Back in 1980, the average annual cost of attending a year of undergraduate college was about $3,500, including tuition, room and board. Today, a higher degree at a public university will cost you around $10,000, while private schools top the list at $30,000 and up.
If costs continue to escalate at 7% per year, couples with young children could expect to pay $60,000 or more per year by the time their kids head off to school.
That's why now it's more important than ever to consider smarter paths to making a college degree affordable. Here are five ways to save on college without sacrificing the quality of the education.
1. Get College Credit in High School
The College Board is best known for administering the SAT, the most widely used college admission exam, but it also offers advanced placement (AP) tests that allow students the ability to earn college credit while still in high school.
There are more than 30 AP courses available to high school students, with the College Board confirming that 90% of four-year colleges award credit, advanced placement or both based on AP exam scores. The cost savings can be great -- it costs $87 to sit for an AP exam, whereas a single college credit can run anywhere from $100 to $1,000 or more depending on the school. Considering many students take five or more years to graduate from college these days, AP credits offer a savings in both time and money.
2. Study Abroad Full Time
Studying abroad for a semester is common for students at U.S. universities, but students also have the option of going completely international to obtain a degree. The cost savings can be substantial for what amounts to a similar level of education. But what also helps are fast-track programs to advanced degrees that aren't offered in the U.S.
England may be an affordable private-school option for international students, for example, with costs between $8,600 and $31,000 according to the British Council. By comparison, US private schools cost an average of $32,000 according to The College Board. Students may be able to get their degree faster, too: Oxford University offers three-year undergraduate programs, which would shave an entire year of tuition, books, board, and fees from a student's expenses.
3. Invest in Tax-Advantaged College Savings Plans
529 plans let parents save for future college expenses without having to pay federal and state income taxes. Qualified distributions are exempt from federal income tax, while state exemptions can come with investing in your state's respective 529 plan.
These plans cover what are considered qualified higher education expenses: including tuition and fees, room and board, as well as books and computer needs. Certain states also offer tax incentives for residents who enroll in the state-sponsored plan, such as matching grant and scholarship opportunities and protection from state financial aid calculations. To let the magic of compounding interest work in your favor, the sooner you start a plan the better.
4. Enroll in Your Local (and Inexpensive) Junior College
For some students, a junior college can be an ideal stepping stone to a traditional -- and expensive -- university. The average cost for a two-year community college is a fraction of four-year colleges, averaging about $3,500 per year for tuition for local (in-district) students according to The College Board. The credits also apply to a four-year school, which means a degree can be earned in about the same time as students who start at a four-year university -- for about one-third the cost.
5. Stick to Public, In-State Colleges and Universities
Even when sticking with a traditional four-year college in the states, there are more cost-effective options. In addition to the cheaper rates of state schools, public universities also charge almost half the price for students that reside in-state. The average charge for in-state students at a public four-year college is $9,500 per year, whereas full-time out-of-state students can expect to pay closer to $24,000.
In most cases, there are a number of public options within your state. If not, it may be worth the effort to establish residency in a state where your child is more likely to attend college.
While a college education has never been free, individuals can expect to pay more for this privilege in the future. But for those savvy investors and parents able to think outside of the box, cost-cutting techniques still exist if you know where to look.
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