The cost of pursuing a bachelor's degree at both private and public schools is rising much faster than the national inflation rate. By some estimates, students at elite private schools in the class of 2022 can expect to pay a whopping $334,000 for their education.
In many cases, it's more affordable to attend school online than it is on-campus. Distance learners often save on housing and food expenses, and many online programs allow out-of-state students to pay in-state tuition. Just as importantly, online learners are still part of their broader campus community.
Your education doesn't have to be a financial burden. By making smart choices, budgeting your living expenditures, planning ahead, and taking advantage of federal aid and scholarships, you can manage the cost of your education without incurring an uncomfortable amount of debt. Below we cover the simplest ways for you to leave school with minimal financial burden.
Ways to Save Before College
529 Savings Plans
Also known as "qualified tuition plans," 529 plans are designed to encourage parents to save for tuition ahead of time. As long as they are used for eligible college costs (tuition, room and board, etc.), you will not pay federal taxes on a 529 plan. These plans are long-term investments that you can establish before your child is born.
The two main types of 529 savings plans are college savings plans and prepaid tuition plans. Each state offers slightly different options, but every state has them.
College Savings Plans
- Do not lock in college tuition rates
- Covers tuition, room and board, mandatory fees, books, and other qualified higher education expenses
- $200,000 is typically the maximum you can contribute to most plans and the investments that you make are not secured by the state
- Open to all ages
- No state residency requirement
- Offer enrollment throughout the year
Prepaid Tuition Plans
- These lock in tuition rates at participating schools
- Most plans only cover tuition and mandatory fees
- Plans typically set payments before they are made based on your age and the number of years of college tuition that you're paying for
- Most plans have age limits
- Many plans are backed by the state and require beneficiaries to be residents
Remember, the beneficiary's investment typically affects the amount of financial aid a student can qualify for, as the 529 is treated as a parental asset. Many of these plans are purchased through brokers and financial advisors; be sure to carefully evaluate all options before making a purchase.
Take Classes at Community Colleges
Taking courses at a community college can help keep your tuition rates low. Community colleges are usually much less expensive than four-year schools, and students looking to save money should take as many credits as possible at a community college. Before transferring to a four-year school, make sure that your new college accepts all of your prior credits.
Choosing a School
Cost is a major consideration for college-bound students. The average tuition and fees for public four-year colleges is $9,410 per in state student, as of the 2015-2016 school year. Typically, the cost is about 2.5 times higher for out-of-state students. Private for-profit universities cost an average of $15,610 per year, while the average cost for nonprofit private schools is $32,405.
While in-state public colleges offer lower tuition prices than other schools, you can still find an affordable school elsewhere. If you want to attend school out of state, you might be able to avoid paying out-of-state tuition. For example, if your state doesn't offer the program you're planning to study, or if your target school is encouraging students from outside of the state to enroll, you may be able to pay less in tuition. If your dream school doesn't offer these options, you can still establish residency before enrolling. Most states only require that you reside there for a year before you're considered a resident.
Additionally, most schools offer their own scholarship and financial aid opportunities. These funding sources can cover even the most expensive schools, and a number of private colleges are willing and able to meet 100% of "demonstrated financial need" through a combination of loans, scholarships, grants, and work study.
Paying for College Without Debt
Work Study positions are part-time jobs available on or off campus, awarded as part of your financial aid. The amount you can earn is based on your financial aid package. Some positions pay a higher hourly wage than others, and the amount you would have to work varies by position. Wages are generally paid bi-weekly by your school and you can either use the payments for your educational expenses or deposit them into your bank account.
This is not money that you have to pay back, but if your goal is graduating debt free, it's prudent to use the money for tuition, books, and related expenses.
Finding a Job
There are many reasons to work while you're in school: you can dedicate the money you earn towards tuition, or use it to cover other expenses. Additionally, if you can find a job in a field related to your major, working can augment your resume.
Most colleges have a career services department where you can speak with a counselor about prospective job opportunities. Be sure to also consult your academic counselor and department head. Use every resource the school offers and don't be shy. You never know what opportunities await if you take the initiative.
Scholarships and Grants
The primary difference between scholarships and grants is that scholarships are typically merit-based and grants are need-based. Neither require you to repay the money, and both can help you study without incurring debt.
The most common grant is the Federal Pell Grant. Pell Grant awards range from $600 to $5,575. To apply for one, you must complete and submit a FAFSA (Free Application For Federal Student Aid). Factors for eligibility include whether you're a part time or full-time student and how much income your parents make.
Most schools don't distinguish between online and traditional students regarding financial aid. Studying online will not reduce your opportunities to earn a scholarship.
Scholarships are very competitive, but that doesn't mean you shouldn't try to earn one. Here are a few ways to improve your chances:
- Apply early! Early applications demonstrate initiative and help you stand out from a crowd.
- Consider what makes you unique outside of your academic performance. Did you spend a summer volunteering at a local homeless shelter or win a medal for water polo? Mention it. This is not the time for modesty. Still have a few years until college? Get out there and do something in your community. Scholarship boards like well-rounded candidates.
- Apply for a variety of scholarships. Your school will have plenty of awards, but you can also check Scholarship Search or Fastweb for a range of online awards.
- Get others to proofread any essays that are part of the application process.
- Ask relevant people for recommendations early. If someone has already written you a recommendation, ask them if you can use the same letter or if they'll write you another one.
Avoid Student Loans
Many students receive a loan as they take classes. Small loans, or loans with tiny interest rates can help students afford college, but many loans are bad investments. Most federal loans come with aggressive interest rates, which can be damaging if you don't land a high-paying job right out of school. Ultimately, student loans are by far the largest source of debt for graduates: if you want to graduate debt free, do not get a student loan.
College Life On A Budget
To graduate without debt, you'll need to live on a budget. Here are some ways to save money while you're in school:
Housing: One of the best ways to cut costs is to become a resident advisor. As an RA, the school will cover the cost of your housing and give you a monthly food stipend. If you are not selected for the position, you may want to consider splitting the rent in an off-campus apartment with a few friends. Apartments are generally cheaper than dorms, and you can also save money on food.
Given that online students don't need to live near campus, you'll be able to pursue a wider variety of housing options than residential students. You can live at home, or search for inexpensive housing throughout your community.
Food: There are a number of ways to trim your food budget. Buying food in bulk, searching for discounts on meats and produce, and limiting meals at restaurants will all help you save.
Educational Expenses: Textbooks are not cheap. For the best deals, look outside the campus bookstore and check sites like Chegg and Amazon. You may also be able to rent the books you need, or check them out from the library. If you're having trouble covering your books, supplies, or additional fees, ask your financial aid department about emergency bursary funds. These are generally a last resort and are usually only awarded to students burdened by unforeseeable financial complications, but it never hurts to ask. While online students will have fewer expenses than residential students, you will still have to pay travel expenses and technology fees as applicable.
Social Activities: Not every social event has to cost money. You can organize sports matches with your friends, go on hikes, volunteer with local organizations – the options are virtually endless.
Program Rankings for High ROI Degrees
Know you want to go to college, but aren't sure what to study? Take a look at some of the most popular degrees for incoming students. Below, we've ranked the best programs in several of the nation's most popular majors. Affordability is a huge part of our criteria, and each school's tuition rates and financial aid opportunities are baked into their rankings. Each of the programs listed below routinely provide graduates with a solid return on investment, and the school's featured boast strong financial aid departments.
- Best Online Associate Programs in Business Administration
- Best Online Bachelor's Programs in Accounting
- Best Online Bachelor's Programs in Business Administration
- Best Online Bachelor's Programs in Human Resources
- Best Online Bachelor's Programs in Marketing
- Best Online Master's Programs in Accounting
- Best Online Master's Programs in Finance
- Best Online Master's Programs in Human Resources
- Best Online MBA Programs
- 10 Habits You Develop in College That Will Save You Money in the Real World: This Wall Street Journal article offers actionable tips on how to be fiscally responsible in college and after graduation.
- How I Graduated Debt-Free With $40,000 In The Bank: Real life debt-free college graduate Amanda Reaume explains how she was able to do it, and how you can too.
- Federal Student Aid: This is the official site for information pertaining to federal aid through the U.S. Department of Education. It provides information on loans, grants, work study, and helpful phone numbers to call if you have questions.
- Chegg.com: You can purchase new and used textbooks at discounts of up to 90%, with options for renting and purchasing ebook versions.
- Fastweb: Complete a profile and gain access to 1.5 million scholarships, plus valuable information as you search for colleges and internship opportunities.
- Introduction to 529 Plans: Find out more about college savings and prepaid tuition plans through the U.S. Securities and Exchange Commission.