Yahoo Finance How Rich Do You Have To Be To Pay for College Without Loans?
In 1963, the average cost of a year’s tuition at a public university was $243. Adjusting for inflation, that’d be $2,431 in today’s dollars — a fraction of today’s tuition costs. And incomes haven’t kept pace. In fact, from 2000 to 2020, average tuition costs outpaced wage gains by 111.4%.
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So what’s a middle-class family to do? How do you help your kids with college costs to prevent them from struggling with student loan debt for the next few decades? Fortunately, there are other options to consider.
The Numbers: Paying Cash for College
You could pay your children’s tuition in cash if you can afford it.
In the 2023-2024 school year, in-state tuition at public universities averaged $10,662. Out-of-state tuition averaged $23,630, and private college tuition averaged $42,162. That doesn’t include books, supplies, housing, or food. Those add up to roughly $17,000 more per year, according to the Education Data Initiative.
For a private college, that comes to a total cost of around $60,000 per year, or $240,000 over four years, providing costs don’t rise over the next four years.
Some wealthier families might be able to swing that, without hurting their retirement savings, but most families can’t afford to pay nearly a quarter million dollars in cash for a college degree.
Investing for College in Advance
Some savvy parents start investing or saving for their child’s college education from birth, and that’s great. If you’re planning on kids but don’t have any yet, investing in a stock index fund that earns a long-term average 10% return can result in the following (after 18 years based on your monthly investment):
$50/month: $29,799
$100/month: $59,598
$200/month: $119,197
$300/month: $178,795
$400/month: $238,294
How much you invest will cover anything from in-state tuition to tuition and room and board or out-of-state or private school tuition plus other expenses. These estimates are all based on today’s costs, which will likely increase over the next 18 years.
Trimming Tuition Costs
Students have plenty of options to pay less out of pocket for their education. Consider all your options, and combine as many as you can.
Scholarships. Schools offer academic and athletic scholarships, but that marks the beginning of your scholarship search, not the end. Look at state and regional scholarships, such as those offered to Maryland residents. Then there are scholarships for specific populations, specific career paths, and specific skills. Check out Scholarships360 to start your search, and stack up as many scholarships as you can.
Financial aid. Beyond merit-based scholarships, you can also add need-based scholarships into the mix. Fill out the Free Application for Federal Student Aid (FAFSA) form and submit it with each college application. But don’t stop there — look at state and local aid programs, federal aid programs, and need-based scholarships on Scholarships360 as well.
Grants. Another form of free money for college, research what federal grants are available. Likewise, research state and local grants to make sure you cast as wide a net as possible.
Comparison shop. Shop around and compare college costs versus the quality of the degree to find the best bang for your buck. Consider how much aid each school is willing to offer and what other benefits your student may receive.
Start at community colleges. Students can spend their first two years knocking out prerequisite courses at a community college, then transfer to a four-year university to graduate. Community colleges may also offer free tuition, depending on your state and your student’s GPA.
Employer Help
Some employers offer tuition reimbursement programs to help their employees pay for college. Check out these employers who offer it.
If you’re in the military or part of a military family, you might already have options. “Veterans can earn tuition reimbursement through GI Bill benefits,” notes Brian Meiggs, co-founder of BeerMoney. “Alternatively, you can start working toward your degree before serving as an officer through the Reserve Officers’ Training Corps (ROTC) program.”
Work-Study
Finally, students can work part-time while taking classes. That could mean working on-campus or off-campus, or even a side hustle. Students might also be able to find on-campus jobs like a resident assistant that offers both a paycheck and reduced living costs.
Get Creative
Some parents and children pay for college in tandem by flipping houses together during the summer months. Other parents buy an off-campus house for their student to live in and rent the remaining rooms. The rent covers the mortgage payment and maintenance costs.
The possibilities go from there. With a little creativity, you can find ways to afford college without taking out student loans.
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