5 Creative Ways to Pay for College

With college tuition skyrocketing, many families question whether it's possible to help their kids get an education without wrecking the family finances or endangering other long-term financial goals. Parents who are concerned about their kids being burdened by student loan debt are looking for creative ways to save and pay for college. With a bit of advanced planning and flexibility, your family might discover that there is a wider variety of options for making college affordable – ranging from finding unusual scholarship sources to having your student live at home, or even going to college in other countries Opens in new window.

Below are five creative ways parents and their college-bound kids can get past feeling overwhelmed about cost and start moving forward with greater confidence and calm.

Start scholarship search in 9th grade

Olivia Valdes is a college admissions consultant and founder of Zen Admissions Opens in new window who helps coach students and families to find the best scholarship opportunities. She says that there are more college scholarships out there than parents might expect – but it pays to start early. “Many families don't realize that there are lots of scholarships available as early as a student's freshman year of high school," Olivia says. “Encourage your child to start the scholarship process early, as their schedule will likely get busier as they approach their senior year."

Olivia recommends that parents begin by checking with their employers or professional groups that they're involved with. “Some large companies run their own scholarship programs for children of employees, and associations like the Kiwanis Club Opens in new window and the Rotary Club Opens in new window offer scholarships, including some for the children of their members," Olivia says. “There are also regional scholarships and scholarships aimed at children of veterans. Students should seek out unique scholarship opportunities that relate to their specific interests, rather than applying only for widely known national scholarships, which have much larger applicant pools."

Earn real college credit online for free

There is nothing cheaper than free tuition. The Modern States Education Alliance Opens in new window is a philanthropic organization that offers tuition-free courses online that allow students to work at their own pace and earn college credit by taking the AP exam or College Level Examination Program (CLEP) exam. Their “Freshman Year for Free" initiative is designed to help people – including current college students – earn college credits at no cost. (Modern States will even pay the $85 fee for taking the CLEP exam.)

The Modern States program offers online courses taught by professors from leading universities like Columbia, Purdue, MIT, Johns Hopkins, University of California at Berkeley, Rice University and more, in subjects ranging from business to literature to history to science and world languages. Many universities and tech startups have been experimenting with online learning, but this program takes things one step further by giving students the chance to earn real college credit and potentially get their entire first year of college for free.

Explore state-specific scholarships and grants

Kristen Moon, founder of college admissions consulting firm Moon Prep Opens in new window, says that your student may be able to qualify for merit-based scholarships for in-state tuition, depending on where you live.

“In Georgia, we have the Hope Scholarship and Zell Miller Scholarship – both are merit-based, do not need to be repaid and can cover full tuition for an in-state college, public or private," Moon says. “In Arizona, students who attend in-state universities are eligible for the Regents High Honors Endorsement Scholarship and the Flinn Scholarship. Both are merit-based. See if your state offers merit-based aid. Students do not automatically receive the aid; they need to apply."

Re-imagine the student loan

Some universities have started offering a creative alternative to student loans: the Income Share Agreement (ISA). “With an ISA, a student receives funds to pay for college and in return agrees to pay a percentage of the student's future income after graduation for a fixed period of time," Kristen Moon says. “Unlike a traditional loan, there is zero interest and zero balance."

Two universities that are currently offering this Income Share Agreement option are Purdue University Opens in new window and Clarkson University in New York Opens in new window. The Income Share Agreement might help you save money compared to paying off student loan interest, but be sure to read the fine print and be aware of the possible downsides. One potential drawback of an ISA plan is, as Kristen Moon says, “Students could end up paying more than the original amount of their college tuition. For example, the terms of an ISA could require 15% of a future business. If a student goes on to launch a successful start-up, then they might end up paying a great deal more than the original amount."

Think beyond the 529

Many families use 529 college savings accounts to save money for college, often on a tax-advantaged basis (depending on the state – some states offer a state income tax deduction for 529 contributions). And although a 529 can be a great option to save money for college, you shouldn't stop there. Saving for college should be looked at as part of your overall family finances and financial planning – and depending on your income and assets, there are creative ways to maximize your cost-savings strategically.

Financial professionals help families implement financial planning strategies that go beyond the 529 and lower the cost of college. Be strategic when applying for financial aid and dealing with the FAFSA  Opens in new window(Free Application for Federal Student Aid) that evaluates the family finances and assesses an expected family contribution (EFC) Opens in new window to the student's college funding.

College is expensive, but your family has options. With some advance planning, flexibility, and creativity, your children can achieve their dreams of a college education — while you enjoy healthy, low-stress family finances.

Please consult your tax and legal advisors regarding your particular circumstances.

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