When her two sons were younger, Sarah McCord says she was a stay-at-home mom. But as soon as her oldest hit high school, she went back to work with one goal in mind: using her pay to cover the kids’ college tuition.
“The cost of school, I think, is exorbitant, and I can’t imagine how (a student) would recoup that if a kid were to finance that on their own,” says McCord, whose salary from her job at a pharmaceutical company covers her younger son’s roughly $17,000 a semester in tuition, room and board. “Entry level salaries just aren’t going to make a dent in those payments.”
With Americans carrying $1.57 trillion in outstanding student loan debt, many families and students continue to borrow to cover the ever-escalating costs of college tuition. But some are also figuring out more creative ways to pay for higher education, from crowdfunding to corporate reimbursement programs to stashing cash back from purchases they make every day.
“As college costs continue to rise and there seems to be no end in sight, the gap is going to get narrower and narrower at the top of who can really even afford this anymore,” says Susan Dabbar, founder and CEO of AdmissionSmarts, which helps families navigate the college admissions process, from applications to affordability. “More and more people are going to be looking for all of these different ways…to figure out how are we really going to pay for this.”
So how are you going to pay for college?
Last year, 57% of financial aid funding for undergraduate students came from grants, 34% from loans, 7.9% from education tax benefits and less than 1% from student jobs, says Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.
Scholarships, offered by everyone from states to fraternal organizations, can also help cut the cost of tuition. And Jeff Levy, an independent educational consultant says “the most creative way to finance a college education is to find the colleges that are the most generous with financial aid, both need-based and non-need-based.”
The average discount from the published cost of attendance is 44% he says. “So for families who are smart about how to shop for college, they can easily cut the cost … in half by putting sensible colleges on their child’s list.”
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But Americans are also saving, utilizing tools like 529 plans, which offer tax advantages to families that invest in stocks and bonds.
“Eighteen percent of children under the age of 18 have 529 plans,” Kantrowitz says, “a relatively low number but it’s been growing. Every dollar you save is a dollar less you’re going to have to borrow.”
A little cash to pad those 529s
Kathleen Surdan, who lives with her family in Acton, Massachusetts opened 529 plans for her three children. But she also saved more than $4,000 over 12 years through Upromise, a site that enables users to buy products and services from various retailers online, then get cash back from those purchases that goes into an account.
“It takes 10 seconds to go through that link,” said Surdan, who started out getting a few cents back for purchasing orange juice and eventually saved up to $400 a year booking family trips as well as hotels for her daughter’s out of town softball games. When you finally need to tap the funds, she says, “they send you a check.”
Surdan’s two daughters, now 23 and 25, and her 20-year-old son received some scholarships. They also had to pay for their own books and come up with their own spending money. But Surdan says she and her husband paid much of their children’s tuition with savings.
“My husband read an article when they were little … saying you need $400 a month starting now, when they’re born, and my husband took that to heart and we started putting money in,’’ she says. “Once your kid is born and you think they might go to college, you have 18 years to figure out a plan.”
McCord said her family was unable to build savings during the years her family lived solely on one income.
“We had no savings at all,” says McCord who has two sons, Isaac, 24 and Silas, 19.
When she did return to work to put aside money for their looming tuition, “I was open to anything,’’ she says noting that she worked as an office manager before landing her current job in human resources.
It cost roughly $17,000 a semester including room and board for her oldest son to attend Liberty University, and about the same amount for her youngest who currently goes to Johnson University in Knoxville, Tennessee. McCord’s pay “covers all of it,” she says. “They both got a little bit of scholarship (money) from the schools, a little bit of financial aid … but what I make covers their tuition.’’
Non-traditional ways to pay for college
Students are also seeking out novel ways to cover the costs of their education.
“There are lots of students using crowdfunding, some with amazing results,” says Dabbar noting the rise of GoFundMe and other campaigns. One student she worked with had a $12,000 gap between what merit aid would cover and what she needed. “She had a very compelling story….She put up a GoFundMe page, and she didn’t’ reach her goal of $12,000, but she raised close to $8,000, which got her that much closer to funding her first year of college.”
Students who work while in school might also want to be strategic in the positions they aim for.
“I always tell students to get a (part-time) job at the college, not as a student worker, but as an employee,” says Jill Geers, a college adviser at Joliet Junior College in Joliet, Illinois, near Chicago.
Students need to check what, if any, tuition discount the college gives those on staff.Geers says at her school, a part-time employee gets one free class per semester. “As a full-time employee, myself and my dependents attend tuition-free….There are so many attainable jobs on every campus.”
Several companies also reimburse employees for their tuition costs. Starbucks, for instance, has a program that enables eligible staff members to attend Arizona State University online, with both tuition assistance from the company and a university scholarship. Meanwhile, Chipotle’s “Cultivate Me” initiative, which kicked off April 1, reimburses employees for up to $5,250 in tuition annually.
“If you’ve got a student trying to get a college degree and you’re a barista at Starbucks, this is a really good opportunity,” says Dabbar. “Work study in a lot of colleges isn’t very generous, but if you think outside the box, and you go out to the corporate world and … here are three Chipotles within three miles of campus. What if Susie gets a job at Chipotle and then gets into their tuition-reimbursement program? It’s kind of a different way of thinking.”
For those students who may think of attending community college to save money then transferring to a four-year institution, it’s important to do their homework beforehand, such as making sure their credits will actually carry over. But it can be cost-effective.
A collaboration between Texas A&M and nearby Blinn community college, for instance, allows some students who have applied to the four-year university to co-enroll at both schools. They take the bulk of their classes and pay the lower tuition at the community college but also enroll in courses at Texas A&M, participating in that campus’ activities. The goal is that the students will eventually attend A&M full time.
Depending on the college, Advanced Placement courses and exams taken in high school can also shave the number of credits students have to take once arriving on campus, saving money.
With tuition in the 2018-2019 school year rising 2.5% at a public, four-year, in-state college on average, and 3.3% at a private nonprofit school, crowdfunding, cash-back offers and other alternate ways of saving may only go so far. But every little bit helps.
“You’re probably going to have to save and borrow,” says Kantrowitz, “but they can be good ways of helping to defray the costs.”
If you have a college savings strategy you’d like to share, let Charisse Jones know via email or on Twitter.