Debt Free

Weather you're funding your college education or a dependent's, the cost of getting a degree has gone up along with everything else. According to the most recent College Board study the cost of living alone, even in the low budget category, is $10,930 for a 9 month stay at college. That, unfortunately for anyone footing the bill, doesn't include tuition, fees, and books. Add in the average cost for those items at a major, public 4-year college or university of $6,185, and you can see how the expense of a college education can seem impossible to afford.

While a college education isn't the right choice for everyone, the statistics are pretty clear on this one. Getting a college education will allow you to earn more money throughout your career than not getting one. Some of that is from the education, some of it is from the piece of paper you'll receive at the end of the process, and some of the increased income is derived from the social network you'll have by the time you graduate.

How to Save Money On a College Education – 1
What are you to do if the cost of college is looming, and you don't see a way to fund it? You have a couple of choices. The most logical first step is to lower the funding requirement. The lower the cost for the tuition, fees, and living expenses over the 4-years, obviously the easier it will be to foot the bill. Consider beginning the higher education process at a community college and transferring credits to a 4-year school to complete the degree.

The average annual cost of tuition and fees at a 2-year school for the 2007 – 2008 school year was only $2,361, only 38% of what you'd pay at a 4-year school. If you figure on a similar savings for the first two years, attending a community college would save approximately 19% on the cost of a 4-year degree.

How to Save Money On a College Education – 2
If the education is for a dependent, living at home during all or part the 4 years would further cut costs. Even if the time the dependent lived with parents only consumed the first two years, a good portion of the average $10, 930 in living expenses would be eliminated for that time.

How to Save Money On a College Education – 3
Pick a more affordable school. State to state there is a huge variation in costs for both 2 and 4 year colleges. The annual cost of an tuition and fees ranges for 2 year schools from a low of $633/ year in California to a high of $5,692 in New Hampshire. I'd venture to guess that the schools in California are not 8 times worse than those in the Live Free or Die State. Apparently living free does not extend to their higher education system.

Make the jump to a 4 year institution and you'll see a commensurate increase in costs from high to low. Once again it's schools with sun beating out schools in the Northeast for education costs. Florida can get you educated for $3,361 per year at one of the state's 4 year public colleges, while going up the coast to Vermont will drive up prices to a jaw dropping $10,428! That's a whole lot of clams for annual tuition and fees at a public college or university.

Note that these are in state figures, and those from out of state, unless they are from a state with a reciprocal agreement, will pay far higher costs in most cases.

How to Save Money On a College Education – 4
One great option you can use to fund a college education is to pay for college with today's dollars. As with everything else, the cost of a college education is affected by inflation. The problem for someone paying for that education is that the cost of an education is rising much faster than inflation, and has been for a while now. Tuition and fees increased a nationwide average of 6.6% according to the College Board report. Even in our current inflation situation, this out paces inflation by a healthy margin.

The solution? Pay for college with today's dollars, before inflation has a chance to take hold. Many states offer prepaid tuition plans, where you can pay for a college education at today's prices, by locking in the price of college tuition and fees at current rates. If you're about to start college, that offers you little solace, but for those parents facing the prospect of paying little Johnny or Jane's (possibly both) college expenses in the future, it could be welcome relief from high future prices. Check with your state to find out what they offer.

Note that a prepaid plan is not the same a 529 plan. A 529 plan is also a way to pay for college, but with a different spin. While prepaid expense plan is for tuition and fees only, a 529 plan, technically called a qualified tuition plans, will pay for all qualified expenses, such as tuition, books, room and board, and required computers.

Another important difference is that many states will actually guarantee your investment in a prepaid plan, no matter what the market does. A 529 plan, on the other hand offers no such piece of mind. Any money you have invested is subject to the whims of the market where you're invested. One advantage you will get with a 529 plan however, is that they are not subject to any federal income or capital gains taxes. In the majority of cases, that applies to state taxes as well. You will have to pay fees that will lower your realized return, so check with you state to determine these. To find out more about 529 plans, prepaid education plans, and the differences between the two, see the U.S. SEC website here.

How to Save Money On a College Education – 5
Something else that can be done to decrease the funding requirement for college is to have someone else fund it. Usually that means the Federal Government, although you should check with your state to see what programs are available. The most popular federal education funding mechanism is the Pell Grant, although many different grants are available for qualified students. Last year about $70 billion was delivered to students by Federal and state government agencies to fund all or part of their educations.

There's a new type of education grant offered by the Federal government called the Teacher Assistance for College and Higher Education (TEACH) (Cute, huh? Who do the taxpayers pay to think these things up, anyway?) grant. It's for those going into education related fields that will serve low income students. Here are the requirements for a TEASCH grant (from the DOEd website) First, you'll have to fill out the Free Application for Federal Student Aid (FAFSA), although you do not have to demonstrate financial need. Then you'll have to meet the following criteria:

• Be a U.S. citizen or eligible non-citizen.

• Be enrolled as an undergraduate, post-baccalaureate, or graduate student in a postsecondary educational institution that has chosen to participate in the TEACH Grant Program.

• Be enrolled in coursework that is necessary to begin a career in teaching or plan to complete such coursework. Such coursework may include subject area courses (e.g., math courses for a student who intends to be a math teacher).

• Meet certain academic achievement requirements (generally, scoring above the 75th percentile on a college admissions test or maintaining a cumulative GPA of at least 3.25).

• Sign a TEACH Grant Agreement to Serve (see below for more information on the TEACH Grant Agreement to Serve)
  

I did a post last year on the types of student loans, if you're looking to borrow the money for a college education.

How to Save Money On a College Education – 6
One thing that contributes more to the college experience every year is the cost of college textbooks. Back in the day they only cost a few hundred dollars a semester, now it seems like that's the cost of one book. Well, the professors have to sell the fruits of their publish or perish lifestyle somewhere. One place you can sometimes find said fruit is on Amazon.com, often for far less than the same item in the student bookstore. Instead of buying $300 - $500 in books you'll use for 3 months, spend less and buy them on line. Also, check eBAY. Sometimes you'll find school book bargains there as well.

Hopefully these tips can help you fund a college education, weather it's yours or a loved one's.