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7 Ways to Reduce the Cost of a College Education

According to a report from the Bureau of Labor Statistics, approximately two-thirds of high school graduates enroll in college the fall following graduation. While most experts agree that a college education affects annual earnings by at least $20,000 (an estimated $1 million over the course of a working career), a 2011 Pew Research poll reported that more than 75% of Americans think a college education has become too expensive to afford.

In a May 2013 interview with US News & World Report, former U.S. Secretary of Education William Bennett advised parents that they shouldn’t “automatically or reflexively send their kids to college,” noting that there are 115,000 janitors in the U.S. with bachelor degrees today. His recently published book, “Is College Worth It?“, notes there will be 14 million jobs available in 2018 requiring more than a high school education, but less than a college diploma. Bennett also claims that a community college graduate, on average, makes more today than a graduate of a four-year university. That said, according to the Pew Poll, 86% of college graduates believe that college was a good investment, with 7 out of 10 stating the experience gave them maturity and intellectual growth, as well as job preparedness.

Whatever your feelings about the value of a college degree, there’s no denying that education is expensive. If you or your child wants to pursue a degree, there are ways to reduce educational expenses and avoid the long-term financial burden of extensive student loans.

College Cost Savings Ideas

Implementing and maximizing the benefits of these cost-reduction strategies requires forethought and diligence. Plan wisely to take advantage of their full benefits.

1. Choose a College Wisely

The decision to attend a particular college has major ramifications on the total cost of education. For example, a high school student in Texas might attend a smaller public university such as Midwestern University (estimated total cost of $7,952 per year), a large public university, such as the University of Texas at Austin (approximately $26,400 annually), or a private school such as Southern Methodist University (estimated annual cost of $57,755).

While these estimates do not take financial aid into consideration, they do reflect the disparity between different educational environments. All three schools are fully accredited and all three schools regularly send graduates on to advanced degree programs, such as law or medical school.

Careers that require advanced degrees may depend less on the choice of undergraduate college and more on the mastery of standardized tests, such as:

  • Graduate Record Examination (GRE)
  • Graduate Management Admission Test (GMAT)
  • Law School Admission Test (LSAT)
  • Medical College Admission Test (MCAT)

For example, the Harvard Business School MBA program is widely recognized as one of the best graduate programs in the world, yet its 2015 graduating class attended 264 different institutions, including Bob Jones University, Florida A&M, and Texas A&M. Parents would be wise to remember that the prestige of a school does not necessarily reflect the quality of education.

2. Take Advantage of Income Tax Savings for College

There are a variety of tax-advantaged college savings plans to help you save for the inevitable costs of college:

  • 529 Savings Plans. Nearly every state offers a version of a 529 plan, which allows your contributions to grow tax-free (there is no federal income tax deduction for contributions, but some states allow contributions to be deducted from state income taxes) as long as the savings are used for college costs. In most states, there are two types of plans available: a prepaid tuition plan, and a college savings plan.
  • Coverdell Education Savings Accounts. A Coverdell ESA can be used for pre-college and college expenses.

Since Coverdell plans can be used for pre-college educational expenses, some families elect to establish both plans. Tax-advantaged accounts for pre-college or college expenses should be established by the parents with the students as beneficiaries. This allows parents to maintain parental control, provides flexibility in case beneficiaries need to be changed, and keeps the funds from being considered student assets when applying for financial aid. Establish a savings plan early to allow contributions to compound as long as possible.

3. Consider Low-Interest Federal Loans

The Federal Government offers a number of financial assistance programs to college students through low-interest loans. Direct subsidized loans are based upon financial need, while direct unsubsidized loans do not require proof of need.

Whether or not you elect to use federal loans, you should complete the Free Application for Federal Student Aid (FAFSA) to determine which loans may be available to you. Take note of the federal and state deadlines for the application – state deadlines vary by state, while the federal deadline is usually June 30th. Remember that submitting the FAFSA does not obligate you to borrow funds, but will provide you with information regarding your available aid.

Repayment for federal loans begins six months after you graduate, leave school, or drop below half-time enrollment. There are a variety of loan repayment options available when repayment begins.

4. Apply for Scholarships and Grants

There are grants and scholarships worth billions of dollars up for grabs each year. This “free money” is available from the Federal Government, state governments, colleges, and private organizations. In most cases, neither grants nor scholarships have to be repaid. Grants are usually based upon need, while scholarships are based upon merit. Many college admission officers automatically put your name in for grants and college-sponsored scholarship awards, but you should always check to be sure.

With the vast number of scholarships available, the search for the right scholarships can feel overwhelming. Avoid turning to companies promising scholarship awards in return for a fee. These scholarship search scams cost victims more than $100 million annually and are unnecessary to identify potential scholarship opportunities.

The College Board’s Scholarship Search is free and provides information on thousands of available awards. Other free Internet scholarship search sites are,, and High school counselors may also have insight into the availability of local scholarships. Some companies sponsor scholarships for employees and their children, while some professional or religious groups do the same. There are also scholarships available based on your major, avocation, or even your grade level. To find scholarships that apply to you, begin searching prior to your senior year of high school.

5. Minimize the Length of College Attendance

Most students enter college expecting to graduate within four years; however, according to a report from the National Center for Education Statistics, less than one-half of students actually graduate in four years, and only about two-thirds of those entering college graduate within six years.

In a Bloomberg interview, Richard Vedder, director of the Center for College Affordability and Productivity, claims the difference between those who graduate in four years and those who take longer is particularly pronounced when comparing elite private schools (87% graduation in four years) to state universities (25% graduation rate in four years). Vedder goes on to suggest that the total cost of an elite private university education may actually be less, on average, than the total cost of education at a public university due simply to the expense incurred by delaying graduation.

Since time is money, parents and students should focus on completing degree requirements as quickly as possible by maximizing the use of the following:

  • Achievement Tests and Courses for College Credit. Students can earn college credit without ever attending a college class by taking advance placement (AP) courses, enrolling in dual credit courses, or passing CLEP (college-level examination programs) tests. Colleges have different policies regarding AP and CLEP credits, so contact the college you plan to attend before enrolling. And remember, you only get credit for AP courses if you actually do well on the subsequent AP exams. Don’t blow off the test just because you did well in class.
  • Expanded Course Loads. Most college majors require 120 credits or more to graduate. This equates to five 3-credit courses each semester. Simply adding an extra class each semester – taking 18 credit hours instead of 15 – would allow you to graduate in three and a half years, rather than four years, saving you the expense of a whole semester.
  • Year-Round Attendance. Students can earn an additional 6 to 12 credits per year by attending summer school. Not only does this reduce the time needed to obtain a degree, but some colleges cut the cost of summer tuition, making summer school a win-win when it comes to reducing total educational expenses. Just keep in mind that some financial aid doesn’t apply to summer school, so you may have to reapply for special aid to help fund your summer session. Check with your financial aid office to learn more.
  • Online Rather Than On-Campus Classes. Most colleges offer credit for online courses, provided that the majority of courses a student takes are on campus. Some courses are self-paced, while others proceed during the semester. Online courses generally cost less in tuition and fees than traditional courses, thus reducing the average cost of attendance.
  • Combined Degree or Accelerated Programs. Most universities offer programs where students can start taking graduate-level courses during their junior and senior year of college, gaining undergraduate and graduate degree credits. These combined programs reduce the time necessary to complete both degrees, but they’re generally limited to students with excellent grades (3.5 cumulative grade point on a 4.0 scale), and the approval of the graduate school. These fast-track programs are unique to each school, so graduate credits earned at one school may not transfer to another graduate school. Be sure to talk to your advisor before committing to an accelerated program.

6. Attend Community College First

The benefits of attending community college for two years to earn an associate’s degree are numerous – especially as it can greatly lower tuition expenses. Most of the courses required during freshman and sophomore years are available at community colleges and can be transferred to four-year public universities. However, some private or out-of-state universities may not accept the credits earned. Check with your community college advisors – as well as the advisors at the four-year institution where you intend to transfer credits to – to be sure you’ll receive credit for classes taken.

Many states have “guaranteed admission agreements” and “articulation agreements” that detail which four-year universities guarantee admission to students earning an associate’s degree, as well as which credits transfer. When admission to a well-respected state university is highly competitive, guaranteed admission through community college graduation is a significant advantage.

7. Utilize Military College and Veteran Benefits

Military veterans who have served at least 36 months of active duty are entitled to financial assistance including 36 months of undergraduate or graduate tuition and fees, a housing allowance, and a stipend for books and supplies. This benefit applies to officers and enlistees alike.

For students considering college and the military as viable post-graduation options, attending a military academy might be the best of both worlds. These academies provide intensive training and a university education at little or no cost. Acceptance is competitive, and the U.S. Military Academy at West Point, the U.S. Naval Academy at Annapolis, and the U.S. Air Force Academy at Colorado Springs require a rigorous admission process, as well as a nomination from a U.S. Congressman, Senator, or the Vice President of the United States.

The U.S. Coast Guard Academy at New London and the U.S. Merchant Marine Academy at Kings Point are other service academies that provide an excellent education. All military academies require a multi-year military service commitment after graduation.

Students at U.S. public and private institutions who are interested in serving in the military post-graduation should consider enrolling in their college’s Reserve Officer Training Corps (ROTC) Reserve Unit. All of the military branches (Army, Navy, Air Force, and Marine Corps) provide ROTC scholarships to cover tuition, fees, books, and living expenses at colleges with ROTC programs. Generally, students who are beneficiaries of military scholarships must take military coursework and training during college and must serve terms of active duty as commissioned officers post-graduation. Some view having a job immediately after graduation as a major benefit in today’s difficult economic environment.

Final Word

In an increasingly complex world, knowledge is indispensable. The truth is, a college degree is the price of admission to many sought-after careers, and job candidates without a degree are quickly passed over. The question of whether the ever-increasing cost of college is worth the investment is made easier by implementing cost-saving strategies. By taking steps to make college more affordable, you won’t have to question the value of your education.

What cost-saving strategies do you use to reduce college expenses?

Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike's articles on personal investments, business management, and the economy are available on several online publications. He's a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas - including The Storm.