimize savings growth and aid eligibility.
Some accounts may be viewed more favorably than others in the financial aid process, influencing your choice of savings account. For example, assets held in a parent’s name may have a different impact than those held in the student’s name. Consider:
- Diversifying your savings approach: Consider combining these accounts with other investment vehicles, such as custodial accounts or Roth IRAs for teenagers, as it can provide flexibility. This strategy allows for optimizing tax benefits and financial aid outcomes based on each family’s unique circumstances.
- Engage a financial advisor: Seeking the counsel of someone specialized in educational savings can offer personalized advice tailored to your unique financial situation and long-term goals. Their expertise can be invaluable in navigating the complex college savings landscape, ensuring you’re making informed decisions that align with your college funding strategy.
Scholarships and Grants: Untapped Resources
Scholarships and grants are essentially free money for college, and they come in all sizes and for a vast array of talents and interests.
Do Some Due Diligence
Commit time to research and apply for scholarships; even smaller awards can add up and reduce the amount you need to save or borrow. Don’t overlook local scholarships, which may have less competition. Remember, persistence pays off in the scholarship hunt.
Expanding your child’s scholarship search to include niche areas such as hobbies, community service or specific career interests can uncover hidden opportunities. These less traditional avenues often have fewer applicants, increasing your chances of success.
Use scholarship search engines, school counselors, and community organizations to broaden your search. These resources can provide access to a wide range of scholarships, including those that may not be widely advertised.
Help Your Child Prepare a Personal Statement
A compelling personal statement and strong academic and extracurricular record can strengthen your child’s applications. A well-rounded application showcasing achievements, aspirations, and community involvement can make you stand out in a crowded field.
- Be patient: Encourage your child to apply for scholarships annually, not just before college, as many are available to students already in higher education. Continuous applications throughout your child’s college career can provide ongoing financial support, reducing reliance on student loans.
- Network: Encourage your child to build relationships with mentors and advisors who can provide strong recommendations. These individuals can attest to your child’s character, work ethic and suitability for the scholarships, adding weight to those applications.
Part-Time Work for Your Student: Earning While Learning
A part-time job can serve dual purposes; it provides valuable work experience while supplementing college savings. Not only can your student consider summer jobs, internships or work-study programs, you may also want to consider part-time work for extra cash. Why not?
Not only do these opportunities contribute financially, but they also enhance your child’s resume and provide a glimpse into potential career paths.
Leveraging part-time work for skill development and financial gains can be incredibly valuable. Encourage your child to look for jobs or internships that offer transferable skills relevant to their future career. This dual focus can enhance your employability upon graduation.
Networking through your part-time jobs can open doors to future career opportunities and internships, making these positions more than just a paycheck. Furthermore, saving a portion of your earnings specifically for college expenses can instill a sense of responsibility and accomplishment, reinforcing the value of your education.
Minimizing Expenses: The Art of Frugality
Adopting a frugal mindset doesn’t mean sacrificing quality of life; it’s about making informed, value-driven decisions.
For college students, this could mean:
- Buying used textbooks
- Choosing housing that offers the best value
- Taking advantage of student discounts
Every dollar saved is a dollar that can be redirected to your college fund.
Embracing a minimalist lifestyle can further extend your college savings. Evaluate your needs versus wants, focusing on spending that brings long-term value. Leveraging student discounts for technology, software and services can significantly reduce educational expenses.
Additionally, consider alternative transportation options to save on commuting costs. Participating in campus events and activities, many of which are free for students, can enrich your college experience without straining your budget. This mindful approach to spending and saving highlights the importance of resourcefulness and creativity in achieving financial goals and saving for college options.
Strategic Course Planning: Reducing the Road to Graduation
Careful planning of your child’s course load can save money in the long run.
- Advanced Placement (AP) courses, community college classes during high school and summer sessions can reduce the number of credits your child needs to graduate, potentially shortening their time in college and reducing tuition costs.
- Engaging with academic advisors early and often to map out your course plan can ensure your child takes the most efficient path to graduation.
- Investigating dual degree programs or accelerated tracks can reduce the time and money spent on education.
- Staying informed about changes in degree requirements or course offerings can prevent costly surprises.
- Consider the financial implications of changing majors or transferring schools, as these decisions can impact educational expenses.
Strategic course planning is a dynamic process that requires flexibility and foresight. It emphasizes the importance of being proactive in one’s educational journey.
Financial Aid: Navigating the Process
Grasping the intricacies of the financial aid process is essential and contributes to ways to save for college:
Free Application for Federal Student Aid (FAFSA)
Completing the Free Application for Federal Student Aid (FAFSA) is key to uncovering your federal and state assistance eligibility. Pay close attention to submission deadlines and the necessary paperwork. Additionally, financial aid advisors at your potential colleges are invaluable for navigating your financial options.
In addition to federal aid, investigate institutional aid offered directly by colleges. These can include merit-based scholarships, need-based grants and other financial aid packages unique to each school. Understanding the nuances of each college’s financial aid policies can reveal opportunities to maximize your aid package.
Financial Aid Officers
Regular communication with financial aid officers can also alert you to new funding opportunities or changes in your financial situation that may affect your aid eligibility. Documenting all communications and keeping detailed records can simplify the financial aid application process and help you advocate for yourself effectively.
Online Degrees as a Cost-Saving Strategy
As you explore the landscape of higher education, consider the benefits of geo-based online degrees as a strategic way to save on costs.
Opting for an online business administration degree in Texas or choosing a specialized nursing program in Pennsylvania, for instance, cuts down your tuition and related college expenses and ensures your education aligns with the needs of your local employment market. This geographical focus boosts the relevance and applicability of your studies, equipping you with targeted skills for specific regional demands.
By selecting such programs, you can significantly reduce your educational expenses while enhancing your career prospects in your area. This is a smart approach to managing your finances and achieving your professional aspirations.
Investing in Your Child: The Ultimate Asset
While this guide focuses on saving money, it’s also important to invest in experiences and opportunities that enhance your child’s education and personal growth, through:
- Extracurricular activities
- Networking opportunities
While saving for college is important, investing in experiences that build your child’s character, skill set and network is invaluable. Seek leadership roles, volunteer opportunities and extracurricular activities aligning with your child’s interests and career goals. These experiences enhance your child’s college application and develop the soft skills employers value.
Balancing academics with personal development opportunities can make you a well-rounded individual and a compelling candidate for scholarships, internships and future employment. Remember, the ultimate goal is to build a foundation for a successful life.
Saving for College is Possible
What’s the best way to save for college? There’s no one “best way to save for kids college,” as you’ll note after reading this article. As you navigate the path to saving for college, remember that this journey is as much about financial preparation as it is about personal growth. The discipline, planning and foresight you and your child applies today will pave the way for a smoother college experience and instill habits and skills that will serve you well beyond your academic years.
By embracing these strategies, you’re not just preparing to meet the financial demands of college; you’re setting the stage for a future filled with possibilities. Let this guide be your companion as you embark on this exciting saving for child’s college journey, equipped with the knowledge and confidence to realize your child’s educational dreams.
Picture yourself cozied with a laptop, sipping your favorite coffee, and diving deep into your studies. For countless learners choosing online master’s programs, this is the everyday reality.
Science, technology, engineering, math and business have found a firm footing in the online learning landscape. It’s not just about convenience; it’s about fitting a complete master’s level education into the packed schedule of a full-time job without missing a beat.
The Advantage of Learning at Your Own Pace
Forget about the rush-hour races to campus; online learning brings the lecture hall to you or your student. (This could be a few years away for your high schooler, but it’s worth considering now, or it might make sense for you!)
Imagine planning your study schedule around your work routine or family responsibilities. That’s the level of flexibility online master’s degree programs offer. Personalized learning means the classroom if you’re an early bird who excels at dawn. If you’re a night owl, your lectures await.
This tailor-made academic journey of online master’s degrees draw professionals to further their education without sacrificing career momentum or life balance.
An additional benefit of self-paced online learning is the reduction of stress and an increase in information retention. Without the pressure of immediate deadlines, learners are more likely to engage deeply with the material, leading to a thorough understanding that serves them well in their professional lives. This relaxed pace can also accommodate different learning styles, ensuring that visual, auditory and kinesthetic learners find their best path to mastery.
Moreover, learning at your own pace allows room for those lucky “Aha!” moments outside a scheduled class environment.
As you move through the material, the freedom to pause, reflect and apply concepts to your real-world experiences can cement learning in a way traditional classrooms sometimes struggle to achieve. The self-paced nature also means you can revisit complex topics as needed, ensuring a solid foundation before advancing.
Another dimension of learning at your own pace: The benefit it provides for international students. With the flexibility to study across time zones and the absence of geographic constraints, learners from around the globe can advance their education with a level of accessibility that traditional brick-and-mortar institutions can rarely match.
This universal access contributes to a more diverse learning environment, fostering cross-cultural exchanges and a broader perspective in the academic discourse.
Financial Strategies for Virtual Academic Pursuits
Dream big, but spend wisely. Online learning can be a more economical option, but it still requires intelligent financial planning.
Look into scholarships and grants aimed specifically at online learners. Scour through listings and apply for those you qualify for. Moreover, many employers offer tuition assistance or reimbursement for courses that further your industry expertise. Part-time enrollment is also a clever way to stretch your budget, allowing you to pay as you go and sometimes avoid student loans altogether.
As a cost-saving measure, some learners combine their online studies with free webinars, workshops and industry conferences that align with their curriculum. This proactive approach not only enhances their learning experience but can also help build a professional network.
These additional sources of knowledge and networking often come without extra costs, thus enriching the education received without straining the wallet.
Consider subscribing to financial advisory newsletters or following finance-oriented blogs that provide regular insights and tips on managing education expenses. Keeping abreast of financial strategies and trends can empower you to make smarter, more informed decisions, leading to substantial savings throughout your online education journey.
The Hidden Savings of STEM Online Studies
STEM fields are notorious for high tuition fees, but moving these programs online reduces costs. For starters, online courses often have lower tuition fees than their on-campus counterparts. Using digital textbooks, open-source materials and virtual simulations reduces the hefty price tags of expensive books and lab equipment.
These savings are real and can be the deciding factor for someone looking to advance in their STEM career.
STEM learners engaging with online programs also benefit from collaborative projects and peer-to-peer learning platforms readily available across the internet. These interactive online communities often offer simulations, coding challenges and DIY project guides that can substitute for hands-on experience while minimizing expenses traditionally involved with lab-based or in-person group work.
In addition to direct-cost savings, the efficiency of online STEM programs can lead to indirect savings by reducing the amount of time spent on commuting, campus meals and other incidental expenses associated with on-site programs. These conveniences allow students to allocate funds to other areas of their lives or save for future investments.
Industry-Specific Financial Aid and its Impact
It pays to research industry-specific financial aid options, which can significantly lower your educational expenses. Numerous organizations offer scholarships for students pursuing particular fields, especially technology and business, as high-demand areas.
Don’t overlook less traditional funding avenues such as crowdfunding, which can rally the support of your community behind your educational goals. Remember, every little bit can help reduce the cost of your online degree.
Exploring financial aid can often lead to discovering mentorship programs as well. Many organizations providing scholarships also offer mentorship opportunities, which can be instrumental in a learner’s career progression. These mentorships provide guidance and can result in interning positions or job offers post-graduation, thus adding value to the scholarship’s monetary benefit.
Don’t forget to regularly check for updates on financial aid offerings, as new scholarships and grants can arise anytime. Engineering professional societies, tech companies and business forums often update their funding opportunities based on industry needs and contributions, providing fresh chances for financial support.
Understand the Full Cost of Your Online Journey
Financial planning goes beyond just tuition. When choosing an online program, factor in all possible expenses, including technology requirements, potential travel for on-site residencies and subscription fees for online resources. Know what you’re getting into financially.
Draft a comprehensive budget that includes your regular expenses plus your educational costs to keep your finances healthy and stress-free through your studies.
It’s also wise for learners to account for potential upgrades in their technology setups as they progress through their online programs. Ensuring one’s computer and internet connection meet the technical demands of an online master’s program can be a hidden cost. Planning for technology updates or necessary software purchases in advance can prevent unexpected financial strains on a student’s budget.
Active participation in your program’s online forums can unveil additional strategies to minimize costs, such as group discounts on software or collective negotiations for access to professional databases. Fellow students may share similar financial challenges and can be a source of support and innovative ideas for cutting costs.
The Smart Investment in Your Future
Education is an investment, and online learning is no exception. Choosing a program that offers good prospects in terms of post-graduation employment and salary increments is pivotal.
These considerations will help you measure the return on investment (ROI) for your online master’s degree. Self-paced learning could also translate to cost savings as you can potentially graduate faster than in traditional programs, reducing the overall cost and getting you into the market sooner.
Aside from the potential career and salary benefits, online learning imparts crucial digital literacy skills, positioning graduates to thrive in an increasingly digital world. As many industries embrace remote work and digital collaboration, these skills can put online graduates at a significant advantage, potentially opening up opportunities for them in global markets and within forward-thinking organizations.
Furthermore, as the digital landscape evolves, keeping an eye on emerging trends can help align your educational goals with future job opportunities. An online master’s program that adapts to the changing market can provide relevant, up-to-date skills that could command a higher salary or give you a competitive edge in the job market.
Cost-Effective Strategies for STEM Enthusiasts
The internet teems with cost-effective (and free) resources for those starting their STEM journey. Massive open online courses (MOOCs) offer a low-stress introduction to complex subjects at little to no cost.
Additionally, many professional organizations host virtual networking events, allowing you to build relationships that might translate into learning opportunities or career advancements without the associated travel and lodging costs.
Open-source projects offer a treasure trove of opportunities for those passionate about continuous learning. By contributing to these projects, STEM students can apply what they’ve learned practically, gain experience and even make a name for themselves within the community. Such engagement carries the additional perk of being free and can be a powerful addition to your resume, showcasing real-world problem-solving and collaboration.
Joining online forums and subscribing to relevant tech and science podcasts are additional ways to enrich your knowledge base without incurring costs. When complemented with your formal online education, these platforms can offer insights and discussions on the latest industry trends, providing a well-rounded understanding of your field.
A Balancing Act: Working, Studying and Budgeting
Managing time is akin to managing money, especially for adult learners juggling work, studies and a family. Efficient time management can save you from extending your program, thus incurring additional costs. Explore whether you qualify for education-related tax benefits, such as credits and deductions.
It’s crucial to vet an institution’s credibility and financial policies before enrolling to ensure it meets your fiscal requirements.
Another financial tip is to leverage digital tools and apps designed for budgeting and time management. Many of these tools are freely available, and they can help students track spending, manage study hours and keep a close eye on deadlines. This proactive approach to managing finances and time can lead to a more organized, less stressful and successful educational experience.
To further streamline your financial planning, using technology platforms for automating savings or tracing spending can provide a clear picture of your financial health. Automation ensures that you regularly save for your tuition while spending trackers help avoid unnecessary expenses derailing your budget.
Stretching Your Education Dollars Further
Ensure you get the most bang for your buck by researching and comparing the true costs of various online programs.
Many institutions now offer intuitive cost-comparison tools to aid prospective students. When paying the tuition, consider student loans a last resort and investigate whether your school offers payment plans or financial advising services.
These resources can provide significant support in managing the investment in your education.
Students can also explore alternative methods of gaining credits, such as competency-based exams or life experience portfolios. These options often come at a fraction of the cost of traditional coursework.
For knowledgeable or experienced professionals, they present an efficient way to jump ahead in their academic journey while making the most of their education budget.
Another strategy to make the most of each dollar is to participate in online study groups or tutoring sessions that may be offered at a reduced rate or even for free by senior students or alumni. This collaborative approach reduces costs and deepens understanding through group learning dynamics.
Tackling the Financial Maze of Online Learning
The financial aspects of online education can sometimes feel as complex as the coursework itself! From filling out the Free Application for Federal Student Aid (FAFSA) for financial aid to understanding how accreditation affects aid eligibility, these are navigational tools every online student must master. Thankfully, a wealth of resources is available to help you build your financial literacy as you progress through your online studies.
As you can see, the journey to acquiring an advanced education online is much more than just logging in and studying. It’s a financial adventure that requires preparation, research and smart decision-making. Empower yourself with the knowledge to manage your education and finances effectively, and you’ll find that your investment in an online master’s degree is one of the smartest moves you could make for your future.
Finally, embracing online forums and education-based communities can provide invaluable insights and first-hand student experiences relating to financial aid, scholarships and budget-friendly study strategies.
Through these communities, students can share their learning and tips and even collaborate to find the best deals on resources, thereby navigating the financial aspects of online education with collective wisdom and support.
The costs of college tuition, fees and room and board are rising yearly, placing higher education financially out of reach for many students.
However, if you know where to look, numerous proven strategies exist for how to reduce college costs. This guide reveals insider tips and tricks to maximize scholarships, accelerate graduation, work lucrative jobs and take advantage of other money-saving tactics.
Whether your child utilizes every strategy or just a few, implementing these college cost-cutting hacks can save you and your child thousands of dollars on a degree.
Read on to learn essential techniques for affording college through strategic planning, resourcefulness and determination. With creativity and grit, you can make higher education affordable, achieve your career goals, and graduate with minimal debt through the help of these expert insights. Read on for more information about how to reduce the cost of college.
Take Advantage of Dual-Enrollment Programs
Dual-enrollment programs allow high schoolers to take college classes and earn credits before graduating. It can shave off an entire semester or more of college tuition. Meet with your school counselor to see what options are available. Getting a jumpstart on college while still in high school is one of the most effective ways to reduce the overall cost.
Some key benefits of dual enrollment programs as a key way to get college paid for include the following.
Earn College Credits in High School
By taking college-level courses in high school, you can potentially knock out an entire semester’s worth of credits or more before even setting foot on a college campus. Earning credits in high school allows your student to graduate faster or lighten your course load.
Save Substantially on Tuition
Most dual enrollment programs offer college courses to high schoolers for free or at a steeply discounted per-credit rate. Your family can save thousands of dollars compared to paying full college tuition.
Smaller Classes and More Attention
Dual enrollment classes often contain smaller sizes than traditional college lectures, allowing for more individualized instruction and support from professors.
Get a Head Start on College Transition
Taking early college courses gives students a feel for college’s workload, pace and independence, making the eventual full-time college transition less intimidating.
Dual enrollment gives you an affordable, fast track to college while preparing your child for university-level academics.
Start at Community College
Completing general education credits at a community college can save tens of thousands of dollars compared to starting at a four-year university. Class sizes also tend to be smaller at community colleges, enabling more individualized attention. Ensure credits will transfer when transitioning to a bachelor’s degree program.
Key tips for leveraging community college:
- Complete gen ed requirements: Focus on knocking out general education requirements like English, math, science, history, etc. These credits should transfer to four-year schools.
- Confirm transferability: Your child must meet with advisors at their community college and target a four-year university to map out transfer plans for their major. Get transfer credit agreements in writing.
- Then, transfer to a university: After two years or so, provided your child has earned 60+ credits, they can transfer straight into a bachelor’s degree program at a university as a junior.
- Save over $20,000: Students who complete an associate degree at a community college before transferring to a public four-year university can save over $20,000 on a bachelor’s degree.
Starting at community college is a proven money-saving strategy. Just be strategic about transfer planning.
Compare All Housing Options
Living on campus can be convenient but costly. Weigh all options like commuting from home or renting an off-campus apartment with roommates. The more informed your child’s housing decision, the more you can reduce this major college expense.
Live at Home
If your child lives at home with you and commutes to campus, it can save tens of thousands over expensive dorms or private apartments — factor in gas, car maintenance, parking fees and reduced social life costs.
Share Off-Campus Housing
Renting a house or apartment with multiple roommates splits costs like rent, utilities, Wi-Fi, etc. The main downsides are compromised privacy and space. So, have your child meet potential roommates first.
Weigh the Tradeoffs
Make budget-based housing decisions according to your priorities. Convenience, independence, privacy and social life all come with added costs. Getting creative with college housing can unlock huge savings. Know all your options before committing.
Choose Majors with High ROI
Certain majors lead to careers with much higher lifetime earnings than others. Research the salaries and job prospects for different fields before declaring your major. Consider majors like computer science, engineering and business, which tend to have the best return on investment based on tuition costs.
Research Career Prospects
Research expected salaries and job availability for intended majors using resources like the Bureau of Labor Statistics, university career centers and alumni networks.
Prioritize In-Demand Fields
Consider encouraging your child to choose majors that prepare them for growing, high-paying careers like healthcare, tech, engineering, data science, finance, etc. These tend to have the best ROI.
If your child’s dream major has poor career prospects, consider complementing it with a dual major or minor that broadens their hiring appeal.
Do the Math
Calculate the ROI on college majors by comparing typical salaries to the total tuition investment. Then, optimize accordingly.
Picking a lucrative major can unlock higher lifetime earnings that justify the tuition costs many times over.
Buy Used Textbooks
Textbooks often cost hundreds of dollars each. Thankfully, there are many ways to buy them secondhand. Check out Amazon Textbook Rentals, Chegg, AbeBooks and university student Facebook groups. Buying used books or renting textbooks can cut these costs by 50% or more.
Rent Instead of Buying
Renting textbooks can save up to 90% over purchasing new ones from the university bookstore. Rental periods allow enough time for a full semester.
Buy Used Copies
Used textbooks sold on Amazon, Chegg and other sites offer major discounts on original pricing. Just be wary of excessive highlighting and missing pages.
Share with Classmates
Your child can also get creative and share textbooks with classmates, though that can get complicated. They can split up chapters and swap books for key assignments.
Sell Back Afterward
After a semester, sell back unwanted textbooks to Amazon or bookstores to recoup some costs. Buyback quotes are never great, but it’s better than nothing.
Getting strategic about sourcing textbooks can quickly chop these costs in half each semester.
Understanding the financial aspect of college goes beyond tuition and textbooks; it’s also about managing money and credit wisely. Many students rely on student credit cards or loans.
Before applying for every scholarship possible, take a moment to learn how credit acceptance works and how maintaining a good credit score can open up additional avenues for financing your education. This knowledge will help in the short term and set your child up for financial stability long after graduation.
Apply for Every Scholarship Possible
Never assume your child won’t qualify for a scholarship. Millions of dollars of college scholarships are out there, including niche scholarships that most students don’t even know exist. Search databases and Google for scholarships matching your child’s background and interests. Even small scholarships add up.
Cast a Wide Net
Start searching and applying for scholarships at least 12 months before college begins. Leverage big databases that match your child with many options.
Carefully screen each scholarship’s eligibility requirements before applying. Having one disqualifying factor can instantly disqualify your child.
Tailor Your Materials
Customize application materials like essays for each scholarship. Generic submissions are less compelling.
Follow Up Relentlessly
Don’t hesitate to call and email scholarship providers requesting application status updates. Politely advocate for your case. Applying for every possible scholarship can secure critical money, significantly reducing reliance on student loans.
Finding a part-time job is one of the best ways to offset college costs without taking on more student loans. Encourage your student to look for paid internships, research assistant positions, on-campus jobs, bartending gigs and more. Working 10 to 15 hours per week can cover many living expenses.
Encourage Seeking Paid Internships
Paid internships let your child start earning money and relevant experience. Most majors offer such opportunities.
Encourage an RA Position
Resident advisors provide mentorship in dorms and receive free room and board. It’s an excellent gig for free housing.
Encourage Work-Study on Campus
Jobs in campus dining halls, libraries, gyms, and labs offer students convenience and built-in flexibility. Federal work-study programs can also help secure these coveted on-campus jobs.
Off-campus restaurant, bar and catering gigs pay competitively, even with minimal experience. The schedule flexibility is also convenient for students.
Working through college is rewarding and reduces reliance on student loans to fund living expenses. Explore all options and secure employment early each semester for maximum cost savings.
Explore Graduating Early, if Possible
Graduating just one semester early can save you thousands in tuition, fees, housing, meals and more. Take advantage of summer classes, overloaded semesters and CLEP exams to accelerate progress. Graduating faster lets you enter the workforce sooner while paying for fewer semesters overall.
Explore Enrollment Year-Round
Completing summer courses or even winter intersession credits helps you finish faster. Just ensure your child doesn’t burn themselves out in the process.
Overloading credits each semester accelerates progress but can be grueling. Make sure your child still prioritizes their health.
Use CLEP Exams
CLEP exams award college credit for general knowledge on certain topics. Prepping via study guides can help you pass and earn credits quickly.
Provide Guidance for Starting Strong
Earning consistently high marks from the start gives your child flexibility later to graduate early. Talk to them about not digging into an early GPA hole.
Graduating even one semester early unlocks massive savings and gets you earning a full-time salary quicker.
Attend Informational Events for Scholarship Insights
Simply searching online databases for scholarships has limited effectiveness. To gain an edge, attend in-person and virtual events in your community that provide insider tips for winning specific local and national scholarships.
Local scholarships from community organizations, companies, non-profits, and churches often have way less competition than big-name scholarships touted online. However, most students are unaware these hyperlocal scholarships even exist.
Attending informational talks hosted by school counselors, prior scholarship winners, financial aid officers and community leaders provides insider knowledge you won’t find in any database. These events also allow you to ask strategic questions on how to craft winning applications.
Getting out into your local community and tapping into insider scholarship secrets can help you discover and win scholarships other students never even apply to. Don’t just rely on online listings alone.
Talk About Auditing Classes Before Enrolling
Before registering for expensive college courses, see if professors permit students to audit a class at no cost. Attending lectures and taking notes allows your child to get a preview before committing tuition dollars.
Auditing gives your child insights into the teaching style, workload, content and overall value of the classes they’re considering. It enables wiser, more informed enrollment decisions before paying.
If a course is not a good fit, you can easily cross it off your list, having not wasted money or college credits. And if the class meets your child’s expectations, both of you will feel confident signing up next semester knowing what they’re getting into.
Leveraging course auditing where possible helps ensure that tuition is invested in worthwhile classes and that students avoid those that other students have rated poorly.
Tips for Paid Internships and Co-ops to Offset Costs
Paid internships and co-ops are a great way to gain work experience and earn money to offset college costs. Here are some tips:
- Start applying early: Popular roles get snapped up fast. Cast a wide net with many applications.
- Target smaller/midsize companies in addition to large corporations: Less competition allows for greater odds of landing a paid role.
- Highlight relevant coursework and specialized skills: Coursework and skills like data analysis, coding and marketing analytics can increase appeal.
- Ask for recommendations: Encourage your child to ask professors and campus career centers to recommend them for high-potential openings they may be aware of.
- Attend job fairs and company info sessions: These often screen for top co-op prospects onsite.
- Discuss the option of a paid role: If offered an unpaid internship, encourage your child to ask for a paid role. More students successfully negotiate this than assumed.
Slash College Costs: It’s Possible!
Slashing college costs requires some strategic planning, sacrifice and hustle. However, implementing even a few insider tips and tricks can save you and your child tens of thousands of dollars over their college career.
Don’t let money be why your child doesn’t pursue higher education. With a bit of creativity, college can be affordable for nearly anyone willing to put in the work., even though it’s expensive.
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Have you ever gone to bed worrying about college money? Paralyzed, gripped by the all-consuming question: “How will I pay for this?”
I can help you.
What you might not realize is that the ways to get college paid for doesn’t just involve one approach.
Often, paying for college is like a puzzle. Or a pizza.
You pay for college using lots of different sources — need-based aid, merit-based aid, outside scholarships, etc.
Well. Let’s not list it all out here. Let’s dive in and go over the puzzle pieces, one by one.
1. File the FAFSA.
The Free Application for Federal Student Aid (FAFSA) gives you major access to scholarships and aid. You can file the FAFSA starting on October 1 of your child’s senior year. The first thing you need to do is get an FSA ID for both you and your student.
You can choose any of these methods to file a FAFSA form:
- Apply online.
- Fill out the form in the myStudentAid mobile app, available on the App Store (iOS) or Google Play (Android).
- Complete a 2021–22 FAFSA PDF.
- Get a print-out of the FAFSA PDF by calling us at 1-800-4-FED-AID (1-800-433-3243) or 334-523-2691 (TTY for the deaf or hard of hearing 1-800-730-8913). You can mail it in instead.
The FAFSA qualifies you for not only federal student aid, the FAFSA is used to determine your eligibility for certain state and college and university financial aid. Your FAFSA information is shared with the colleges and/or career schools you list on the FAFSA.
2. File the CSS Profile.
What’s the CSS Profile?
It’s one of the best ways you can get aid for college. The College Scholarship Service (CSS) Profile is a private independent survey you fill out through a nonprofit organization, the College Board. Nearly 400 universities rely on the CSS Profile to award your kid scholarships and other non-federal financial aid.
What does your child get from filing the CSS Profile? The application could help your child secure institutional scholarships as well as grants or student loans from the federal government.
What colleges accept the CSS Profile?
Great question. Check out the list of participating colleges and universities. The list includes colleges and universities that use CSS Profile as part of their financial aid processes for some or all of their financial aid applicants. Check schools’ websites or contact the institution’s financial aid office for more information.
Unlike the FAFSA, which is free, It costs $25 for the application and one report to a school. You’ll pay $16 for each additional report.
The CSS Profile gathers information about your family’s annual income as well as medical expenses and anything else that could affect your ability to pay for college — it takes a deeper dive into families’ finances than the FAFSA.
Note: Divorced parents must complete the CSS profile separately.
3. Explore your options for merit aid.
You’ll run into a lot of myths about aid. Let’s take a machete to these harmful myths:
- My kid has to be a genius to get money from a college or university.
- Students must be incredible athletes to receive money.
- It takes an exhaustive search of scholarships don’t have to look any further than the college or university your child is looking into.
Did you know that there’s unlimited merit aid from schools around the country? Merit-based aid is aid not based on financial need. Instead, it’s based on items like grade point average, test scores and specific talents.
Let’s look at one school for an example. I’m going to adopt my cousin’s alma mater, St. Olaf, for a second, and show you the merit-based scholarships available there:
- The Buntrock Scholarship (a renewable award of $25,000 per year) recognizes students with outstanding academic accomplishment and exemplary achievement across many facets of the high school experience.
- The Presidential Scholarship (a renewable award of $23,000 per year) recognizes salutary academic achievement.
- The Dean’s Scholarship (a renewable award of $21,000 per year) recognizes a strong and sustained academic achievement.
- The Faculty Scholarship (a renewable award of $19,000 per year) recognizes a balanced record of consistent academic achievement.
- The St. Olaf Scholarship (a renewable award of $17,000 per year) recognizes academic achievement.
What would your child have to do to get these scholarships? Fill out the Common Application and include test scores, high school transcripts and letters of recommendation.
As you can imagine, the highest scholarship amounts get offered to top students, but the lower-tier GPA and scores still get merit scholarships. As you can see, the “lower” tier totals $17,000 per year for four years.
That’s still a whopping $68,000 over four years for the lower-tier scholarships.
My point? Find out what your child can get for merit-based aid. Merit-based aid is also awarded to students who qualify for need-based financial aid.
4. Apply for outside scholarships.
Outside scholarships include private scholarships and cash awards. Encourage your child to go for those $100 scholarships — they add up.
What can you do besides ask the guidance counselor at your child’s school for insight?
- Ask area high schools for graduation programs dating back up to four years ago. You can find the names of scholarships, Google them and ta-dah! Your kid’s got an abundance of choices.
- Contact various civic organizations. Is your next-door neighbor a Kiwanis member? Your co-worker’s husband on the zoo board?
- Talk to the company you work for. What types of scholarships does your company offer? Your partner’s? Your sister’s?
- Scour emails from the guidance office. Gone are the days when a printed-out list of scholarships came from the guidance office. Unfortunately, it’s much more fleeting than that. Your child could see it on an email — then, blip — it’s gone. Ask for an email copy of these announcements, if possible.
- Check social media. Social media is a great place to search for scholarships. You might join any number of Facebook groups or other social media groups that post scholarships. You can do a simple search and find scholarship groups.
- Look at scholarship search engines. (I know, groan. When I was an admission counselor and offered this idea to parents, they always groaned, “There’s so many, they’re all competitive, they’re all national scholarships open to thousands of kids.”)
Don’t hastily dismiss! I suggest Googling “scholarships for writers,” for example. Use keywords to your advantage! And if your child doesn’t look like a match for a specific scholarship, reach out to the scholarship committee and ask if your child can apply anyway. Maybe he’s just missing one tiny requirement.
Also, encourage your child to continue to apply for outside scholarships throughout college. You can find so many scholarships even while your student’s knee-deep in scholarships.
5. Ask department heads about scholarships.
Yes! Don’t shy away from asking academic departments at schools about scholarships. Here’s how this can work:
“Dr. Fletcher, you’ve been a biology professor here at X College since 1975. You’ve got to know about some excellent scholarships in your department.”
“Why, as a matter of fact, we have three options for incoming freshmen.”
“One that would apply to my child’s deepening interest in European water voles?”
“Yes! How marvelous is this? My graduate research dabbled in voles.”
“What can we do to apply?”
“Here’s what you need to do…”
So, how can you do this if you’re not able to meet with professors in person?
Email is splendid. Communicate with these people! Build relationships! Do your best to communicate with these influential individuals ahead of time so you start to build relationships.
6. Pay for it on your own.
Remember how I mentioned that paying for college is a giant jigsaw puzzle? It’s also a subtraction problem.
Take the total cost and subtract small bits at a time to get your out-of-pocket cost at the end. It could look like this. (Note: these numbers are completely made up and geared more toward private college costs):
Total cost: $60,000
Merit-based Scholarships: $20,000
Federal subsidized loan: $3,500
Federal unsubsidized loan: $2,000
Total out-of-pocket cost: $30,500
Outside scholarships: $10,000
New out-of-pocket cost: $20,500
See how we subtracted, subtracted, subtracted from that total cost to arrive at an out-of-pocket cost?
Check out the next part to see how you can further take that $20,500 and break it down.
7. Use a tuition payment plan.
Many people underestimate a tuition payment plan — or don’t know about it in the first place. You pay for college using your own money, but break it up into monthly payments.
Let’s take that $20,500 from above and break it into a 10-month payment plan.
Breaking it into a 10-month payment plan means you’ll pay $2,050 per month.
Check out the beauty of the next section!
8. Get creative.
Next, how can you get creative to pay for that $2,050 per month? Can you ask other people to pitch in — both sets of grandparents, your child (think work-study, summer earnings) and maybe an aunt or uncle want to help.
See, what usually happens is most people fixate on the $20,050 and can’t get beyond it. (Trust me, I saw it happen all the time in the admission office.)
Or, figure out what one person will pay you to do for $10. Then, do that 10 more times.
Am I advocating for a side hustle? Maybe! But this really could be an idea for more than a side hustle. It could be your full-time job, if that’s your passion. Save for college by making more money (it’s how I save for my own kids’ 529 plans). Ask yourself this question: What would someone pay you $10 to do?
What do you do better than everyone else? Cook fried chicken? Babysit? Walk chihuahuas? Write goofy ad copy?
Enhancing your skill set through online platforms can open up new avenues for funding your child’s education. Discover a variety of skills to learn online that can help you stand out in the crowd or enable you to start a profitable side hustle.
Do that one thing for that person, then do it 10 more times. Then do it again 10 more times. Maybe you’ll need to get help from others to help you! To be honest, it doesn’t matter what it is as long as it generates recurring income.
In general, it’s a simple way to think about how you could leverage your passions and talents to save for college. Then stuff the money you make into an ESA, 529 or custodial account.
Instead, take the break-it-down approach!
9. Have your child take out loans.
Okay, this may not be what you had in mind when you Googled “ways to get college paid for”… but you know what? It’s still a way to pay for college.
Loans have their place, and while you probably don’t want your child to take out loans for the full cost of his entire four (or more!) years of college, you can still strategize to figure out how loans fit into the jigsaw puzzle of the full financial aid picture.
In other words, if your child must take out loans, do it as conservatively as possible, in this order:
- Take out federal loans.
- Round out as much as you can with your own money.
- Take out private loans as necessary.
10. Use life insurance.
This is a slightly more morbid way to handle paying for college because you and your spouse must die in order to get it. I know. I hesitated to stick this in here but today is the second anniversary of my father-in-law’s death and I decided to mention it.
If his kids had been in college when he died, my mother-in-law could have relied on his life insurance to pay for college.
Read about how I got brave and bought life insurance for college after my mom got pancreatic cancer.
I sincerely believed that during COVID-19, I’d avoid the crowds and opt for a no-exam life insurance policy. You can get a quote from Bestow and get coverage from $50,000 to $1,000,000. Choose from 10- and 20-year terms built to suit your needs.
11. Use your Roth IRA.
The busy-as-a-squirrel retirement saver in me squeaks just a little bit when I suggest this option. It kind of feels like trying to say something while having my finger smashed in a drawer.
Because I really, really believe you must take care of your own retirement first before you worry about paying for college.
However, there’s no denying it: You can use your Roth IRA for both retirement and college tuition. You won’t pay withdrawal penalties with IRAs, including Roth IRAs, if the funds are used for qualified educational expenses — tuition, fees, books and room and board.
For most folks who are sending their kids off to college, only the contribution portions of their Roth IRA balances can be withdrawn tax-free. (Any earnings in the account will be taxable for those people under 59, as well as for those over 59½ who haven’t held the Roth for at least five years.)
But Roth IRAs enjoy a somewhat unique tax treatment. Withdrawals are treated as a “return of contribution” first and as earnings second.
Uh… English, please.
No problem. So, what this means is that if you’ve been contributing $4,000 per year for the past five years, you can withdraw $20,000 tax-free (as long as you use the money for tuition, fees, room, board, etc.)
What happens if your withdrawals exceed your total contributions?
They’ll be taxable for those under age 59½.
Just remember, always take care of yourself first. You can always borrow for college but you can’t borrow for retirement. If you’re a little thin on the retirement funds, be a busy squirrel and keep contributing to your Roth IRA!
Ways to Get College Paid for in Action
Don’t limit yourself or your child. So much goes into the process of learning how to pay for college.
Also — one more thing. Don’t stop figuring it out. Ever. This isn’t a process you quit as soon as your child is safely secured in his or her residence hall room on the first day of college. Keep looking for scholarships, keep side hustling, keep finding ways to make college work.
It’s doable — and you can do it!
Your high schooler’s busier than you. (Okay, maybe not.) But between cross country practice, homework (ugh — how hard is trig?!) and making sure those gym shorts smell Snuggle-fresh, who has time for anything else?
Even though your kiddo’s busy, it’s still important to put that math homework to good use because it could affect your child for the rest of his life.
Check this out.
When Caroline was 14 years old, she and her dad decided to invest $2,000 every year for five years. Call it a little experiment, if you will. Here’s what it looked like:
Age 14: $2,000
Age 15: $2,000
Age 16: $2,000
Age 17: $2,000
Age 18: $2,000
Caroline and her dad invested no more money than that initial $10,000.
Fast forward 51 years. How much money did Caroline have after 10 percent annual return, at age 64?
How’s that for some incredible math? (Skip solving for x.)
Why Learn About Money Now?
Investing is so important — but that’s not all your child should spend time learning. Unfortunately, high schools and colleges just don’t teach basic financial literacy.
It changes lives when they learn this stuff early:
- Your kids show up equipped to handle debt. The less debt a child has over his lifetime, the more he’ll be able to do the things he wants to do, such as buy a home, purchase the things he wants (not on credit), retire and more.
- It’s fun. When you see money compound, your eyes fall out of your head. It’s more fun than living paycheck to paycheck, that’s for sure.
- It’s habitual. Get it together early on and those good money habits will follow your child the rest of his life. Encourage him to put 10 percent of his income into a retirement account and increase that account a little bit at a time. Your child will be in good shape if she keeps it up till retirement!
- It makes him a lifelong money learner. Books about money these days are so dang good. And so inspiring! Check out Why Didn’t They Teach Me This in School?. He might start stuffing it into his trig book and devouring it during class.
Money Topics Your Child Won’t Learn in School
Here’s what your child needs to learn about money management from you, through books and other methods.
Budgeting and Other Fun Stuff
Budgeting 101 is typically not an essential high school class, so check out the basic budgeting steps your child should know. Why not let him in on all your expenses and bills so he sees what you do?
- Add up expenses like rent, utilities, internet, groceries, clothes, household supplies — you know, those fun adult things you get to tackle each month.
- Add up income. How much money do you make from all income sources?
- Subtract expenses from income.
- Understand the difference between “needs” and “wants.” Start applying this now. “Needs” should only include necessary items, like rent, utilities, groceries and more. “Wants” include coffee runs, entertainment and expensive jeans. A really crucial lesson for kids to understand!
- Sign up for automatic bill pay. Incurring extra fees or interest when you fail to pay your bills on time is a real bummer — and it can ding your credit. Show your child how you pay for everything on time.
Make it fun! Your child can tap into lots of budgeting apps, like YNAB and Mint.
Encourage your child to learn about college costs, including a few keywords:
- Tuition: The cost of taking classes at a college
- Room: On-campus housing
- Board: Meals on campus
- Activity fee: Fee to go to events on campus
- Total cost: The sticker price — most students won’t pay this amount!
Let Quatromoney help you (and your child) understand college costs. Quatromoney helps you assess how savings and cash can help your child reduce the need for loans. The company helps your child plan for four years, not just the first year of college.
It’s really important to understand student loans — heck, all loans! — because your child might need them to pay for college.
Student loans seem super complicated, right? They are. For now, let’s reduce student loans into just a few quick facts:
- You pay interest when you borrow. Interest is the amount your child pays (a percentage of a loan) to borrow money. In other words, when your child borrows money for student loans, it costs more money to pay them back. The longer your child takes to pay them back, the more he owes. (Does your child understand this stuff?)
- Take federal loans first and private loans as a last resort. (Let’s go over this more in a second.)
- Get to know the college’s financial aid office. Financial aid officers can help your child navigate everything. Get to know the financial aid personnel at your child’s college. You’ll be happier for it.
Now, onto the basics of federal and private student loans.
Federal Student Loans
The U.S. Department of Education offers Direct Unsubsidized and Subsidized loans and Direct PLUS loans, including Grad PLUS loans for graduate and professional students and Parent PLUS loans for parents of undergraduate students.
What to know: Federal student loans trump private student loans for several reasons:
- No credit checks are involved (although Direct PLUS loans do require a credit check).
- Your child might qualify for an income-based repayment plan once he graduates, which means it depends on how much money your child makes once he graduates from college.
- They’re most often forgiven, which means your child may not have to repay. This depends on which career your child chooses after graduation.
- Federal student loan interest rates are lower compared to private loans.
Private Student Loans
Private student loans fill in the need gap after your child exhausts all scholarship, grant, savings and federal student loan options.
What to know: Private loans often require a co-signer. This person is commonly you or another relative. A co-signer needs a good credit score and needs to show proof of income.
Finally, remember that co-signers are just as responsible for paying back loans. Have a conversation with your child about risk and how your child plans to repay private loans before your child agrees to co-sign.
Starting a Retirement Fund — Now! Yes, Now!
Let’s go back to that fun math problem we did at the very beginning of this article. It took Caroline 51 years to earn a million dollars. Sixty-five years old might feel like it’s a lifetime away.
I’ll repeat what Grandma told your child a million times: “You’ll be my age before you know it, Sonny!”
She’s right — you know that now! (How do the years slip by?)
Do you wish you’d saved $2,000 for five years starting at age 14? I’m sure you do. Hopefully that example is enough of a motivation. Hopefully it propels your kid to scrape up the money from every birthday he’s ever had and invest it.
What to know: If your child’s earned income, she can contribute to a Roth IRA. This could include money earned from a W-2 job or even from self-employment gigs like dog-sitting.
Help Your Child with Financial Literacy
It’s easy for a high schooler to think, “I’ve got plenty of time to figure this stuff out!”
It’s easy to say, “Retirement’s like, 100 years away.”
It’s not! Help your child with this knowledge and let her peer over your shoulder when you’re doing things like paying bills online. Involve your child — they’re great lessons for the future.