Figuring out how to pay for college keeps many parents up at night. I see the worry in their eyes on a regular basis in my office.
A couple visited me last year, both with solid careers but anxious about their daughter's future. She had just been accepted to her dream school with a $55,000 annual price tag.
"We've saved some, but not nearly enough," they told me. Like many families, they assumed they earned too much for financial aid.
They were wrong.
Together, we uncovered strategies that cut their costs by over $20,000 per year.
College expenses have jumped 180% since 2000 according to the College Board's Trends in College Pricing report [1]. Despite this harsh reality, many families qualify for more help than they realize.
There are smart approaches to making college affordable without compromising on quality. The most important step any family can take is beginning a college savings plan early.
1. Start Saving Early with a College Savings Plan
The earlier you start saving for college, the better. Time is your biggest advantage. Even $50 a month adds up when you start early.
Here's a breakdown of the main college savings options:
- 529 Plans: These state-sponsored plans let your money grow tax-free when used for education expenses. Many states offer tax deductions on contributions. You maintain control of the money, and it has minimal impact on financial aid eligibility.
- Coverdell ESAs: These work similarly to 529s but with a $2,000 annual contribution limit. They offer more investment options and can cover K-12 expenses. Income limits apply for contributors.
- UGMA/UTMA Accounts: These aren't specifically for education but offer flexibility for any expense that benefits the child. The downside is they count more heavily against financial aid calculations, and your child gains control of the money at age 18 or 21.
Don't worry about starting small. What matters most is beginning early and contributing consistently. The power of compound growth turns even modest monthly contributions into meaningful college savings over time.
2. Leverage Scholarships and Grants (Free Money!)
Scholarships and grants are the best form of financial aid because they don't need to be repaid.
Merit-based scholarships reward academic achievement, special talents, and community involvement. These can significantly reduce college costs for students who stand out in some way.
Many families overlook the Federal Pell Grant. This is free money from the federal government for students with financial need. Unlike loans, Pell Grants never need to be repaid and can be combined with other forms of aid.
Don't ignore private scholarships from employers, community organizations, and special interest groups. These often have less competition than national scholarships.
Where to look:
- Your child's high school guidance office
- College financial aid websites
- Local businesses and community foundations
Start the scholarship search by sophomore year of high school. Many smaller awards in the $500-$1,000 range add up quickly and often have fewer applicants.
3. Complete the FAFSA to Unlock Federal Financial Aid
The Free Application for Federal Student Aid (FAFSA) opens doors to all types of financial aid. I urge every family to complete it even if they think they earn too much money.
Why?
Because many colleges use the FAFSA for merit scholarships too, not just need-based aid. Much of the available financial aid gets distributed on a first-come first-served basis, so file as early as possible when the application period opens.
Common mistakes I see:
- Waiting too late to apply
- Not updating the FAFSA when current income drops
- Having savings in the student's name (counts more heavily against aid)
- Misunderstanding which parent assets to report in divorce situations
Families with higher incomes should still apply for federal student aid. Many students from middle and upper-income households receive institutional scholarships based partly on FAFSA information.
The FAFSA uses a formula that often surprises families. I've worked with clients earning six-figure incomes who qualified for significant aid when they had multiple children in college at the same time.
4, Apply for State and Institutional Grants
State grant programs have their own eligibility requirements that differ from federal financial aid guidelines. These often benefit middle-income families who might not qualify for federal student aid.
In New York, for example, the Tuition Assistance Program (TAP) helps thousands of state residents attend college each year. Every state offers different grant programs with varying awards and eligibility criteria.
Don't overlook institutional grants from the colleges themselves. Private colleges with high sticker prices often have substantial grant funds to attract qualified students. These awards can dramatically reduce your actual cost.
Some tips I share with clients:
- Check your state's higher education website for state-specific grants
- Ask college financial aid offices about institutional grants
- Look for schools where your child's academic profile is above the average admitted student
These sources often provide substantial aid for offsetting college costs that many families never discover. Some of my clients have received institutional grants covering 40-50% of tuition costs.
5. Pick a College That Fits Your Budget
Having the "college budget talk" with your child is tough but necessary. Many families struggle with debt because they avoid these important conversations.
Public in-state universities cost significantly less for tuition than private colleges. Out-of-state public universities usually fall somewhere in between these two options.
Consider these options:
- Start at a community college for two years, then transfer
- Focus on schools where your child qualifies for merit scholarships
- Look for colleges known for generous financial aid
- Consider schools that guarantee four-year graduation rates
The most expensive school isn't necessarily the best one. Many employers care more about your degree and experience than where you earned it.
Community college can be an excellent starting point. I worked with a family whose daughter completed her general requirements at a local community college before transferring to her dream university. This strategy cut their total cost by nearly half.
6. Help Your Child Graduate Faster to Save Money
The average student now takes 5-6 years to earn a "four-year" degree according to the National Center for Education Statistics. Each extra year costs not just tuition but also delays full-time income.
I advise families to focus on graduation timelines from day one.
High school students should take AP or IB courses that transfer to college credit. One student I advised earned enough credits before freshman year to skip almost an entire semester, saving substantial tuition costs.
Summer classes can accelerate graduation and often cost less than regular semester courses. Many colleges offer discounted summer tuition to fill otherwise empty classrooms.
Some schools have formal 3-year degree programs or combined bachelor's/master's programs that save time and money.
The key is having a graduation plan from the start. Meet regularly with academic advisors to stay on track and avoid unnecessary courses that delay graduation.
7. Explore Employer Tuition Assistance Programs
Many companies offer education benefits that families overlook when planning for college. This hidden source of financial aid can save thousands.
Ask your HR department about dependent education benefits. Many employers provide scholarships or tuition discounts for employees' children.
For working students, tuition reimbursement programs typically cover a significant portion of education costs tax-free each year. Even retail chains and fast food restaurants now offer substantial education benefits to part-time employees.
I've guided several parents to strategically change jobs before college years to access better education benefits. One client found a position at a local university that provided a substantial tuition reduction for dependents saving their family tens of thousands across their children's college years.
Take inventory of all potential employer benefits. Some companies offer matching contributions to 529 plans, while others provide direct scholarships or reduced tuition through partnerships with specific colleges.
Most employer programs have specific requirements like maintaining certain grades or studying in approved fields. The extra paperwork is worth the potential savings of thousands each year.
8. Use ROTC or Military Benefits to Cut College Costs
Military education benefits provide some of the most generous financial aid packages available. Students willing to serve can eliminate college debt entirely through these programs.
ROTC scholarships cover full tuition, books, and fees at many colleges. They also provide a monthly stipend for living expenses. Students commit to military service after graduation for about four years of active duty.
The application process for ROTC scholarships begins during junior or senior year of high school. Strong academics, leadership, and physical fitness are key factors in selection.
For those who serve before college, the GI Bill benefits are substantial:
- Full tuition and fees at public universities
- Housing allowance based on school location
- Book and supply stipend
- Up to 36 months of benefits
Service members can also transfer unused GI Bill benefits to spouses or children under certain conditions.
9. Help Your Child Find Work-Study or Part-Time Jobs
Working during college helps cover college costs while building valuable skills. Students who work 10-15 hours weekly often perform better academically than non-working peers.
Federal Work-Study is a form of financial aid that guarantees on-campus jobs for eligible students.
These positions typically:
- Work around class schedules
- Offer higher pay than off-campus retail jobs
- Provide valuable experience in academic departments
- Allow study time during slow periods
Even without Work-Study, on-campus jobs often pay well and save commuting time. Library assistants, resident advisors, campus tour guides, and IT help desk staff usually earn more than minimum wage.
Summer internships in your child's field of study can provide both income and career advantages. Many also lead to tuition assistance or scholarship opportunities.
A strategic approach to working during college can reduce loan amounts while building a resume that helps land a better job after graduation.
10. Offset Costs with Tax Credits and Deductions
Many families miss out on valuable tax benefits that can significantly reduce college expenses.
The American Opportunity Tax Credit (AOTC) offers a substantial credit per eligible student for the first four years of college. It's partially refundable so you might receive money back even if you don’t owe taxes.
Students beyond their fourth year or taking classes part-time can benefit from the Lifetime Learning Credit. You can claim this credit for unlimited years unlike the AOTC. However, it provides a smaller overall benefit.
Qualified withdrawals from 529 plans and Coverdell ESAs remain tax-free when used for approved education expenses. This makes your college savings go further.
Income limits apply to education tax credits but many middle-income families qualify. These tax benefits work alongside other financial aid to reduce your total college costs.
I recommend consulting with a tax professional to identify which education tax benefits will work best for your specific situation.
11. Understand Private and Federal Student Loans
Federal student loans typically offer better terms than private options when grants and scholarships don't cover all expenses.
Direct Subsidized Loans are the best federal option because the government pays the interest while your child is in school. They're only available to students with financial need.
Direct Unsubsidized Loans are available regardless of need but accrue interest during school. Both loan types offer fixed rates with flexible repayment options.
Parent PLUS Loans let parents borrow up to the full cost of attendance minus other financial aid. These carry higher interest rates and fewer forgiveness options, so use them cautiously.
Consider private student loans only after exhausting federal options. When comparing private lenders, look beyond interest rates to examine:
- Fixed vs. variable rates
- Repayment flexibility
- Hardship options
- Co-signer release terms
I suggest limiting borrowing to no more than your child's expected first-year salary. Excessive student loan debt can delay major life milestones like homeownership or retirement saving.
12. Refinance or Consolidate Existing Student Loans
Refinancing or consolidation can lower payments or reduce interest costs for families managing existing student debt.
Parents with PLUS loans often benefit from refinancing through private lenders when interest rates drop. Those with strong credit scores can secure lower rates and potentially save thousands over the life of the loan.
Federal consolidation combines multiple federal loans into one with a single monthly payment. This simplifies management but doesn't lower your interest rate. The new rate is calculated as the weighted average of your original loans rounded up to the nearest eighth percent.
Consider these trade-offs when refinancing federal loans to private loans:
- You might get a lower interest rate
- You lose federal benefits like income-based repayment
- You forfeit potential loan forgiveness options
Refinancing makes the most sense when you:
- Have stable income and good credit
- Don't qualify for forgiveness programs
- Can secure a significantly lower interest rate
Remember that refinancing doesn't eliminate debt. It just restructures it.
13. Work on Education Planning with a Professional
Getting help with college financial planning can make a significant difference in your results.
A good financial advisor can help you:
- Create a realistic savings plan based on your budget
- Balance college funding with other important goals
- Understand how different savings vehicles impact financial aid
- Develop strategies to maximize tax benefits
- Position assets to improve aid eligibility
We work with families during all stages of the college planning journey. Some clients begin when their children are newborns while others seek help with college just a year or two away. We find ways to make education more affordable for everyone.
The best advice I can offer is to start planning early and be realistic. College is a major investment, but it doesn't have to derail your financial future.
Want to stop worrying about college costs? Contact us to schedule your consultation.
References
[1] Trends in College Pricing Report, College Board Research. Cited February 26, 2025. https://research.collegeboard.org/trends/college-pricing