10 ways to cut college costs
(CBS Moneywatch) We all know that college tuition has been rising faster than inflation for decades. In fact, college is now four times as expensive as it was 20 or 30 years ago. While this is discouraging news for parents contemplating how to pay for college, there are proven ways to shrink these college costs.
Here are 10 cost-cutting strategies to get you started:
1. Understand that college sticker prices are meaningless.
Unfortunately, 59% of families say that they only look at college price tags when shopping for schools, which eliminates expensive colleges with excellent aid policies from contention.
Actually, two-thirds of college students receive one or more scholarships or grants. At private colleges and universities, 85% of freshman receive a price break, according to the latest tuition discounting report from the National Association of College and University Business Officers.
2. Don't automatically head to a state university.
Most students attend their own state colleges and universities, but these institutions aren't always the cheapest. Sometimes private colleges cost less than public universities after subtracting financial aid and scholarships.
3. Cast a wide net.
Thirty-five percent of students attend colleges 50 miles away or less and roughly half select a college no more than 100 miles from their home. Many schools, however, crave geographic diversity and will give a price break to students who live in distant zip codes.
4. Check out a school's graduation rate.
You can save money by graduating in four years, but only 57 percent of students who enroll in four-year institutions manage to graduate in six years. You can use College Results Online to find four-year grad rates. When researching schools on the site, also check the freshman retention rate. It's a way to assess how happy the freshmen are.
5. Find out what colleges will expect you to pay.
Long before your child's senior year in high school, find out what your Expected Family Contribution will be. You EFC is what any college will expect you to pay, at a minimum, for one year of college. To obtain this figure use the College Board's EFC calculator.
6. Use net price calculators.
This is the best tool you can use to find out in advance how much any school will cost you. You can learn more from my recent post on these calculators.
7. Apply for aid regardless of your income.
Don't assume that you will have to pay full price at any school. Families that make $150,000 to $200,000 can sometimes qualify for significant need-based aid at pricey colleges with top-notch aid policies. If you don't qualify for need-based aid, aim for the institution's merit scholarships.
8. Don't freak out about poor SAT/ACT scores.
Many schools won't financially penalize students for poor scores if they apply to test-optional schools. You can find the list of colleges and universities which don't require SAT or ACT scores for admission at FairTest.org.
9. Beware of reach schools.
The danger of reach schools is that they often give little or no financial aid or scholarships to students who barely get in.
10. Limit borrowing to federal student loans.
Students should try to borrow only through federal student loans which have built-in repayment programs.
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