Education pays. According to U.S. Bureau of Labor Statistics, in 2012, people with Bachelor’s degrees earned more than 60% higher than those with just a high school diploma. That is nearly $22,000 annually. The unemployment rate among college graduates was also 3.8% lower than that of high school graduates.
However, education makes you pay, and it’s not cheap. According to Bloomberg, college tuition and fees have increased 1,120% since 1978, far outpaced the increase rate of medical expenses (601%) and the price of food (244%) over the same period.
So you work diligently, starting saving early and dig through every college saving plans and tax credit options you can find. What else? How about cutting down the out-of-pocket costs upfront! Give some thoughts to these innovative ways to help trim the college costs.
1. Research for Scholarship. Scholarships are NOT only for star students. Many scholarship programs are available to match various talents and backgrounds of even “average” students. You may find scholarship programs for certain sports, for volunteering and community service, for students challenged with an illness or disability, and even for certain school/organization alumni families. You can run a thorough search through some awesome on-line resources, such as fastweb.com or collegeboard.org. And don’t forget to check your employer’s education assistant program and local chamber of commerce for scholarships.
2. Earn (cheaper) college credits outside of college. Many high schools offer AP courses that are eligible for college credits. You can also enroll in local community college for the first couple years – where costs are often substantially lower – and then transfer the credits to your desired four-year college. Your diploma will be from the four-year institution, but your expenses won’t. Before choosing this option, though, make sure these credits are transferable to your desired college.
3. Take a year off and make it pay. More and more students take a so-called “gap year” between high school and college to volunteer, travel and work. The real-world experience grows maturity and helps
students understand the value of high education, thus becoming more motived for college. Financially, working certainly earns money to pay for college. It is worth knowing, organizations such as AmeriCorps may provide a modest living allowance for volunteering services. AmeriCorps also offers a Segal Education Award that can be used to pay for post-secondary education or repay qualified student loans.
4. Shorten the college years. Some colleges offer accelerated programs that allows students graduate in three years instead of four, or combines an undergraduate and graduate degree in five years. Shorter school years, less tuition and campus costs, and earlier career kick-off, that’s a triple-win! Of course, the shortfall of this option is a heavier work load.
5. Be money smart on campus. Always looking for deals for books and other supplies, live at home or find a roommate, understand credit and use credit cards responsibly. Help you college kids set up reasonable budget and maybe build in some reward mechanism to encourage good spending habits. Every penny adds up!
As part of Money Smart Week, we asked the Michigan Association of Certified Public Accountants to help us break down some of the personal finance issues that bog us all down. Money Smart Week runs through April 12. This is part of a series of articles you'll see all week.