How to Fund College if You’re not Rich

Next to the purchase of a home or retirement, college costs are the highest expenditure families will face. Increases in college tuition outpace inflation year after year. There are ways to combat this but families must be resourceful.

Saving in advance is the solution most people think of, but can't implement. Many families make the mistake of attempting to fund their child's college education with savings while woefully neglecting their retirement savings. As the old saying goes, nobody will loan you money for retirement but college loans abound! Skip the 529 account unless you are actively putting 20% of your gross income away each year for retirement.

Applying for scholarships is always a good idea but be aware of their scarcity. Scholarships as a form of college aid are becoming few and far between. Most college aid now comes in the form of loans so be prepared to borrow for a portion of the expense. Your goal is to minimize the amount needed to borrow.

Several strategies can save money but stick with ones that will have the largest impact on the numbers.

If you child is academically sound, have him/her take College Level Exams (CLEP Exams) for as little as $65 plus a nominal testing fee and they will receive college credit for the class if they pass. These tests can be taken while in high school. Check out the limits with your child's prospective school to make sure they'll receive credit for the exams. If the school takes five classes, that's one semester of tuition you won't have to foot the bill for.

In some colleges, this is worth almost $20,000 of tuition expense. CLEP study guides are available in used form on used book sites and new ones even available for purchase for as little as $35. Compared to some textbook costs of upwards of $150, this option will save you even more money. More information on CLEP can be found by visiting the collegeboard website at http://www.collegeboard.com/student/testing/clep/about.html. Your child could even graduate early and get a jump start on the job market ahead of those May graduates!

If your child is considering a part-time job, have them seek one at the college they will be attending. Some colleges offer reduced tuition for students employed at the college. Even a 20% discount on tuition would make a huge dent in the bill. Other part time work at school could consist of tutoring or proofreading papers for other students.

A job with an outside employer who offers tuition reimbursement is also something to consider. There is nothing better than having somebody else foot the bill while earning money at the same time.

If a career change is in order for mom or dad and the college is close to home, consider a job opening at the college. Many full time employees at colleges receive free tuition for their dependents, saving the bulk of the cost of an education.

Consider having your student attend a local community or state college for the first two years then transfer to the college of their choice. This will require some advanced preparation to ensure that all credits will transfer but is well worth the savings. Community and state colleges in some areas can have tuition at half the cost of private school tuition. Two years of state school could in effect save a whole year of private school tuition. In the end, their resume will list a degree from the college they attend for their last two years.

If the college is close to home, consider having your child live at home and commute, saving on dormitory costs. Although the benefit of living on their own won't be realized right away, the benefit of reduced student loans will benefit them later.

Lastly, if you child does go off to school, be sure they are well versed in the mechanics and pitfalls of credit cards. Many college students are heavily marketed at school from various credit card companies who have a presence on campus. Many come out with more than student loans to saddle their future earnings.

Whatever strategy you employ, be realistic and minimize costs where possible. Every bit counts when a college education bill is at stake!