How To Pay Less For College

There are several ways to pay less for a college education, thereby making college more affordable despite the high cost. These 18 tips will help you cut the cost of college.

[See also How to Cut College Costs for additional tips.]

Learn more than a dozen tips about ways to spend less on a college education.


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Tips about Financial Aid for College

Focus on free money first, such as grants, scholarships and tuition waivers. Use a free scholarship matching website, such as Fastweb.com or the College Board’s Big Future, to find scholarships that match your background profile. Also use Google to search for scholarships by adding the word “scholarships” to your search query, but beware of scholarship scams. If you have to pay money to get money, it’s probably a scam. Scholarship listing books can also be helpful, but check the copyright date to ensure that the book isn’t too old to be useful. Continue searching for scholarships even after you are already enrolled in college.

Apply for financial aid even if you don’t think you’ll qualify. File the Free Application for Federal Student Aid (FAFSA) every year to qualify for federal and state grants. Some colleges will require a supplemental form, such as the CSS Profile, to apply for their own financial aid funds, but must still use the FAFSA for federal and state aid. Students are more likely to qualify for financial aid at a higher-cost college, even if they aren’t low-income students. You can’t get financial aid if you don’t apply.

Military student aid can make college more affordable. You can get a ROTC scholarship for one year before you are required to commit to serve in the U.S. Armed Forces after graduation.

You can get a work-study job or part-time job on or near campus to earn extra money to pay for college. Earnings from student employment of up to about $7,000 a year will not affect eligibility for need-based financial aid. However, don’t work more than 12 hours a week. Students who work a full-time job are half as likely to earn a Bachelor’s degree within six years as compared with students who work 12 hours or less a week.

Appeal for more financial aid. Financial aid forms do not consider special circumstances, such as changes in family income and employment, or unusual situations that differentiate the family’s finances from that of the typical family. Financial aid appeals are sometimes called negotiation, a professional judgment review or a special circumstances review. Download a free tip sheet on how to appeal for more financial aid.

Leverage Tax Breaks for College

Save money in a 529 plan, which is a kind of college savings plan that offers tax and financial aid advantages. Two-thirds of the states offer a state income tax deduction or tax credit on contributions to the state’s 529 plan, which is like getting a small discount on tuition. Every dollar you save is a dollar less you’ll have to borrow.

Parents should claim the American Opportunity Tax Credit (AOTC) on their federal income tax return. The AOTC provides a partially-refundable tax credit worth up to $2,500 based on up to $4,000 in tuition and textbook expenses each year for up to four years. The AOTC is an above-the-line exclusion from income, which means you can claim it even if you don’t itemize. There’s also the Lifetime Learning Tax Credit (LLTC), which is a less generous tax credit for people who do not qualify for the AOTC.

Claim the Student Loan Interest Deduction on your federal income tax return. The Student Loan Interest Deduction is an above-the-line exclusion from income for up to $2,500 in interest paid on federal and private student loans.

Reduce the Cost of Attendance

Live off-campus in an apartment or with your parents to cut housing costs. Get a roommate to split the rent. However, students who live on-campus are more likely to graduate and to graduate on time as compared with students who life off-campus or with their parents. If you have to commute to campus, the cost of a car may increase your costs. It may be difficult to find a parking space on campus.

Buy used textbooks. Buying used textbooks and selling your textbooks back to the campus bookstore at the end of the term may save you as much as half of the cost of new textbooks. College course syllabi must include the ISBN for every required textbook, which should help you shop online for a less expensive version of the correct edition of the textbook. The textbooks may also be on reserve in the college library, but these books tend to go missing early in the term.

Adopt an austere lifestyle. Only spend money on necessities, not luxuries. Your goal is to get a college degree, not to party or major in pre-wed. Avoid eating out or paid entertainment unless someone else is paying. Choose a cheaper meal plan to save on room and board and to avoid the freshman 15. Live like a student while you are in school, so you don’t have to live like a student after you graduate. Every dollar you spend will cost about two dollars by the time you repay the debt, so ask yourself if you’d still spend the money if it cost twice as much.

Ask for discounts. If you have a regular bill, ask for a discount. Sometimes you have to threaten to cancel your service. When you shop, ask if they have a student discount or other discounts. It doesn’t hurt to ask, and the worst they can say is “no.” (This tip works even when you’re an adult. Most department stores will provide a 10% discount and free delivery on appliances just for asking.)

Track your spending. Awareness of spending is the first step in exercising restraint. Track your spending using a spreadsheet, Mint.com or Quicken. Tag each expense in a broad category, like food, clothing, housing, transportation, medical care and taxes. Or, label each expense as mandatory (need) or discretionary (want). Generate a total for each tag or category at the end of the month to see where your money is going.

Tips about Education Financing

Ask the college bursar about tuition installment plans. A tuition installment plan breaks up the college bills into equal monthly installments over the academic term. They are useful if you can pay the college bills, just not in one big lump sum. Tuition installment plans do not charge interest, but do charge an up-front fee. They are a less expensive alternative to long-term student loan debt.

Budget before you borrow. Aim to have total student loan debt at graduation that is less than your annual starting salary, and, ideally, a lot less. If total student loan debt is less than annual income, you should be able to repay your student loans in ten years or less. If total student loan debt exceeds annual income, you’ll struggle to repay your student loans in ten years, and will need an alternate repayment plan, such as extended repayment or income-driven repayment, to afford the monthly loan payments. These repayment plans reduce the monthly payment by increasing the repayment term to 20, 25 or even 30 years.

Borrow federal first. Federal student loans are less expensive and have better repayment options than private student loans. They are also easier to get.

Reduce the Time to a College Degree

Crystalize a choice of academic major early. Students who change majors or transfer to another college are less likely to graduate on time, because some of their college credits may not count toward the new major or college and colleges offer less financial aid to transfer students. Take an interest or skills inventory test to help you identify the right academic major sooner.

Plan a path from enrollment to completion. Students who plan which classes they will take when are more likely to graduate on time. Graduating in three years instead of four, or, more realistically, four years instead of five, will save you a year or two of college costs. Consider the frequency with which the classes are offered and any prerequisite requirements.