How to Cut College Costs ... A Sample List

Free advice Friday! The incredible costs of a college education have every parent and student concerned for their future plans. The following is a list of 3 out of 10 recommended methods to cut college costs. If you would like the rest of the list, email me directly and I will send you a PDF.

1. Get College Credit in High School: Students can take AP or IB college credited classes, with the help of a knowledgeable counselor, which will help to cut down on the number of courses needed to graduate from college. Most AP courses are paid for by the high schools so as not to deter students from enrolling. The tests are usually about $85 each and are far less than the cost of a college course, which is going to be a minimum of $500 at a university. Did you know? There are more than 30 AP courses and exams across multiple subject areas to choose from. Over 90% of 4-year colleges in the U.S. provide credit and/or advanced placement for qualifying scores. Dual college credit is another option. In Texas, ACC offers a program Early College Start (http://www.austincc.edu/ecs/) offered through your high school.  AP - Advanced Placement IB - International Bacc

2. Community Colleges: If you can convince your student, spending the first year or two in college at a CC is a huge cost savings. In many cases, students have yet to declare a major. In these cases, general education requirements can be fulfilled at a CC. The cost savings in tuition, books, supplies, housing, food, and travel may give a student and parent a head start on costs for graduate tuitions. Get your general ed requirements completed at Austin Community College.

3. Cash in on Tax Credits: “What students need to know is that there’s the Hope and the Lifetime Learning tax credits (http://www.nasfaa.org/AnnualPubs/TaxBenefitsGuide.html),” says Joseph M. Re, author of “Financial Aid Financer: Expert Answers to College Financing Questions.”

The Hope Credit is a tax credit for college students in their first two years of college. It provides a tax credit of up to $1,800 on the first $2,400 of college tuition and fees. You can claim the Hope Credit on your tax return if you, your spouse, or your dependent are a first-year or second-year college student, is enrolled at least half-time at an eligible education institution, and you are responsible for paying college expenses. (Only parents who claim the student as a dependent on their tax return would be eligible for the credit.) “The key to taking advantage of this credit,” Re says, “is to plan ahead and be aware of the stipulations.”

From the IRS government website, "Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify over the next two years for a tax credit, the American Opportunity Credit, to pay for college expenses. The American Opportunity Credit is not available on the 2008 returns taxpayers are filing during 2009. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits."

The information provided was written by Lauren Kahn, CEO of Lone Star Ed Consulting. If you would like more information about Lone Star Ed Consulting's college planning services, please e-mail Lauren Kahn or call her at 512-294-6608.

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Obama on Economy, Student Loans; Rise in Community College Enrollment

President Barack Obama shows his legitimate concern and pledges to help students pursuing higher education during these trying economic times. On September 21st, he spoke in a town forum style to a group of Hudson Valley community college students in Michigan. I know that with the lack of support for universal health care and the war in Afghanistan, his approval ratings are not exactly stellar, but I endorse his dedication and methods to improve the quality of both secondary and post-secondary education.

Did you know Obama was actually a transfer college student during undergraduate school? Prior to the President enrolling and eventually graduating from Columbia University with a B.A. in Political Science and International Studies, he attended Occidental College.

Yes, Obama attended Occidental College in California for two years as an undergraduate from 1979-81:Jim Tranquada, Occidental's Director of Communications, said: "Contemporary public documents, such as the 1979-80 freshman 'Lookbook' published at the beginning of President Obama's first year at Occidental, list him as Barack Obama. All of the Occidental alumni I have spoken to from that era (1979-81) who knew him, knew him as Barry Obama."

Although Obama did not attend community college, he is a huge advocate of the community college system. According to an article in the August issue of U.S. News and World Report, enrollment at public community colleges has grown by 30 percent since 2000. President Barrack Obama’s “American Graduation Initiative,” which would invest $12 billion in community colleges over 10 years, has created quite a buzz around two-year colleges.

Community College Fast Facts

Community College Students Constitute the Following Percentages of Undergraduates:
All U.S. undergraduates: 46%
First-time freshmen: 41%
Native American: 55%
Asian/Pacific Islander: 46%
Black: 46%
Hispanic: 55%

Employment Status:
Full-time students employed full time: 27%
Full-time students employed part time: 50%
Part-time students employed full time: 50%
Part-time students employed part time: 33%

Percentage of Students Receiving Financial Aid:
Any aid: 47%
Federal grants: 23%
Federal loans: 11%
State aid: 12%

Percentage of Federal Aid Received by Community Colleges:
Pell grants: 34%
Campus-based aid: 9%

Average Annual Tuition and Fees:
Community colleges (public): $2,361
4-year colleges (public): $6,185

Degrees and Certificates Awarded Annually:
Associate degrees: 555,000
Certificates: 295,000
Baccalaureates: awarded by 29 public and 66 independent colleges

Revenue Sources (public colleges):
State funds: 37%
Tuition and fees: 17%
Local funds: 21%
Federal funds: 16%
Other: 9%

Obama on Economy, Student Loans (CNBC) Published: 09 Please click here to see CNBC's coverage of Obama's speech at Hudson Valley Community College in which he discusses the economy and student loans. Obama's Video on Education and Student Loans

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Tips on Paying for College

Tips on Paying for College

Here are some helpful hints for parents in panic mode this fall about how to finance their children's college plans.

For some, saving money for a child's or grandchild's college education seems nearly impossible. Before you give up the battle, however, consider this: A high school graduate will earn an average annual income of $26,416. A college graduate will earn an average annual income of $34,000 to $74,000. For someone who works 40 years, that can add up to an additional $320,000 to $1.92 million in earnings. That's quite a return on an investment in a college education!

Saving for college may seem like a monumental task, but you don't need to save the entire amount overnight, and, chances are, you won't need to finance the entire expense yourself. Today, there are a multitude of loans, work programs, tax credits, and so forth designed to help put college within the grasp of nearly everyone. With a little homework, you can find all the options available to you.

Here are five sources of college funding to consider:

Grants and Scholarships: Grants and scholarships are awarded on a number of criteria, including grades, talent, heritage, race, and gender. Grants and scholarships can be offered locally, statewide, nationwide, and by particular colleges and universities. The internet, school counselors, and the financial aid offices of colleges and universities can provide a wealth of information on this topic. Grants and scholarships typically supplement college costs rather than cover total expenses. Therefore, it's important you take an active role in saving for your child's educational future.

Investments: Through the years, parents and grandparents have used savings bonds, zero coupon bonds, and growth-and-income mutual funds to help with educational expenses. All are excellent ways to save for a college education. In more recent years, however, several new tools to help save for or offset college expenses have been introduced. All make financing a college education easier than ever before.

Section 529 Plans: When you set up a Section 529 savings plan, you put money in specific investments, which are managed by the plan administrator. 529 plans can be established for a child or grandchild. When establishing a 529 plan, you choose from two options: (1) Prepaid tuition programs, where you buy future tuition credit--at today's prices --that's generally used at an in-state school; and (2) Savings plans, where your earnings are not taxed as they accumulate, and qualified withdrawals are free from federal income tax. Savings plans are the more popular of the two plans because they generally don't restrict students to certain colleges in specific states. Your plan contribution limits are high, and your withdrawals are free from federal income taxes, as long as the money is used for qualified college or graduate school expenses. (Section 529 tax benefits are only effective through 2010, unless extended by Congress. Also, a Section 529 plan could reduce your child's or grandchild's ability to qualify for financial aid. Because tax issues for 529 plans can be complicated, please consult your tax advisor.)

Coverdell Education Savings Account: Depending on your income level, you can contribute up to $2,000 annually to a Coverdell Education Savings Account. Your Coverdell earnings and withdrawals will be tax-free, provided you use the money for qualified education expenses (tuition, fees, tutoring, special-needs services, books, supplies, computer equipment, room and board, uniforms, and transportation). You can fund your Coverdell Education Savings Account with virtually any investment you choose--stocks, bonds, certificates of deposit, etc. Once a Coverdell education savings account is established, anyone--a family member, friend, or the child--can contribute to the account as long as he or she meets the adjusted gross income limits. And you can contribute to a Coverdell Account in the same year that you put money into a Section 529 plan.

Tax Credits: Even if you already have a child enrolled in college, help still may be available. The Hope Scholarship Credit and the Lifetime Learning Credit are tax credits that can be used to offset college tuition and fees. The exact amount that can be claimed depends on your family's income, the amount of qualified tuition and fees paid and the amount of certain scholarships and allowances subtracted from tuition.


"Last-Minute" Options

If you have a college-bound senior in your house and you haven't saved as much as you would have liked, don't despair. Even at this late date, you can take some steps to help pay those college bills. Here are a few ideas to consider:

Remember, you don't have to pay the full year's tuition, room and board up front. You will likely be billed in installments that may correspond to the school's quarter or semester system. This payment system doesn't lessen your overall costs, of course, but it does give you a bit of time to come up with additional funding sources. For example, if you have a bond coming due in the middle of the college calendar, you can use the proceeds to help pay for school.

Liquidate assets in timely manner. If you've earmarked certain investments for college, try not to liquidate them until it's absolutely time to write out a check. The longer you can keep your investments growing, the better off you'll be.

Look at a Roth IRA. If you have a Roth IRA, you can withdraw contributions, tax- and penalty-free, to help pay for your child's education. Certain conditions apply to penalty-free withdrawals, so you should talk to your tax advisor for more information. And keep in mind, if you start withdrawing earnings, you'll have to pay taxes on them unless you meet certain conditions.

Putting together a good college-funding plan--either at the last minute or years in advance--can test your resources and ingenuity. But by diligently exploring all your options, it's a test you should be able to "pass."

Provided by: Lauren Kahn, M.A. from Lone Star Ed Consulting. www.lonestar-edconsulting.com
512-294-6608
Written by: Randy Loren (www.randyloren.com). He has more than two decades of experience in many areas of business and finance, and is currently a financial advisor for Edward Jones and a sought-after motivational speaker who educates high school students on the value of financial literacy and sound money and work practices. He is author of a new book, Climbing the Money Mountain: The Young Adult's Guide to Reaching Your Financial Peak (FN Publications, $19.95).