4 Ways to Plan For and Slash College Costs

By Lynnette Khalfani-Cox, The Money Coach
This is the first of a two part series on slashing college costs, stay tuned for part two this Thursday!


1debtIf you’re gearing up for college, or you have a child in high school, you probably already know that higher education costs are soaring.

The average price tag of a public, four-year college or university now stands at roughly $20,000 a year, including tuition, fees, room and board.

The total cost of a private, four-year institution currently exceeds $40,000 annually, according to data from the College Board.

At top colleges in America — including Ivy League schools; other elite, private institutions; and many excellent state schools that attract out-of-state students –- it’s common for total costs to hit the $50,000 to $60,000 range or more per year.

Fortunately, that’s just the sticker price. Most families don’t pay published tuition rates. Scholarships, grants, and other financial aid help offset college costs.

But do you just get that free money? Equally important, how can you lower your overall college expenses, thereby avoiding massive student loans?

Here are four sure-fire ways to cut college costs by thousands of dollars each year.

1fafsaTip #1: Use the FAFSA4caster and fill out the FAFSA early

Even if your child is currently a high school freshman, sophomore or junior, you can get a sense of how much financial aid you are likely to qualify for by using the FAFSA4caster. The FAFSA is the Free Application for Federal Student Aid and it’s often your ticket to maximizing college financial aid.

Savvy college-bound students and parents should fill out the FAFSA as soon as possible, preferably in January of a student’s senior year of high school. (Once a student enters college, continue to fill out the FAFSA every year).

Don’t make the mistake of waiting to file the FAFSA in March or April, after the student or his or her parents have filed taxes. By then, various federal funds and certain institutional aid may be tapped out – having been allocated to early FAFSA filers.

Ideally, you should complete the FAFSA by January 15, realizing that it is perfectly acceptable to fill out a FAFSA using income estimates. You can later re-submit more accurate income figures after your 1040 tax forms have been prepared.

1frustratedUnfortunately, each year scores of students and their families fail to fill out the all-important FAFSA at all, essentially taking the student out of the running for a whole host of economic assistance.

Low-income families and first-generation college bound students frequently fail to fill out the FAFSA because the entire financial aid process overwhelms them or they don’t understand how college financial aid works.

Meanwhile, wealthy and upper middle-class students often don’t bother with the FAFSA because they mistakenly believe that “we make too much money to qualify for need-based aid.”

What many of them don’t realize, however, is that colleges define things like “need” and “middle class” very broadly. At Ivy League schools and many top institutions, families can earn as much as $150,000 to $200,000 and still obtain some free aid.

What’s more, filling out the FAFSA is also required in order to be eligible for merit-based aid at many colleges and universities. This aid, typically in the form of institutional scholarships, is often worth thousands of dollars of free money. So filling out the FAFSA is crucial.

 

Tip #2: Seek Out Tuition Waivers

Once a student makes an initial list of colleges, he or she should immediately begin – along with a parent – researching those institutions’ tuition and financial aid policies.

 A key question to ask is: Does your college offer any waivers for which I might qualify? A waiver is a non-cash award that can either eliminate or significantly lower a school’s annual tuition. A waiver can be granted for any number of reasons.

1waiverSome schools offer out-of-state waivers to students who live in states that border the one in which the campus is located. Under the College for All Texans program, students hoping to attend various Texas-based colleges and universities can get a border waiver if they reside in a county or parish of Arkansas, Louisiana, New Mexico or Oklahoma that is adjacent to Texas.

Other institutions, like Eastern Kentucky University, offer waivers for certain disadvantaged populations, namely foster and adopted children, and children of police officers, firefighters or state workers who died or are disabled.

Then there are campuses such as the University of Massachusetts, Amherst, which grants full or partial tuition waivers on the basis of a student’s special talents. UMass offers the Chancellor’s Talent Award to freshman with exceptional achievements in art, music or drama. The campus also lures top-ranked students with the Valedictorian Program Tuition Waiver, which is awarded to high school seniors from the state who’ve been named as their class valedictorian.

Finally, some schools provide waivers on the basis of a student’s planned major, or when a student comes from a specific targeted ethnic or racial background.

As an example of the latter category, under the American Indian Tuition Waiver, all 16 schools in the Montana University system waive the tuition cost for state residents with 1/4th or more Indian blood. At a school like Montana State University, where 2013 tuition was $6,710, getting that tuition waiver can amount to keeping $26,840 in your pocket over four years.

Ultimately, any school that provides a tuition waiver is a great value.

Nabbing a tuition waiver means some students will pay no tuition all, saving their families tens of thousands of dollars. Even out-of-state students awarded a tuition waiver will save substantial bucks, since out-of-state waivers usually lower tuition to the same rate that in-state students are charged.

As with all aid offers, though, you must act quickly and be proactive about seeking out waivers. Many schools don’t go out of their way to broadcast information about tuition reductions, and waivers are usually granted on a first-come, first-served basis.

Stay tuned for the second half of 4 Ways to Plan For and Slash College Costs this Thursday!

lkcThis is the first of a two-part installment on slashing college costs. Stay tuned for part two Thursday, May 23rd. Lynnette Khalfani-Cox is a personal finance expert, New York Times best-selling author, and co-founder of the free financial advice site, AskTheMoneyCoach.com. Lynnette’s forthcoming book is College Secrets: An Insider’s Guide to Getting Into Any College and Paying for It Without Going Broke.