The last two years have seen the biggest college tuition hikes since records have been kept for those sorts of things. A study by The College Board shows that for the 2009-2010 school year tuition for U.S. public colleges rose on average 6.5%, with California leading the way with a 30% tuition hike. This was on top of a nationwide college tuition increase of 6.4% the previous year. Now a college student is expected to pay over $7,000 a year (on average) for the privilege of attending the public halls of higher learning. That’s going to be tough, since household incomes have only increased in the same time period by about a third as much. Unfortunately, this “new math” just might price most people out of going to college.
Or will it?
Just like solving a Rubik’s Cube seems impossible when it’s all scrambled up, there are ways to get around the rising cost of college if you think outside the box. Oh sure, there are the usual avenues; applying for grants, taking out college loans, working and going to school part time. However, there are also other options that people tend to overlook.
So on your next much-needed break from filling out all those college loan applications take a few minutes to read the following three ways you can cut corners on rising college tuition costs.
1) Consider Online College
Now most public and private colleges offer some form of online classes, and in many cases allow you to get your entire degree via the Internet. But because the curriculum, textbooks, supplies, and instructors for online classes are usually the same as those for campus classes, the tuition roughly ends up being similar for both. (Depending on the college you choose.) However, there is a substantial savings with online college in that you get to attend school from the comfort of your own home. This means you don’t have to pay for college housing, transportation, gas, or parking, all of which can up to thousands of dollars per year.
True, you do need to own a computer and pay for Internet access, and possibly buy some special software, but these are small costs compared to what you’d have to fork out to attend years of brick-and-mortar college. If you’re interested in comparing the cost of online versus campus college About.com has a great cost comparison sheet that allows you to do exactly that.
And then there’s the big question, is an online degree equal in value to a campus college degree? The answer is, it depends. Of course, if you want to be a brain surgeon then you’ll be hard pressed to find an accredited online medical school (although you could fulfill at least a few pre-med class requirements online). Plus, it might be kind of hard to student teach online if you’re an education major. However, for specialized careers in things like nursing, accounting, tourism, business, and even pre-law online degrees will get you jobs just as quickly as the old fashioned college degrees. Which brings me to my next point…
2) Consider Specialized Education
Regardless if you study online or on campus, there are many careers in technology, for example, that didn’t exist 10 years ago, such as social media, blogging, website design, electronic graphic arts, search engine optimization (SEO), IT specialist, the list goes on. Even though there are programs at universities for these areas of study, you can get just as valuable of a tech degree at a community college or vocational school – for a fraction of the cost. According to the College Board, community college tuition increased in the 2009-2010 school year by only 1.6%. Similarly culinary arts, graphic design, journalism, and business are all areas of specialized education that are available at smaller, less expensive schools (which are also possibly easier to get into).
3) Consider a Private School
According to the New York Times, tuition at private colleges has gone up 81% between 1993 and 2004, however, financial aid at those same schools has increased by 135% over those same years, even though financial assistance at public schools has actually gone down. Ironically, this means that although private colleges are more expensive than public universities, private schools tend to offer more scholarships. Therefore, your chances of getting a scholarship at a private school are far greater than if you applied to a public university. Granted, you need the grades and resume to get into a private school, but if you apply and ask for assistance, the worst they can do is say no. But you’ll never know if you can get that assistance if you don’t ask.
Rising costs in college tuition are a fact of life now. But that doesn’t mean you should give up your dream of going to college. And it doesn’t mean you have to start your career deep in college debt. However, it does mean you may have to compromise a little by looking at college as a practical matter. Yes, we’d all like to attend Harvard, Stanford, or NYU, but is paying off college debt the rest of your life really worth it?
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We’d all like to go to college on scholarship or grants, but the reality is there’s only so much free money to go around. And if you choose to go back to school part time while you work (because giving up food is just not an option) then your chances of obtaining a scholarship or grant are even slimmer. (Benefactors tend to give money to full-time students with no other sources of income.)
That leaves the dreaded college loan. We’ve all heard horror stories about graduates having their credit permanently damaged as a result of not repaying their college loans in a timely manner. Or where balloon interest on a college loan inflates upon graduation, leaving the new graduate to start life so deep in debt, it will take decades just to make a dent.
While it is true that managing any debt requires a fair amount of responsibility and willingness to stay on top of the payments, college loans are not nearly as complicated, scary and financially crippling as they used to be. Basically college loans boil down to three categories: government student loans, parent loans, and private student loans.
Government Student Loans (GSL)
GSLs are funded by the federal government, have extremely low interest rates, don’t require credit checks, and offer a plethora of repayment plans. This is where it gets tricky, because if you defer repayment of your student loans until after you graduate you might become comfortably accustomed to a lifestyle and budget that does not include a monthly student loan payment. So (Surprise!) when the government one day comes knocking, expecting a payment, and you haven’t planned for that, well, things can get financially ugly very quickly.
Your repayment plan depends on which GSL you get. There are two; the Federal Stafford Loan and the Federal Perkins Loan. The Federal Stafford Loan has a fixed rate of 6.8% and repayment can be deferred until after you graduate. However, to help offset your debt upon graduation you can set up payment plans for as little as $25 per month while you’re still in school.
To qualify for the deferred payment option you must show need via your tax returns. Two thirds of Stafford loan recipients have a family adjusted gross income (AGI) of $50,000 per year. However, a smaller percentage of recipients have an AGI of up to $100,000. So unless you’re really rolling in the cash, it’s worth your while to look into a Stafford loan.
The Federal Perkins Loan is a little harder to get because it’s a smaller pool of funds and is awarded to students with extreme financial need. Also, Perkins loans are school-based, meaning the individual schools decide who should get assistance however, the loans are funded with government issued money. The interest rate is 5% fixed and the federal government absorbs all the interest while the student goes to school and up to 9 months after graduation. It’s the best deal around, if you qualify.
Parent Loans
If your parents still claim you as a dependent they can take out a Parent Loan for Undergraduate Students (PLUS) loan. In this case, your parents are on the hook for repayment, not you. Like the Stafford and Perkins loans, PLUS loans are government issued, but have an interest rate of 7.9% fixed. Repayment starts 60 days after the last of the loan has been issued (even if you’re still in school), and your parents can take up to 10 years to pay it off.
Private Student Loans
Private Student Loans (PSL) are also called bridge loans because they’re meant to bridge the gap between what the government will loan you to pay for college and what your college tuition actually costs. Unlike the loans mentioned above, PSLs are privately funded by lending institutions, banks, endowments, trusts, and wealthy individuals acting as private lenders. Because there is no safety net in case you default, your credit score pretty much determines if you’ll get a PSL. However, on the bright side there are no lengthy, federal forms to fill out. But because PSLs are privately funded interest rates and repayment plans vary.
Even though a PSL might be easier to obtain (depending on the lender) you should be very careful when you engage in one. To be safe it’s best to have a loan officer or even an attorney check over your lending contract before you take out a privately-funded student loan. Nothing worse than getting into a legal, financial squabble before you even graduate from college.
Now more than ever going back to school is a wise choice. Once the dust settles in this economic downturn wouldn’t you love to be poised to start a new career? That can happen if you take a little time to plan out your college tuition payment options. Depending on your school, major, and financial situation, a college loan may be just the ticket you need to put you on the path to a whole new career.
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With the economy still in the dumper and unemployment still above 9%, many people are taking this opportunity to go back to college to get a degree in something more marketable. That way when the economy finally does bounce back, the newly educated will be in a position to apply for more lucrative jobs. Great plan, except for one problem. How the heck do these people plan on paying for school? Not only must one come up with tuition, but you have to eke out a living as well.
Fortunately, you have some options when it comes to financial assistance for college. The most obvious is Federal Student Aid, which believe it or not, still exists even in these tough times when government is cutting back on programs such as unemployment and social security. The best place to look for information is on the Free the Application Federal Student Aid website. Here you’ll find several worksheets you can fill out to see you if you even qualify for FSA.
However a much less, but equally important place you can check on student aid is with your own employer. Many companies offer college tuition assistance for their employees, however, this type of aid has more strings attached (because it’s privately funded) than FSA, but is still worth investigating.
The best place to start is with your human resources department. Ask them if they have a company-subsidized higher education program, and if you qualify. But before you do, familiarize yourself with these four important points.
1. The IRS
The IRS allows every company to contribute up to $5,250 per year, tax free, to any employee’s college education. However, the employer must pay payroll taxes on any financial aid over $5,250 paid to a single employee in a calendar year, as the government then considers the additional funds extra income. This money can be used for tuition, books, school-mandated school supplies and equipment (such as computers). Your employer should know this, but if not, have him go to the Employer Tuition Assistance page of Fastweb for more information. There are many employer benefits to helping employees go back to school that your employer may not know about.
2. Your GPA and Major Requirements
Once your employer agrees to financially assist you with your education your employer has every right to insist on a minimum GPA and also to dictate what your major will be. It only makes sense that your employer doesn’t want to pay for an education you fritter away by not performing at least up to a C grade level. In fact, many employers reimburse tuition based upon the employee’s GPA. For example, 3.5 and above gets 100% tuition reimbursement. 3.0 to 3.499 yields 80% reimbursement, and so on.
Similarly, an employer who pays for an employee’s education can also insist the employee major in something that adds value to the company, which is not unreasonable. Why would a computer software company, for example, pay one of its employees to get a photography degree (unless, of course, photography was part of the employee’s job requirements).
3. Reimburse versus Direct Pay
If your employer agrees to pay for part or all of your tuition, find out when you’ll get the money. Some employers pay for tuition up front, when tuition is due. However, others pay upon completion of the class. In the latter case, YOU have to front the tuition money in order to become enrolled. The rule of thumb is to have at least two semesters worth of tuition in the bank, so you don’t have any interruptions in your education due to finances. To be safe, find out ahead of time exactly when your employer contributes to your tuition.
4. Repayment Clause
And finally, find out what happens if you change jobs after you’ve received your new degree. Many employers require a newly educated employee to stay with the company at least a year after completing a company-subsidized degree. Nothing makes an employer angrier than a valuable employee jumping ship for bigger bucks right after the employer paid for the education that made that jump possible.
With a new year coming up FSA and other financial assistance programs will be taking applications starting January 1. If you’re interested in going back to school, now’s the time to be doing your research. If you know of any specific corporate college tuition assistance programs, feel free to let us know by posting a comment. Or if you have experience with the FSA program, we want to hear about it. Nothing beats real life experience…except maybe a brand, spanking, new, lucrative college degree.
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