How to Lower Your Annual College Costs

Two-thirds of 2011 college graduates held student loans, and the average debt was $26,600. But college doesn't need to be so expensive. Here are 10 ways to lower your college costs.

Few students pay the full sticker price for college. Thus it pays to shop around. Don't hesitate to ask the financial aid staff at your target schools for information on the financial aid package you could expect. Apply to a few extra colleges since you won't know their true price until after you're accepted.

But don't just look for the cheapest colleges. Look for colleges that provide the most value. As with other purchases, it can make sense to pay more for higher quality. Annual rankings of colleges offering the best value are provided by organizations like U.S. News & World Report and Kiplinger.

Be sure to consider the impact of mandatory fees. Many colleges have shifted more of their costs into mandatory fees as a way to slow the growth of tuition. But these fees must still be paid.

Also consider room & board, which in 2012-2013 averaged $9,205 at public four-year schools and $10,462 at private schools. Room & board costs can vary by thousands of dollars per year, with urban colleges often having the highest room & board costs.

Most in-state colleges offer significantly lower tuition for in-state residents than for non-residents. You (or your parents) already help support your in-state colleges through state and local taxes. Why not enjoy the fruits of those payments?

Attending an in-state college will usually result in lower travel costs. The costs of long car trips, airline tickets and hotels add up over four years, and are not covered by financial aid or scholarships.

To slash the cost of college, consider attending a local community college for two years before transferring to a flagship state school for your junior and senior years. Community colleges are very affordable, especially if you live at home. And your degree will be granted by the flagship school.

One of the most effective ways to lower college costs is to graduate in four years--or less! Fewer than 40% of college freshman graduate in four years, and barely 60% graduate in six years. Each extra semester adds huge extra costs for college, along with the opportunity costs of not working.

Research potential career opportunities early, and decide on a major as soon as possible. Switching majors is a common reason why students are not able to graduate in four years.

To increase your odds of graduating on time, plan out your courses to insure their completion. Many people are unable to graduate in four years because they don't have the prerequisites for a required course when they want to take it, or because that required course wasn't offered at the right time.

Consider carrying extra credits during freshman and sophomore years to provide a buffer for later. Pick classes, such as general education requirements, which will help with whatever major you eventually decide on. Taking a few summer classes can also be an effective way to stay on track.

Earn as many college credits as possible before college to increase your odds of graduating in four years. Take as many Advanced Placement Exams as possible during high school and/or see if your high school will let you take a dual-enrollment class at a local college. Some students are able to amass one or even two semesters worth of college credits before the first day of college classes!

Don't slack off during senior year of high school so as to avoid the need to take remedial courses in college. Remedial courses often do not count toward graduation requirements.

Apply to work as a Resident Advisor (RA) in a dorm. You'll gain valuable problem-solving skills, and most colleges offer reduced or free room & board to their RAs.

Accept work-study aid if it's offered as part of your need-based financial aid package. The work is usually on campus and can be scheduled around classes.

Complete the Free Application for Federal Student Aid (FAFSA) as soon as possible after January 1st of each year--and definitely before your school's financial aid deadline. Applying early makes it less likely your college will run out of financial aid funds before reviewing your application.

Also apply for any financial aid offered by your state. New York, for example, offers a Tuition Assistance Program (TAP) that awards grants of up to $5,000 per year to its in-state residents. Applying is easy--once you've completed the FAFSA.

Scholarships are free money that you won't need to repay. Ask your high school guidance counselor or college adviser about scholarship opportunities, or simply search the web. There are thousands of scholarships available from incredibly diverse organizations, and almost everyone can qualify for one or more.

Don't be discouraged by scholarships that are for "only a few hundred dollars". That's a lot of money for most college students, and you could win multiple scholarships.

Claim any education tax benefits to which you are entitled.

The American Opportunity Credit provides a maximum annual credit of $2,500 per student. The full credit is available for single filers with modified adjusted gross incomes (MAGI) up to $80,000 and joint tax filers with MAGI up to $160,000, with the credit being phased out for higher incomes.

Other education tax benefits include the Lifetime Learning Credit and the Tuition & Fees Deduction. Generally, the American Opportunity Credit is the most valuable, and is thus the best starting point.

Refer to IRS guidelines for the specific rules to claim these tax benefits.

The national average cost of textbooks and supplies for college students is $1,100 per semester. Luckily, there are effective strategies to minimize these expenses.

You can save 20% or more by buying used textbooks rather than new. Used textbooks can be bought from your college's bookstore along with Internet sites like Amazon, eBay and others. You can also save by renting textbooks rather than purchasing them.

Selling textbooks at the end of each semester further slashes their net cost. See "How to Sell Used Textbooks" for tips on getting the highest prices. Except for reference books in your major, resist the temptation to keep old textbooks because "you might need them someday".

Many colleges are competing with each other by offering luxurious dorms, fancy restaurants and other upscale amenities. It's worth remembering that you're attending college to be educated. The luxuries in life can wait until after graduation.

With that in mind, consider staying in a traditional dorm rather than a state-of-the-art apartment. Live with a roommate to split the cost of your dorm room or apartment. Don't bring a car to campus. Take advantage of the free or low-cost entertainment opportunities offered on most college campuses.

There's plenty of time to ramp up your lifestyle after graduation, when you can actually afford it!