We all understand that there is value in having a college degree—a Georgetown University study found that college graduates earn $1 million more than high school grads over their lifetimes. But at the same time we are also aware of the huge financial cost of pursuing a college education. According to the College Board, the average annual cost of a four-year college (in state) is $20,770 for tuition, room, and board. That balloons to an average of $36,420 per year if you attend a public college from out-of-state and the average skyrockets at private colleges to $46,950 per year. While these costs are prohibitive for many, there are strategies to both get the numbers down as well as ways to find financial avenues to help defray these hefty costs.
One thing to keep in mind is that these averages are the published costs and not the “net” cost. You need to do your research to figure out what the actual cost will be in your own situation. For instance, first and foremost find out what if any your federal aid will be and factor in your education tax benefits (both discussed below). Then also take into consideration any grants and scholarships that may be awarded. The College Board has a college cost estimator to get you started.
Financial Aid First
First things first: determine how much federal aid you or your child will be able to receive toward higher education by filling out the FAFSA form. (In addition, most colleges also use the FAFSA to allocate need-based rewards.)
Tuition Tax Deduction
The American Opportunity Tax Deduction allows families who qualify to deduct qualifying education expenses—tax payers can reduce their taxable income by up to $4,000.
Advanced Placement Tests/Dual Credit
This one actually should be at the top of the list because this happens while still in high school. If you (or your child) are anticipating a college education and have the ability to take AP classes, do it! And work hard to get a passing score—this can save you big bucks by translating into college credits. Some high school students can also earn college credits while in high school by participating in a dual credit program (usually at community colleges).
Scholarships and Grants
Scholarships and grants are the best way to acquire college funding, since they don’t have to be repaid. There are many different sources for scholarships (merit based awards) and grants (need based awards). Sources include the federal government, state government, colleges themselves, and many private and nonprofit organizations. For instance, you may have heard of Federal Pell Grants, which are need based for undergrads only and dependent on financial eligibility, and can reward up to $6,095 per year.
New Mexico Legislative Lottery Scholarship
We would be remiss if we didn’t remind you about the New Mexico Lottery Scholarship—which is an important part of college planning for New Mexicans. In fact, in 2018-2019 it is estimated that 26,000 students statewide will take advantage of this scholarship. To get an idea of how the Lottery Scholarship helps, consider that a qualifying student would receive $2,294 per semester at research institutions such as the University of New Mexico. Understand that you will still need to tap financial resources since UNM estimates the cost of attendance for tuition, room and board, books, transportation, etc for one undergrad year to be approximately $22,000. The scholarship is available to New Mexico high school graduates who attend one of the state’s public higher education institutions, take at least 12 (at community colleges) or 15 credit hours (four-year institutions), and maintain at least a 2.5 GPA.
Federal Work Study Programs
Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. Students must demonstrate financial need—and qualifying is linked to information provided on the FAFSA.
Federal Student Loans
Most experts agree that the first line of defense for college loans is the Stafford loans. The advantages to using Stafford loans are that they have certain borrower protections as well as low, fixed interest rates (as of the 2018-2019 school year the rate is 5.05%). There are distinctions to learn regarding these loans—for example a subsidized loan means the U.S Department of Education pays for any interest accrued while the student is in school and there is a six month grace period once the student graduates. (There are income qualifications to be eligible.) Unsubsidized loans begin accruing interest from the date of the first loan disbursement, though payment isn’t required until graduation. Unsubsidized loans don’t require demonstrated financial need, so there is a higher amount that can be borrowed on unsubsidized loans versus subsidized ones.
Graduate in Four Years!
Today there is a trend to extend college from the traditional four year experience to up to six years. According to the National Center for Education Statistics, only 35% of full time students are graduating with a bachelor’s in four years at public institutions; students at private colleges are faring a little better with a four-year graduation rate of 53%. For some, the length is unavoidable due to a simultaneous work schedule or family obligations. However, if you are a full time student, try your best to graduate in four years. Here’s why: students who take six years to graduate end up paying over 50% more than they anticipated for their degree and lose even more money that they could be earning if they were in the work force.
Consider Associate Degree First
Associate degrees take about two years to complete and the majority of them are earned at community colleges. The advantage? The average cost of tuition is $3,570 per year at a public institution. Then you can use the earned credits to put toward a bachelor’s degree elsewhere. Another money savings strategy while at a community college is to live at home and commute while doing so.
Resources – Scholarships and Grants
Here are just a few ideas to get you started. There are many more opportunities for funding through public, educational, and private institutions.
Michael S Currier Scholarship at Santa Fe Community Foundation Scholarship
The New Mexico Scholars Program
LANL Foundation Scholarship
Sussman-Miller Educational Assistance Award Program
Notah Begay Scholarship
The Daniels Fund
Horatio Alger Scholarship
Credit Union Association of New Mexico Scholarships
Don’t despair when you set out to find ways to finance your future dreams. There are many strategies to help offset the cost of higher education, and every avenue should be explored before turning to student loans. Fill out the FAFSA, and find out what Federal grants you can receive. Then set your sights on other sources. According to unigo.com, a terrific online scholarship resource, “What are your characteristics? Are you male or female? Are you a first-generation college student? Do you have any diseases or disabilities? Is anyone in your family in the military? Each of these characteristics are part of your identity and many organizations give scholarships to students just for possessing one or more special characteristics.” So understand your personal criteria and seek out scholarships and grants for which you may be eligible such as athletic scholarships, minority scholarships, scholarships by major, and merit-based scholarships.