College is expensive and is most likely only going to get more expensive. A survey of 102 administrators by the tax, audit, and advisory firm KPMG found that—because of cuts to state funding—53% have raised, or are considering raising, tuition.
And tuition is only one of the many costs that college students—both traditional and online—have to bear, which is why experts in both the higher education and financial services industries have been trying to raise (saving and financial literacy rates)? amongst college students for years. Making changes in financial habits is not as easy as it would seem.
A recent study from the Pew Research Center found that 29% of adults between the ages of 25 and 34 are living with their parents, and a recent study from the Securities and Exchange Commission shows that their parents are struggling with financial literacy as well. The SEC study found that the vast majority of investors “have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud.” One of the key failures amongst retail investor literacy was the ability to distinguish between a stock and a bond.
One of the ways that students and their families can find ways to stretch their dollars is through financial literacy courses. A recent study by for-profit corporation Inceptia, which makes and markets financial literacy products, found that college students who spent an average of 45 minutes interacting with a financial literacy course improved their understanding of basic financial concepts—like credit cards and contracts—and saving strategies by 40%.
When considering strategies for reducing the cost of going to school, remember one of the oldest pieces of consumer advice: keep the receipt. While it may sound like a cliché, a little known government program can provide college students with a tax credit of up to $2,500 for out-of-pocket higher education expenses, like textbooks and other course materials.
The measure, known as the American Occupy Tax Credit (AOTC), was authorized by the American Recovery and Reinvestment Act of 2009 and, according to an Oct. 2010 study by the U.S. Treasury Department, provides an average credit of more than $1,700 to college students. The Treasury Department also found that 4.5 million students received an AOTC tax refund in 2009, with the average amount received being $800.
In order to explain the AOTC and assist students in receiving credits and refunds, the IRS has partnered with the National Association of College Stores to create the website textbookaid.org. The site provides students with an easy-to-use interface and easy-to-understand examples to help them navigate the complexities of the tax code.
Follow Alex Wukman on Twitter: @AlexWukmanCMN