Paying for College: Six tips to lower the cost

College is expensive! For example, tuition, room and board at Harvard College cost $52,652 in 2011-12. Add books and other expenses and four years can top a quarter of a million dollars, and Harvard doesn’t even make it onto the top ten of Forbes’ list of the most expensive colleges in the US. Few will go to Harvard, but the cost of attending more modestly priced institutions can cripple the budget of many American families. Fortunately, you can take steps to mitigate the damage.

Focus on Academic Performance in High School – Bill put a lot of time, effort and money into helping Bill, Jr. become a better youth baseball player. He expects that a baseball scholarship will pay for his son’s college. In the same way, Bill’s preparation for retirement consists of the semiweekly purchase of lottery tickets. The probability of a happy conclusion with either strategy is small.

Less than two percent of high school athletes will earn athletic scholarships. Yet, at many schools, more than 50 percent of students earn financial aid based, at least in part, on academic ability. Students and their parents hoping to defray college costs through scholarships should focus on academics not athletics

Most colleges consider academic ability when determining financial aid packages.  They will look at things like high school GPA, class rank, and SAT scores. Other factors include the academic rigor of the high school and the caliber of the courses attempted (an “A” in calculus means more than an “A” in interpretive dance).

Our best advice is to focus on academic performance. If there is a choice, attend the best high school possible. Take academically rigorous classes—advanced placement or college-prep courses. Put effort into your studies rather than learning to hit a curveball. Money invested in a math tutor will yield a higher ROI than money spent on a private pitching coach.

Pass on Your Stretch School – All colleges are not equal. A student who receives significant merit-based aid at one school may receive much less from another. Often, students have “stretch” schools (where they are a marginal admit) and “safe” schools (where they are reasonably sure to get in). A stretch school is often a dream for the student. Unfortunately, if the school is truly a stretch, he or she will probably be at the bottom of the academic pecking order and will receive little or no merit-based aid.

Conversely, the same student could be much more attractive to the safe school.  This might mean significant merit-based aid. It’s always difficult to pass on your dream school, but doing so could be worth tens of thousands of dollars over four years.

Maximize Need Based Aid – Think you won’t qualify for need-based aid—you may be pleasantly surprised. Think Ahead, LLC reports that, depending on the school’s sticker price and how many people in your household are in college, even families with incomes that exceed $300,000 annually may qualify for some need-based aid. It’s worth spending a couple of hours to complete the FAFSA (Free Application for Federal Student Aid). The Federal Government will calculate your EFC (Expected Family Contribution) based on this submission. The sticker price of your school less your EFC is your demonstrated need. Schools are not always able to meet 100 percent of demonstrated need, but it’s worth a try.

Prior to completing the FAFSA, you can lower your EFC. For example, pay off credit card debt, prepay your mortgage, or accelerate necessary expenses such as buying a new car to reduce available cash. Maximize contributions to your retirement account. You can borrow for college, but you can’t borrow for retirement. If Mom plans to pursue an Executive MBA, doing so while the children are in college will increase demonstrated need. lists several tips to maximize your ability to qualify for need-based aid.

Start with Community College – Increasingly, students attend community colleges that are typically less expensive than four-year schools. Students often live at home while attending, which further reduces cost. Many four-year schools are anxious to accept transfer students from community colleges because they have empty seats in upper-level courses. Some four-year schools will guarantee acceptance to students who complete specified coursework at a particular community college while meeting required academic standards. The level of academic rigor at some community colleges is less challenging. You can get a good education that will prepare you to complete your baccalaureate, but you’ll need to push yourself to do more than meet minimum requirements.

Graduate in Four Years – Spending additional years in college can raise costs quickly. Years five and six will cost more than years one and two. Most schools raise tuition and fees every year, but financial aid typically doesn’t increase. Consider a school that raises tuition by 5 percent each year. A student who received aid equal to 50 percent of tuition and fees in his or her freshman year will pay 43 percent more in year five than in year one.  Further, aid sometimes ends after a specified number of years. Add to this $30,000 or more of opportunity cost because the student isn’t working and it is obvious that not finishing in four years can be very expensive.

The percentage of students who graduate in four years varies widely by school. It’s not unusual for more than half of the students graduating from large, state schools to take more than four years. Conversely, small, private schools often see 90 to 95 percent of their students who graduate do so in four years or less. Some even guarantee that students will graduate in four years. The state supported school that seemed like a good deal on the front end can be much more expensive if it takes additional time to graduate. When selecting a school, consider four-year graduation rates.

Choose Your Employer Carefully – Economic necessity can require high school graduates to enter the workforce. However, there are many opportunities to earn a college degree while working full-time. Attending college part-time will lengthen the time to graduation, but many employers will pay all or part of an employee’s education expenses. It isn’t easy, but it can be very cost effective. If you plan to attend school while working, choose your employer carefully. A somewhat lower paying job may be more lucrative if your employer will support your education.

College is expensive. It always has been. Fortunately, you can take steps to reduce your out-of-pocket costs significantly. The six tips above are a good place to start.

Doug and Polly White hold a combined six college degrees and have paid for the college educations of their three children. They are Principals at Whitestone Partners; a management-consulting firm that helps small businesses build the infrastructure they need to grow profitably.