Tips and Tricks for Making College Affordable

The average student spends $38,270 per year on college expenses—a number that includes not just tuition but also books, supplies, and daily living expenses. This number is even higher for students attending school at a private school, with the average student paying some $58,628.

In short, college is expensive. It is something that many families spend their whole life saving to afford or, alternatively, take out loans to support with the knowledge that it will lead to a higher lifetime income.

But as expensive as college is, it doesn’t need to be unreachable. With the support of financial aid, scholarships, and other opportunities, it can be something that anyone can pursue. In this blog, we’ll review some of those opportunities so you can plan ahead.

Grants and Scholarships

The most obvious way a student can make college affordable is with grants and scholarships. As we noted in a previous blog, these refer to financial awards that do not need to be repaid but are meant to support specific kinds of applicants. They may be intended to attract high-achieving students (e.g. those with high GPAs or test scores), those with particular skills (e.g. athletes, musicians), or those from a particular background that might be underrepresented in higher education.

Many grants and scholarships are advertised by colleges and universities themselves on their websites or can be found by talking to admissions counselors. Others, such as the Department of Education’s Presidential Scholarship, are offered automatically upon a student fulfilling certain requirements.

Still others, outside scholarships, require some searching. For instance, the Coca-Cola Company’s Coca-Cola Scholars Program Scholarship Program awards up to $20,000 to high school students who demonstrate exceptional leadership and commitment to their communities in ways consistent with the company’s values.

Financial Aid

A second option for students is aid. Most financial aid is meant to address specific financial needs, often resulting from a student’s income.

The way to secure needs-based financial aid is through the FAFSA, which connects students to  a vast network of scholarships, work-study programs, and federal loans that make college affordable. Applying gives students access to the largest possible source of aid to help pay for college. The average undergraduate applying for aid receives roughly $14,100, though some students may receive far more depending on their need.

Through FAFSA, students may gain access to Federal Pell Grants, which are awarded to undergraduate students with exceptional financial need and do not need to be repaid. They may also be connected to a federal work-study program, where they can seek part-time employment while enrolled to pay for college. 

Lastly, they can gain access to subsidized or unsubsidized loans from the Department of Education and others. Subsidized loans refer to those where the Department of Education pays the interest while the student is in school and for the six months afterward. An unsubsidized loan is one where the student borrower is responsible for paying all interest. 

These loans are used by many students and are a vital resource in the college journey.

529 Plans

Another method families use to pay for college are through tuition and saving plans meant to encourage saving for educational costs. One of the most common of these is called a 529 Plan, named after Section 529 of the Internal Revenue Code. 529 Plans are sponsored and run by all 50 states and the District of Columbia, though the rules and fees vary from state to state. 

Most 529 plans are educational savings plans that allow the account owner (usually a parent or guardian) to open an investment account to save for the student’s qualified higher education expenses—such as tuition. Withdrawals are tax-free when used for college expenses. 

While anyone can open a 529 account, they are most frequently operated by a student’s parent or guardian. A financial advisor can help you figure out if a 529 Plan is right for you and your family.

Smart College Choices

One final albeit indirect way that students can reduce the cost of college is simply to be aware of the choices available to them and the relative costs of those choices. Public colleges, on average, tend to cost less than private schools (though not always). In-state schools tend to cost less than schools out of state.

More broadly, students should look at what each college offers them after acceptance. If one school offers a full ride and another offers no financial support, it may be a better financial decision to attend the school offering money—all other factors remaining constant. 

It may be useful for students to sit down and to stack each school’s tuition costs versus the aid, scholarships, and grants available so that they can understand what makes most sense for them and their finances.

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Ultimately, making good financial decisions around college comes down to being aware of your options and planning ahead. If you want help in starting this process and creating a personalized college financial strategy, we encourage you to sign up for a consultation with a Class 101 college advisor today.