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Close5 Unorthodox Ways to Save for College
The average cost of one year of tuition at a four-year private university is $32,410, according to the College Board. Add in more money for room, board, books, and travel, and the total for four years of college can easily exceed $200,000. And that’s in 2020. When it’s time for you to pay, that amount will be even higher.
Are you ready?
If you’re not the only one lacking a solid portfolio of mutual funds to help you foot the bill for college, join the club. Americans owe a combined $14 trillion in personal debt. With the cost of college climbing higher every year, saving for school has never been more critical.
Here are five unconventional approaches that help make your college savings game strong.
1) Capitalize on hidden talents and assets
Setting up a 529 plan and making regular contributions helps build your higher education nest egg, but don’t overlook the importance of depositing larger, one-off windfalls and using your talents to reduce your total bill.
- Make a market in used goods. Secondary markets like eBay and Poshmark make it easy to turn unwanted goods into college savings. Get good at it, and you can start a side hustle flipping trendy items like sneakers or practical goods such as sports equipment.
- Capitalize on creative talent. Photographers, videographers, and other creatives can pick up work on freelance platforms like Fiverr.
- Capitalize on academic talent. Lower your tuition bill by testing out of general education requirements whenever possible with Advanced Placement, CLEP, or in-school exams.
- Take classes at your community college. Take dual-enrollment classes when in high school and a class or two over the summer once you’re enrolled at university, and you can graduate from college sooner.
2) Think differently about financial aid
There are two kinds of financial aid. The first, called need-based aid, is awarded based on a student’s ability to pay. The second type is called merit-based aid. Colleges and private organizations award merit-based aid like scholarships based on academic, athletic, or extracurricular talents. Some kinds of need-based aid, like loans, have to be repaid; other types, like grants, don’t. And typically, merit-based aid does not need to be repaid.
Colleges usually offer a merit award at the time of acceptance or following a separate application submitted by the student. If the school you apply to doesn’t offer you merit-based aid, you can still get one by applying for one or more of the thousands of private scholarships available online. Some are so easy to apply for that they don’t even require an essay!
For need-based grants and loans, you’ll need to fill out the Free Application for Federal Student Aid form, also called FAFSA. It’s best to get in your FAFSA as early as possible during the application process in order to get the most money.
There is one other type of need-based aid that isn’t talked about as much: medical-based financial aid. Certain conditions may qualify you for additional aid above and beyond what you typically can get from other types of need-based or merit-based aid.
3) Explore built-in tuition discounts
Another way to cut down your tuition total before you ever take a class is to explore regional tuition discount programs. The criteria to qualify vary between programs, but these discounts are sometimes compelling enough to consider studying at a regional institution rather than a school farther away.
- The New England Board of Higher Education provides discounts for students in Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont, and Maine who want to study in the northeast and are interested in a degree from their approved list of majors.
- The Excelsior Scholarship in New York State provides free tuition for in-state students choosing to study at a SUNY and who meet specific income qualifications.
- Midwest Student Exchange provides tuition reductions for public and private schools in the midwest.
- The Academic Common Market and the Regional Contract Program in the south.
- The Western Undergraduate Exchange and the Professional Student Exchange Program provide discounts for students in the western U.S. plus Alaska, Hawaii, and the Northern Mariana Islands.
4) Earmark cash windfalls for college savings
Sometimes, you get an unwelcome surprise in the form of a bill. Other times, you get a windfall such as an unexpected bonus, or a financial gift from family or friends. Take those windfalls and deposit them into your 529 plan. Other examples include:
- Tax return refunds
- Micro-investing returns from digital platforms such as Acorns
- Emptying the wallet at month-end
- Checks received on birthdays and at the holidays
5) Cut down on in-school costs
Finally, make hitting your savings goal easier by planning to cut down on in-school costs now. For example, you can:
- Live at home or off-campus
- Look into establishing in-state residency at an out-of-state university
- Borrow books from the library instead of buying them
- Embrace the barter system or buy secondhand what you need to furnish an apartment, for example
If you’ve knocked your savings goal out of the park, then you can consider one financial power move: buying student housing and collecting rent to cover the mortgage, property taxes, and upkeep. Not only will you save on in-school costs, but you’ll also establish a healthy passive income stream for years to come.
