Your 9-Step Plan to Cut Education Costs & Pay for College

For many parents, the cost of college elicits intense sticker shock.

A private four-year college runs at nearly $37,000 per year for tuition and fees alone. So it’s no surprise that even new parents wonder how they’ll pay for college or save enough to cover the expense.

But it can be done. With the right strategy, you can slash the cost of higher education, maximize the power of your money, and get to graduation with little or no student debt. Here’s your 9-step blueprint for making it happen:

1. Nail down your EFC

When you apply for aid, the government estimates the amount of money your family can afford to contribute to the cost of college. That number is called the Expected Family 

Contribution (EFC). It’s calculated directly from the information you provide on your Free Application for Federal Student Aid (FAFSA). And the formula — while complex — is published each year for anyone to see. Unless you submit the application as an independent student, the EFC represents the amount that the student and his/her parents are collectively expected to pay each year.

Why does your EFC matter? It’s an essential tool for the following tasks:

• • Determining which schools to include on your college list.
  • Estimating the amount of financial aid you’ll receive.
  • Evaluating a school’s aid letter.
  • Creating an educational savings strategy.

>> What’s your number? Compute your Expected Family Contribution with this easy EFC calculator

2. Research colleges’ approach to financial aid

Once you know your EFC, it’s simple to determine your “financial need” number. For any given school simply subtract your EFC from the school’s cost of attendance (COA).

Now, when you go to make your college list, explore the percent of financial need that each school covers on average. Ideally, a school will meet 100% of students’ financial need. But knowing a school’s number — the amount of aid it provides relative to a student’s financial need — can help you plan ahead.

To research how a school provides for financial needs, search for that school on the CollegeBoard site. Or filter a list of schools by amount of needs met and other criteria. Click a college, select the “Paying” tab, then choose “Financial Aid by the Numbers.” There, you will find valuable information on the percentage of students’ needs met, the amount of aid given, the types of aid offered, and more.

3. Lower the cost right out of the gate

Before you start looking for ways to cover the cost of college, take the vital step of actually reducing that sticker price. Choose a combination of these strategies:

• • Target affordable schools that give you the best value for your money.
  • Explore local schools that offer discounted rates to in-state residents. These schools cost, on average, 73% lessthan private institutions.
  • Consider starting at a community college, then transferring those credits over to a four-year school.
  • Sign up for high school AP testsand CLEP exams that translate to course credit at your chosen colleges.
  • Slash college housing expenses: Compare on-campus housing with off-campus. Share expenses with roommates. Or have your kid live at home while commuting.
  • Cut down on pricey food costs. Choose the lowest-cost meal plan that fits your needs. Or skip the meal plan and have your college-bound student grocery shop and cook.
  • Buy textbooks used, rent them for the semester, or get a low-cost digital version

4. Save money wisely

If you’re saving up to cover college costs, maximize the impact of each dollar. Beyond a simple savings account, consider the tax-advantaged perks of a 529 savings plan, a 529 pre-paid tuition plan, or a Coverdell Education Savings Account (ESA). Explore the pros and cons of accounts not explicitly designed for college savings — UGMAs and UTMAs, IRAs, taxable brokerage accounts, and more.

Keep in mind that some accounts are considered parental assets, while others belong to the child. Account ownership is factored in when calculating your family’s expected financial need.

5. Apply for aid ASAP

In general, the sooner you submit your request for aid, the better off you’ll be. While some forms of financial aid are consistently available, others run out over time or are given to the first applicants in the door.

Complete the FAFSA and — if your school requires it — the CSS Profile. You’ll be asked about income, assets, benefits you receive, the number of people in your family, and how many are currently going to school. The CSS Profile requests additional details, like the amount of equity you have in your home.

Some schools require additional forms before considering you for aid and scholarships. Check the application details for each school on your list. When your financial aid award letter arrives, review it thoroughly. If the assistance offered is insufficient, appeal the decision with the college.

6. Pursue school-sponsored scholarships

Scholarships, grants, and fellowships are the ultimate boon of aid. Why? They never need to be repaid.

Each school offers its own set of free-to-you financial awards. Visit the admissions section of each school’s website to find details on the types of scholarships they provide. Offerings may target students who excel in academics, athletics, art, community service, and more. Additional awards may go to women, minorities, or children of alumni.

For some scholarships, submitting your application will get you automatic consideration. Others involve some extra legwork — a separate application, an interview, or an audition. Be sure you understand each scholarship’s requirements, deadlines, and process for consideration. 

7. Track down independent scholarships

When it comes to free money for college, you’re not limited to what a school is willing to offer. There are millions of scholarships offered by other groups — businesses, academic organizations, professional societies, religious institutions, veterans’ associations, newspapers, local clubs, and more.

Some awards are just a one-time payout of a few hundred dollars, while others stretch to five figures per year in school. The more awards you can earn, the less money you will need to spend or borrow for college. Best of all, these independent scholarships are portable. Some limit you to schools in a particular state or a specific field of study. But others can be used at any college you choose.

To find these scholarships, first, check with the organizations with which you’re already affiliated. A little research may turn up unadvertised, available funds for which there’s little competition. Next, dive into the results of a scholarship finder tool. 

This tool will typically help you learn:

• • Exactly what school-based scholarships your student qualifies for – even if they’re not at the top of their class.
  • The requirements associated with each scholarship in order to obtain them
  • Additional scholarships are available to the student with only a modest increase in test scores.

Many families miss out on thousands of dollars of scholarship money because they don’t know what’s available to them and exactly what the requirements are to obtain them. 

Finally, see if the schools on your list participate in RaiseMe, a program that lets you earn and stack micro-scholarships.

8. Take advantage of employment.

One time-tested way to pay for college is to hold down a job while attending school:

• • Work-study programs are a popular path. If you’re eligible for participation, you’ll find the offer detailed in your financial aid letter.
  • On-campus jobs are another solution that typically offers to schedule flexibility around classes. Get paid to tutor other students, ring up purchases at the campus bookstore, or work the box office during college performances.
  • Jobs not affiliated with your school might be right for you. Get a part-time job bussing tables down the street, apply for a summer internship, or do some freelance work.
  • Tuition reimbursement opportunities can work beautifully if you hold down a job that offers it. Often, you’ll work full time at a company and take a few classes each semester toward your degree. Check your employer’s policies to see which colleges and courses are covered. 

9. Evaluate choices for student loans.

When you’ve exhausted your supply of scholarships, savings, and net earnings, you’re ready to look into loans. Remember that your loans should be affordable. If the only way to pay for a given college is to bury yourself in student debt, reconsider your choice of school and the cost of living.

Start with federal student loans. They typically offer several advantages over private loans, including a low and fixed interest rate, no credit check, options for repayment plans, and even loan forgiveness. Subsidized loans are best since the Department of Education covers your interest payments while a student is still in school.

If you pursue private student loans as well, compare offerings from banks, credit unions, and online lending platforms. Look for desirable features: competitive rates for excellent credit, low fees, and options for postponing repayment.

Understand that the rules and qualifying criteria differ for each loan. Some lending options are available only to those who demonstrate financial need, while others are available to most students. Some loans require parents to pay during college. Some insist on cosigners. Some allow for deferment down the road. So, before you commit to any loan, evaluate all your options and read the fine print. 

It’s no secret that a college education doesn’t typically come cheap. But making it affordable is possible. By taking these steps, you can send your children to college while ensuring your family’s financial health.