As the calendar nears another school season, parents invariably ask what are the best ways to pay for college without huge debt.
In the college funding portion of my financial planning practice, I use all sorts of strategies to reduce potential college education costs. For every family these options will differ. Part of it depends on what age your student is when you start planning, your family income and assets and the schools you’ve chosen.
Allow me to be brutally honest with the parents of college-bound students. Unless you pay wholesale for a college education, you’re paying too much. If you’re like most parents, you’ll be duped into paying retail but you should think smarter to pay wholesale for a college education.
If you will start thinking like a consumer of higher education, rather than like the sucker colleges hope you to be, you’re going to save yourself a boatload of money. Many parents have no clue and get no help and like a pack of lemmings will end up jumping into a pile of debt. But the fortunate ones reading this know that they can get college at wholesale and save ON the cost of college.
Here are some things you could do – not anywhere near an exhaustive list:
- Start a business to hire your child to lower your taxable income
- Shift low-basis assets to children in lower income tax brackets to save on capital gains taxes
- Coordinate with relatives to fund college savings accounts in a way that doesn’t hurt financial aid chances
- Select the right school at the right price with the right kind of aid that will lower your dependence on loans
- Find the right mix of federal and private student loans that can be refinanced or consolidated in the future.
- Choose a school that offers a great financial aid package: There are database search tools that will provide you with a comparison of the kinds of aid packages available.
- Consider post-college service programs: By joining certain community service programs some or all of your student loans may be forgiven.
You can also consider scholarships, joining the National Guard or military or attending colleges overseas (US students can go for free to colleges in Germany).
Whatever you choose to do, don’t simply rely on going to the local in-state public university or college. You’re limiting yourself and may be paying more. While private schools have a higher sticker price, they have deeper pockets for need- or merit-based aid. And they very often discount the ‘sticker price’ to attract talented students that round out their student population.
To find out more I recommend working with a qualified college financial planner who can add value and help you save your bottom line.
