Affording College

Ensuring you can continue your education without winding up with debt problems.

The recent economic malaise, according to the New York Times, led to increased college enrollments, especially for community colleges. With a higher cost of living, Americans thought it made perfect sense to go back to school, to either learn a trade or obtain a second degree. For others, attending college is just the next step after high school, but whatever the reasons we decide on higher education, obtaining a college degree is not cheap. In fact, CNN money reports that college seniors graduate with an average of $27,000 in student loans.

According to the College Board the average net price paid by full-time students enrolled in public four-year colleges increased measurably in 2012-13 for the second consecutive year. The average net price also increased for public two-year and private nonprofit four-year students in 2011-12 and 2012-13. The table below reflects the increases in tuition and fees, room and board for full-time undergraduates by type of institution.

SectorTuition and Fees Academic Year 2011-12Room and Board 2011-12Total 2011-12Tuition and Fees Academic Year 2012-13Room and Board 2012-13Total 2012-13
Public Two-Year In-State$2,959$7,332$10,291$3,131$7,419$10,550
Public Four-Year In-State$8,256$8,880$17,136$8,655$9,205$17,860
Public Four-Year Out-of-State$20,823$8,880$29,703$21,706$9,205$30,911
Private Nonprofit Four-Year$27,883$10,088$37,971$29,056$10,462$39,518

While the sticker price for college can be enormous, the best way to prepare for college is to save.

Plan ahead and do your homework.

Begin to research schools, scholarships, and grants well before it’s time to apply to the school of your choice. Consider a local school or even starting at a Community College and save on the cost of room and board and tuition. In-state tuition rates are often significantly cheaper for residents. A good place to start is at

Apply for financial aid.

Apply for financial aid as soon as you can to beat the deadlines. Fill out the free application for Federal Student Aid (FAFSA) form whether you think you’ll qualify or not. Be sure to apply as soon as you can after January 1st to ensure that you do not miss out on available aid. You can also fill out a paper application available at any college campus Financial Aid department.

Here’s what FAFSA offers:

  1. Loans: Student loans make up the majority of most students’ aid packages. Some come directly from the federal government, while others are made available through individual lenders. Understand the difference between subsidized and unsubsidized loans. With subsidized loans, the government pays the interest while you are in school, up until the grace period ends. Unsubsidized loans on the other hand means you are responsible for paying the interest that begins to accrue when the loan is disbursed.
  2. PLUS loans: These are available to parents with a good credit history. There is no grace period on these loans, and interest will start accruing immediately. You can also look for private lenders that offer loans to students and their parents.
  3. Work study loans: The federal work-study programs give students the opportunity to work part-time to earn money for college expenses. These jobs are either on-campus or off-campus and sometimes relate to your field of study.
  4. Grants: A grant is money that you don’t need to pay back and is based on your Expected Family Contribution. The lower your Expected Family Contribution (EFC) – a number used by your school to determine your federal student aid eligibility and financial aid award – the higher your chances of qualifying for a Federal Pell Grant, or a Federal Supplemental Educational Opportunity Grant (FSEOG).
  5. Scholarships: Scholarships are free money usually awarded to students based on academic achievements, field of study, minority group membership and GPA. The federal government, state government, college or career schools, non-profit organizations, your school’s financial aid website and your course department website, high school guidance counselors, public libraries are excellent places to ask about scholarships. Be sure to beat the deadlines.

Beware of scholarship scams.

According to the Federal Trade Commission look for these tip-offs that the “scholarship” is a scam:

  • “The scholarship is guaranteed or your money back.”
  • “You can’t get this information anywhere else.”
  • “We’ll do all the work.”
  • “I just need your credit card or bank account number to hold this scholarship.”
  • “The scholarship will cost some money.”
  • “You’ve been selected by a ‘national foundation’ to receive a scholarship” or “You’re a finalist” in a contest you never entered.

Start saving early.

The earlier you start to save the better. Here are a few popular options to save for a child’s education.

  1. 529 Savings Plans: Anyone can open a 529 savings account for himself or for someone else. Individual states sponsor different 529 plans, with different costs and investment options. In some cases, there are state tax benefits to investing through your state’s plan, but don’t automatically assume your state’s plan is the best option. Visit to find out more and the plan that will work in your favor.
  2. Coverdell Education IRAs: Formerly called Education IRAs, these accounts allow anyone to open an account on behalf of a child and contribute up to $2000 a year into an investment account. The account earnings grow tax-deferred, and may be withdrawn tax-free for qualified expenses.
  3. Home Equity: Some parents use their home equity as a form of college savings. They set a goal of paying down their mortgage, or paying it off entirely by the time their children enter college. Because some colleges do not count home equity when figuring aid awards, if your child decides not to go to school (or gets a boatload of scholarships) you still have a house that’s paid for!

A part-time job will earn you extra credit!

Consider the benefit of tuition reimbursement when considering job offers. Some employers will pay for part or all of higher education expenses, allowing a student to work his or her way through college without taking on debt. Look for work in a field that’s related to your career goals. That way not only will you be making money, you will also be honing relevant skills, contacts, and experience that are needed to help you land that dream job after you graduate.

Don’t let debt derail your children’s future

It’s almost impossible to start saving the money you’ll need for your children’s education if you’re saddled with high credit card debt. If you’re struggling to stay afloat and are worried how you’ll afford your children’s education, we can help. Our certified credit counselors are standing by to take your call at . You may also request a free Debt & Budget Analysis online.