If you’re a current or future college student, you need to read this.
It’s about money: your money.
If you know where you want to apply to school and where you want to attend, you’re already off to a good start.
Now it’s time to figure out how you’re going to pay for all of it.
You need to understand a few things before you make all those big decisions.
Let’s take a closer look at what you need to know—and how you can maximize the amount of money that stays in your bank account.
1. Costs are on the rise
College is expensive. Really expensive. According to a recent article in US News and World Report, tuition prices among public national universities increased by 65 percent over the past ten years.
With higher costs, many students make their decisions less on where they want to go to college and more on where they can afford.
In 2017-2018, the average cost of tuition and fees (see #2 for the difference) at private colleges was $34,699, $9,528 for in-state students at state schools, and $21,632 for out-of-state students at state schools.
At public two-year schools, in-state students paid an average of $3,570 per year.
How do those numbers translate? It averages between a 130 percent and 250 percent increase from 30 years ago.
2. The difference between “tuition” and “cost of attendance”
There’s a difference and you need to know it. To know it, you need to read the fine print and understand it.
Tuition refers to the cost the college charges you to attend classes.
It’s the first thing you need to plan for.
There are other costs you’ll need to pay though. You need to eat and sleep, and you’ll probably need some supplies—like books.
Your “cost of attendance” refers to the total amount of money you spend per semester including tuition. You’ll need to factor in rent or dorm costs, meal plan or food prep costs, transportation, books and supplies, and other lifestyle costs.
Tuition is a fraction of what you pay—a big one—but you need to consider the other costs associated with going to school.
One trick? Look for places you can save some money.
3. The difference between “out-of-state” and “in-state” tuition
Public universities charge less tuition for in-state students than they do for out-of-state students.
Public schools can be great options for out-of-state students too, but they’re a lot more expensive. Compared to private options, they’re still less though.
In some cases, tuition for out-of-state students is more than double and often three or four times the cost for in-state students.
Different states have residency requirements. Typically, to declare residency, you need to prove that you’ve been a permanent resident of a state for at least 12-months and that you plan to reside in that state for a while.
You wiill need to show proof of residency with a driver’s license, local bank account, car or voter registration.
It’s nearly impossible to declare in-state residency as an out-of-state student.
4. Tuition payments can help reduce your tax burden
Reduce your or your parents’ tax responsibility by maximizing your deductions.
If you pay your own tuition expenses, you may qualify for an education tax credit, which can reduce the amount of federal income tax that you owe.
If your parents pay your bill, then they may qualify too.
If you have student loans, you can take a deduction, and deduct up to $2,500 of the interest that you’ve already paid on loans.
College savings plans are another way that you can shelter money. 529 plan contributions are not deductible on your federal return, but your earnings and deductions are tax-free.
5. There are creative ways to pay for college
You probably know about grants, loans, and scholarships by now.
One new and innovative way to fund your college education? Crowdfunding. If your cause is compelling enough, you may stand a chance.
Sites like GoFundMe can help you raise some serious cash.
Intrigued? Good. Do your homework. Dot your i’s and cross your t’s and off you go.
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