Photo by Clay Banks on Unsplash
Every fall I do a college planning workshop for the local high schools in my area. Parents sign up to hear my ideas and strategies for paying less for college. At the end of the presentation, I offer a short phone call to discuss any questions they may have and suggest some ideas for how they can pay less for their kids’ college education.
Recently I spoke with a parent who told me that she didn’t have the resources to fund her student’s college goals. She enjoys a good income and has some savings, but as a single mother of two any money she spends on college puts her own financial security and retirement goals at risk.
Like many other parents, she makes too much to qualify for need-based financial aid, but not enough to be able to cash flow a college education for both of her daughters.
During our call she asked me, “How can my kids go to college, if I can’t help them pay for it?”
With state colleges costing upwards of $20,000 a year or more, and private schools costing more than double that amount, it will be difficult for most students to work their way through college like their parents may have done.
Here is what I told her:
First, if you have the benefit of time on your side, consider Post-Secondary Enrollment Options (PSEO) and other ways to get college credit before finishing high school. Juniors and Seniors enrolled in a PSEO program can earn up to two years of college credit before they even start college.
Other options include AP classes, College in Schools (CIS) and even the College Level Examination Program (CLEP) where students can test out of certain courses for a smallish fee.
Of course, not every college will accept every credit earned through PSEO, AP classes or other credits. You will have to do some planning to help ensure that your credits carry over. Your high school guidance counselor or career placement office can help you put together a plan to graduate high school on time while earning college credits that will transfer over to the schools on your list. You can learn more about PSEO here.
Another great resource is Cheri Frame’s website: CreditsBeforeCollege.com. Here you will find resources and information on the CLEP program and other strategies to get college credit while still in high school. Best case scenario, a student could finish up to two years of college before most kids even set foot on campus.
Second, consider the live-at-home option. If you live in the Twin Cities or within commuting distance of an acceptable college, living at home will shave up to $15,000 off the total yearly cost of a college education. Granted, having a student live at home means they are eating at home as well and that costs money. Nevertheless, the rent alone on an apartment or dorm can be $5,000 to $10,000 annually even with roommates.
Students who live at home can expect to pay about $16,000 for tuition and fees at the University of MN. A community or state college costs even less - about $12,000 or less for most state colleges and half that amount for 2-year community colleges.
Third, add community colleges to your list of options. Through the MN-CAP program students who complete a 2-year course of student in good standing at one of seven Minnesota community colleges are guaranteed admission to the University of MN – Twin Cities. Not all colleges or programs at the U participate in MN-CAP, but many do including the College of Science and Engineering, College of Biological Sciences and the College of Liberal Arts.
Even if you choose to finish college at a school other than the University of MN – Twin Cities, community colleges offer an affordable option to paying the total cost of attendance at a 4-year college or university.
If you are considering community colleges as part of your college plan, be sure to meet with your high school guidance counselor as well as appropriate advisors at the college where you hope to obtain your degree. A well-organized plan will be the difference between graduating in 4 years or spinning your wheels with course credits you do not need or that don’t transfer over.
Fourth, create a list of colleges that have a net price that you can afford. For some families that may mean state colleges in MN, WI or the Dakotas where our students enjoy tuition reciprocity. For others it could include private schools that offer large amounts of merit-based aid and/or need-based financial aid.
If you have a top student with excellent grades and a high ACT score (especially if it’s a 30 or higher), you may qualify for a significant amount of financial aid. Of course, total cost of attendance as well as financial aid awards will vary from school to school and student to student.
To get an idea of how much your net cost might be (and whether or not you can even afford that school), check out the Net Price Calculator on the website of the colleges on your list.
The Net Price Calculator can usually be found via the search bar on the school’s website. The calculator will ask for information regarding the student’s grades, ACT score etc. It may also ask for your financial information. Once you enter the relevant info, the calculator will spit out an estimate of what your student might pay to attend that school – net of loans and other financial aid.
In some cases, you might find that even the most expensive schools are more affordable than you think. It’s even possible that it could cost less to attend an elite private college or university than your local state college or university. If you have a talented student and your household income is under $150,000, don’t cross these schools off your list.
A note about need-based financial aid: It’s true. Most families don’t qualify for need-based, government funded financial aid like the Pell Grant. However, most families do qualify for some need-based aid at private colleges and universities. That’s because your eligibility for need-based financial aid depends on what the FAFSA says you can afford AND what the school lists as its total cost of attendance. So, while a student may not get a Pell grant, they may qualify for institutional need-based financial aid that comes directly from the school.
Some schools will even meet 100% of a student’s financial need. To see a list of 75 schools that meet 100% financial need, click here. Two of them are in MN and at least one is in Iowa.
Fifth, be open to options that might be outside your comfort zone. The Reserve Officers Training Program (ROTC) offers tuition assistance up to $18,000 a year at over 1,700 colleges and universities. At the military academies (Air Force, Navy, Army, Merchant Marine, and Coast Guard) tuition, fees, books as well as room and board are all free. That’s on top of a monthly stipend for health care and other expenses.
Both the ROTC program and the military academies offer a job upon graduation. Does your student want to be an engineer, doctor, veterinarian, pilot or even an astronaut? A stint in the military might the way to go.
Like most of the above ideas, there are trade-offs. With ROTC and the military academies grads will be required to complete a term of service. But the payoff can be huge. Imagine earning a degree in engineering, physics, math, accounting, finance, computer science, nursing, or one of the pre-professional degrees and graduating with zero student loans. An appointment at a military academy or scholarship from the ROTC program can make that happen.
Sixth, seek out employers that offer tuition reimbursement. Ok, maybe the military isn’t your thing. I get it. How about working for Target or Walmart?
Both Target and Walmart have announced offer major tuition assistance programs to their retail employees. Just about every college town has at least one Target or Walmart location, it seems. Tuition assistance combined with a $15/hour part-time job can go a long way towards paying for college.
For more information on the Target tuition assistance program, click here. For Walmart, click here. Or visit each company’s website for more info.
Those are just two examples. According to Statista.com 56% of employers offer tuition assistance programs. Yet, fewer than 20% of employees know that their employer offers such a program. Check with your employer to see if they offer tuition benefits for employees or their families.
Here’s one more: The Minnesota Nursing Facility Employee Scholarship Program. In 2001 the state of MN allocated money to fund the Nursing Facility Employee Scholarship Program. Eligible employees, including those who work part-time may be eligible for tuition assistance or student loan forgiveness. You can get details by reading this PDF.
Seventh, look for schools that offer co-operative education programs. Also known as “experiential learning programs”, co-op programs combine traditional classroom education with real world work experience. Often students go to school for a semester, then work for a semester.
When the program is completed graduates often receive high paying jobs in their career field upon graduation. As an added benefit, students get paid to work while they are enrolled in the program providing a funding source for much of their college expenses.
A quick Google search found over 100 schools that offer co-operative education programs including the University of North Dakota, Iowa State University and the University of Wisconsin Madison. You can fast forward to my search here.
Eight, reconsider if college is really the right choice. Not everyone needs to or should go to college. Some careers, particularly trade and technical careers, offer significant income potential and career opportunities without requiring a college degree.
U.S. News ranks Diagnostic Medical Sonographers as #1 in Best Healthcare Support Jobs. Sonographers earn a median salary of $75k per year. That’s more than a lot of physical therapists make and requires only a 2-year associates degree.
Heavy Duty Mechanics can make up $100,000 or more with overtime and no college experience. Careers in cyber security often require 4-year degrees, but not always. Talented individuals with the right skillset and credentials can command generous salaries regardless of their degree.
To be clear, I am NOT a career counselor. But if your student is on the fence about college and you are unsure about how you will pay for it, schedule a meeting with your student’s high school guidance counselor and do your own research.
In today’s economy, worker shortages exist in nearly all industries. Hard workers with the right skills may have significant career potential even without a college degree.
Ninth, are you sure you really have no money for college? No money at all? Not even a little?
Have you updated your financial plan lately? Depending on your goals and what you have saved for your retirement you may be on pace to retire comfortably. One strategy might be to dial back the retirement savings (heresy, I know) and redirect those dollars towards your kids’ college education.
Be warned, if you do scale back your retirement savings, you will need to be certain that doing so doesn’t jeopardize your retirement or long-term financial security. That’s where a review of your financial plan comes into play.
What about tax savings? According to the IRS, most taxpayers qualify for the American Opportunity Tax Credit. This is a $2,500 tax credit parents receive when they pay up to $4,000 in qualified college expenses.
Here’s how it works: parents receive a dollar-for-dollar reduction in their Federal income tax bill for the first $2,000 they spend on qualified education related expenses for college. They also receive $.25 on the dollar for the next $2,000 they spend. So, at a minimum, parents who qualify for this tax credit should be able to cut their tax bill by $2,000 if they help their kids with $2,000 or more of college expenses.
What about other expenses that end when kids go to college? Sports? Food? (most schools include a meal plan in their cost of attendance figures). Music lessons? Add it up and you could redirect some of those expenses towards college.
For example, if dance team and music lessons cost $500 a month (assuming those expenses end when high school ends), that’s up to $6k a year that can be used to help pay for college.
Tenth, consider student loans. On second thought, after reviewing the ideas above, why not scrap the idea of borrowing money for college?
Instead, try to get as much transferrable college credit as possible before finishing high school. Go to an affordable in-state college or attend a community college and transfer to the University of MN. Save even more by having your student live at home and having them get a job with an employer that offers tuition reimbursement or participates in a co-operative education program. Redirect a few dollars from your tax refund or current kid-related expenses.
If you must borrow money for college, avoid private loans and limit your borrowing to the Federal Student Loan Program. You can find out more about that at studentaid.gov. Most students need to borrow at least a little bit to pay for school and that’s OK.
Of course, all of the above ideas and strategies are just that – ideas and strategies. And most of them come with big tradeoffs – PSEO and ROTC are not for everyone. Funding a college education requires tough choices. What is right for you and your student will vary depending on your student, your resources, and other factors.
Get some help. I work with parents of high school aged kids to help them pay less for college so they can have more money for their retirement and other needs later in life. If you are open to a long-term relationship with an advisor who can help you, please contact me and let’s talk.
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.