FOX Business’ Lydia Hu talks with Jessica Daly and her daughter Madison about the rising costs of college as tuition has more than doubled since 2001 on “The Big Money Show.”
For many students and families, the rising costs of higher education seem like an insurmountable challenge. Questions like “Which school is best for me?” » or “The prestige carry more weight than expertise” carry their share of weight, but one question keeps coming up: “How can I save as much money as possible?”
The numbers show total average student debt – including private debt – in the United States could reach $40,681, with the average federal borrower owing $37,853 per person.
Although FAFSA (Free Application for Federal Student Aid) is a key tool for unlocking scholarships, loans, and work-study program opportunities that can help alleviate some higher education expenses, relying solely on FAFSA can sometimes lead to astronomical debt, and not all students can do this. receive the amount of assistance they need.
The good news? There are other ways to reduce your education expenses. Whether you’re trying to avoid excessive student loans or supplement your existing financial aid, these practical and cost-effective options can make higher education more accessible and affordable:
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1. Community College
Entrance to the community college building. (iStock/iStock)
What’s in a name? While attending top universities like Harvard, Stanford, Yale, or Columbia may be a dream, these schools and others like them can come with a hefty price tag.
To break it down:
- THE College Council reports that the average annual cost of tuition and fees for a public 2-year college for the 2022-2023 school year was $3,440 for students in the district.
- The average annual cost of a 4-year public university was $9,410 for in-state students and $23,890 for out-of-state students.
- For a private 4-year university, the cost rose to $32,410 per year in tuition and fees.
Even completing just two years at a less expensive school and transferring to a more expensive institution can reduce some of your overall college costs.
“It’s really important for us in California, where you do two years at a college and transfer to, say, UC Santa Barbara or UCLA or Berkeley,” said Greg Kaplan, a strategist in college admissions based in Golden State. Fox News Digital.
Kaplan pointed out that many students start at community colleges and then transfer to more prestigious flagship universities. This pathway allows students to earn a degree – and institutional recognition – from a top-ranked university, but at a fraction of the cost of attending all four years at their dream university.
“We worked with a student who started at Arizona State University for two years on a full scholarship, and he transferred to Northwestern, which is extremely expensive and very prestigious. only had to pay for two years,” he explained.
2. Make your employer your partner
A barista pours steamed milk into a beverage cup marked “Steven” at a Starbucks Corp. coffee shop. in the Sandton district of Johannesburg, South Africa, on Monday January 14, 2019. (Waldo Swiegers/Bloomberg via Getty Images/Getty Images)
Some employers reimburse tuition for degree programs that could potentially improve their employees’ job skills. In other words, you save money and your employer hires a more talented and well-rounded employee. It’s a win-win for both parties.
Tuition reimbursements are often capped at $5,250 per year, pursuant to Section 127 of the Internal Revenue Code (IRC), which allows companies to provide this dollar amount of tax-free aid. This can be deducted as a business deduction for the employer and employees receive the reimbursement as a non-taxable benefit.
But some employers can do much more than that, even going so far as to fully cover the cost of an employee’s bachelor’s degree.
“It’s not just about employer matching,” Kaplan said. “If you’re a young person and you’re thinking about becoming an entry-level worker, you might want to think about working for a company that could be your partner…I’ve talked to people who are specifically going to work at a company. at a place like Starbucks because they can take classes online at Arizona State, and they’re doing it to get their degrees. »
Starbucks College Success Plan (SCAP) offers eligible employees 100% initial tuition coverage for an undergraduate degree through Arizona State University’s online programs.
Amazon Career Choice Program likewise, pays tuition and fees in advance up to an annual limit, and Walmart’s Live Better U The program provides eligible Walmart employees with the opportunity to continue their education at company expense.
3. Parental benefits
A person is holding a jar full of saved money. (iStock/iStock)
Rather than relying solely on their employer, some college applicants may receive benefits from their parents or guardians, most commonly through company scholarships.
Companies like Chevron, PepsiCo and Wells Fargo offer scholarship opportunities just for children of eligible employees. PepsiCo Foundation Family Researchers The program, for example, offers a renewable reward of up to $5,000 to selected winners who will pursue a qualifying education program with the funds.
After being accepted by a university, it is worth exploring employer benefits and applying for scholarships if eligibility criteria are met.
This amount, combined with the potential for federal and state aid, can significantly reduce the financial burden of higher education.
4. Open a 529 account
Jar with label and money on the table. Money saving concept. (iStock/iStock)
Although it is best to open a 529 account when college savings begin while the college applicant is a child, starting an account as an adult and adding small amounts can be helpful. accumulate over time.
What is a 529 plan? A 529 account is a tax-advantaged savings account designed specifically for education expenses. Contributions to this account grow tax-free, and withdrawals are also tax-free if used for qualified education expenses (e.g., tuition, supplies, room and board, etc.) .
It’s different from a basic savings account since the money has the potential to grow instead of sitting still.
“If you could save a few thousand dollars a year, sure, anything would help,” Kaplan said.
However, a 529 only extends so far. Kaplan notes that 529 plans alone may not cover much of the cost of tuition, especially at private universities.
“It wasn’t enough to pay for my overpriced private university,” he added.
5. Prioritize the SAT/ACT
Close-up of a pencil on a page of an SAT college entrance exam prep book, taken on August 6, 2017 in Melville, New York. (Thomas A. Ferrara/Newsday RM via Getty Images / Getty Images)
While many colleges have retained a test-optional policy in the post-pandemic era, high scores on the SAT or ACT can give students an advantage when it comes to merit-based scholarships. Good standardized test scores can help students unlock thousands of dollars in automatic aid, helping ease the burden on their overall tuition bill.
“For example, if you scored a 32 on the ACT or a 1400 on the SAT, that will automatically qualify you for a huge amount. [approximately] $30,000 scholarship to the University of Alabama, Tuscaloosa,” Kaplan said, noting that other colleges and universities award similar amounts.
“These scholarships are automatic based on test scores and grades, so study for the SAT or ACT, even if it’s not required. Giving it your all could potentially pay for full tuition.”
Although taking the multi-hour exams seems daunting for many high school students, devoting hours of practice through extra classes, practice exams, and even seeking help from tutors could lead to a drastically different financial outcome in the long run.
6. Consider consortium programs
FOX Business Correspondent Lydia Hu explains why fewer students are applying to college on “The Big Money Show.”
A lesser-known way to save on college costs is to take advantage of state consortium programs, which allow students to attend out-of-state public universities at reduced tuition. These agreements can help families avoid the high prices often associated with non-resident tuition.
In states like California, the Western Undergraduate Exchange (WUE) is a game-changer. This program allows students to apply to more than 150 colleges in the Western United States – including schools in Montana, Hawaii, Wyoming, Arizona, California and Nevada – while paying reduced tuition fees.
“If I have a 3.3 GPA, I can go to the University of Utah for in-state tuition plus a small fee as a California resident. So it’s cheaper for me to go to the University of Utah at $11,000 a year than to go there. go to any public university in the state of California,” Kaplan said.
“There are different consortia in the Northeast, Southeast, Midwest and West, and those are ways that these universities are looking to diversify their students based on geography. I think a lot of people don’t Don’t realize that these consortia exist and that they can bring many more schools into play, and this could end up being the right solution for you or your child.
