8 Smarter Ways to Pay for College

college graduation

Take advantage of every savings opportunity to help pay for college. | Andreas Rentz/Getty Images

No matter the college you choose to attend, there is one certainty: Your education will be expensive. The obvious costs of tuition, books, and room and board add up quickly. Then, throw in the hidden costs — a new computer, outfitting your dorm or apartment, studying abroad, health care, and your social life — and you’ve spent tens of thousands dollars.

I graduated college with over $40,000 in student loan debt, which appears to be on par with the national average. In 2016, the typical college graduate averaged over $37,000 in student loan debt. That number contributes to the $1.45 trillion owed in student loan debt across the United States. To put that number into perspective, Americans owe $764 billion in credit card debt, a far cry from education debt.

How do you avoid contributing to those numbers?

Well, you wise up and prepare. As a college student (or a parent of one), it’s crucial to take advantage of every opportunity out there. This means you dig into your community and find out what is available on the local level. And then expand into the state and federal assistance. Here are a few ways to avoid getting caught in the crippling eddy of student loan debt.

1. First and foremost, start a savings plan now

line of piggy banks smallest to largest

Allow your fund to grow over time. | AndreyPopov/iStock/Getty Images

As a parent, your child’s education is typically of the utmost importance. So setting up your child for success often means enabling them to avoid student loan debt. A smart step in the direction of that goal is to create a college savings fund. Consider opening a 529 plan or a Coverdell Education Savings Account.

The differences between the two plans vary on how much you are able to contribute each year, how they are taxed (if at all), and when you are no longer able to contribute. The beauty of both savings plans is you do not have to choose between one or the other. You can have them both.

2. Connect with local foundations for grant opportunities

Graduation cap on $100 bills

Many foundations want to help you get a degree. | BrianAJackson/iStock/Getty Images

On the local level all across the country, there are foundations that exist solely to better the lives of community members. Part of those efforts comes in the form of awarding scholarships to college-bound students in their senior year of high school. From small towns of 3,000 residents to cities as big as San Diego and New York, there are foundations that assist in offsetting the cost of higher education. So urge your child to apply.

3. Apply for federal and state grants and scholarships

Harvard University

Scholarships make attending a university like Harvard more feasible. | Jorge Salcedo/Shutterstock

Who doesn’t want free money? The first step in acquiring that free money is applying for the Free Application for Federal Student Aid before the deadline. Sometimes confusing, FAFSA is the application to qualify a student for financial aid. Pell Grants are awarded to students based on financial need. The more financially strapped your family’s household, the more money received from a Pell Grant.

Federal student grants cover a variety of needs, so it’s important to research all the available options and apply. So many college-bound students become so overwhelmed by their to-do lists that they opt out of applying for state and federal grants and scholarships altogether. But knowledge is power. Become informed on what is available, and apply.

4. Consider community college for the first 2 years

Community TV show scene

Community college is often a smart financial choice. | NBC

There seems to be an unfortunate stigma around the education received from community colleges. Why is that? Naysayers typically believe the education these schools provide is not up to snuff in comparison to a four-year university. But this belief could not be further from the truth.

When it comes to saving money, community college is hands down the better option. Typically, students who opt for community college are able to attend a nearby school, live at home, save money, and learn a lot of discipline before embarking onward to a university. The cost of attending community college is substantially less expensive than a university, and the typical classes required within the first two years of college are the same no matter what school you attend. And when you do transfer and receive your degree from the university of your choice, the diploma will look just the same as everyone else’s.

5. Avoid an out-of-state college

Campus of the University of Michigan

Even state schools are expensive if you’re not a resident. | tiny-al/iStock/Getty Images

For many students, this is where the rubber meets the road. The appeal of getting out of your home state to spread your wings is huge — but insanely expensive. On average, the cost of paying out-of-state tuition could run a student thousands more than attending college in your resident state. Don’t compromise your future financial freedom just to attend college in another state.

6. Check to see whether your state recognizes prepaid tuition plans

using calculator

A plan allows you to know what you’ll have to pay for your degree. | Dutko/Getty Images

Prepaid tuition plans are a dying breed, but they still exist in some states. What is the idea behind a prepaid tuition plan? If you are sure your kiddo will attend an in-state school, you can go ahead and purchase their college tuition at the current rate. It’s no surprise that as time continues to tick, the cost of education gradually increases. Purchasing tuition at a lesser price tag could save a lot of money in the long run. Some states will even allow the prepaid tuition to be transferred to another family member. Check the fine print to see whether your state gives the thumbs up on prepaid plans.

7. Get a job

cashier with customers

Even a part-time job will put a dent in college costs. | leaf/iStock/Getty Images

Does anyone really want to work while attending college? Of course, most students want to avoid a job during college like the plague, but that’s not always a wise decision. Supplementing the cost of college with even a part-time job will greatly mitigate the financial strain. Plus, having a little fun money never hurt anyone.

Another option? Check into a work-study program. Not only are work-study programs a great option for offsetting the cost of tuition, but these programs also allow students to gain more knowledge within their field of study. Beyond that, it’s an amazing opportunity to begin networking within your chosen industry.

8. If you must take out student loans, follow these rules

college student

Research all your loan options, so you’re not buried in debt when you graduate. | Png-Studio/iStock/Getty Images

Sometimes, all other options have been exhausted, and student loans are inevitable. If so, join the club, but do so wisely. Lenders make borrowing money insanely easy, so do not get overzealous with how much you choose to borrow.

First rule of thumb: Take out federal student loans. There are two types of student loans: private and federal. The advantages of a private loan pale in comparison to those of a federal loan. Federal loans offer a fixed interest rate, options for consolidation, higher potential for student loan forgiveness programs, and more flexible options for repayment. Private loans usually have variable interest rates that could rise up to 18%.

Second rule of thumb: Know how much to borrow. Avoid taking out more than the salary you anticipate earning in your first year of post-grad work. For instance, if you are graduating with a law degree, you’ll be able to afford to take out a higher amount of student loans because your salary will be higher. On the other hand, if you are graduating with a journalism degree, you’ll want to take out a lower amount in student loans.

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