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Ways to subsidize college
The student loan debt crisis is older than this blog, and nothing’s changed in 10 years. So, until the system’s overhauled, here are 5 ways to subsidize college for yourself or a loved one. As credit card debt often accompanies student loans, get the 7-Step Credit Card Debt Slasher here.
Subsidize college (and maybe make it free)
College tuition and student loan debt have skyrocketed over the last few decades, while household incomes have barely kept up, especially with the recent rate of inflation.
Because of this quick rise in college tuition and slow increase in income, a college education is becoming out of reach for many. For those who can still afford college tuition, many are saddled with debt for years after graduation. With youth unemployment hovering around 8.5%, recent college graduates cannot pay off their student loans as quickly as previous generations. This will make reaching other financial goals, such as marriage, buying a home and having children, more difficult. This is why we want to share ways to have someone or something else subsidize college education.
There are five ways to subsidize college without opening your wallet. Consider these options, along with taking ways to keep college expenses down. We will share ways to keep college expenses down next week.
1. Advanced placement courses
Advanced Placement (AP) courses are college-level courses offered to high school students and accredited by the College Board. The College Board audits these courses to ensure the courses meet minimum requirements. AP designation is offered mostly for core courses such as English and math. Other qualifying courses, however, may be available.
The benefit of these courses is that they often carry over into the first year of college and reduce a student’s time spent in college and, therefore, the amount of money they spend on college. There are no costs for taking AP courses in high school, but students must qualify for them and receive a 3 (qualified), 4 (well-qualified), or 5 (extremely well-qualified) on their final exam to have the AP course count towards their college credits.
Each college has its AP course policy. Students should work with the college of their choice to learn more about these requirements.
2. Grants and scholarships
1. Private scholarships
College scholarships are monetary awards specifically for education. They come with certain requirements, such as work or internships both before and after the scholarships are awarded. Requirements are usually tied to grade-point averages (GPA) or to a specific number of credits that must be accumulated each semester.
Grants and scholarships rarely require repayment. They do, sometimes, require an agreement to work for a particular company or industry for a term.
Grants and scholarships are often tied to a study or career, such as medicine or teaching, and are sometimes designed to correct shortages in those fields. Many organizations offer grants and scholarships. You can apply for and accept as many as you like, and it doesn’t hurt to seek as many as you can get.
The competition to win high-dollar scholarships is often quite competitive. The trick is to apply for the lower-dollar scholarships that have less competition. More work may be required of the college student, but the returns will be better.
2. Government grants and scholarships
Most grants and scholarships are offered by the federal government, state governments, and schools.
Students should first research www.grants.gov and apply for grants that are appropriate for them. Then, fill out a FAFSA (Free Application for Federal Student Aid) application at www.fafsa.ed.gov to apply for federal student loan assistance authorized under Title IV of the Higher Education Act of 1965.
Title IV of the Higher Education Act of 1965 covers Pell Grants, Supplemental Educational Opportunity Grants, and the Federal TEACH Grant, along with other grants, loans, and work-study programs.
Finally, students should research www.ed.gov for additional grants for which they may qualify.
Each state offers grants and scholarships and has its requirements and incentives. Information can be found on student’s home state’s Department of Education or state grant agency websites. A simple way to search for available scholarships is through Scholarships.com.
3. Essay contests
There are many of essay contests that award $500 to $70,000 (and more) to winners. Essay contests cover a range of topics, including book and author reviews, political and social topics, among many others. Writing winning essays takes time. The reward may mean a free education.
For a search engine customized to finding essay contests, use Petersons.com. Another source is Scholarships.com from the previous section.
4. Employer reimbursement or repayments
Many businesses offer incentives to employees and their children to help pay for college. Some of these employers include UPS, Apple, Google, ADP, JM Smuckers, Starbucks, and Home Depot.
Ask your company’s human resources or benefits department for details. Reimbursement usually covers up to a certain dollar amount in each year and doesn’t require repayment. It does typically require that the student meets minimum GPA requirements. Also, in part because of the student loan debt crisis, many companies are taking advantage of the newer Employer Participation Repayment Act (EPRA).
Employer Participation Repayment Act – EPRA
EPRA is a provision that allows employers to use up to the $5,250 max they would normally use for tuition reimbursement when a student is going to school while employed to instead pay for past education via paying on student loans either via payments to the employee like tuition reimbursement or directly to the loan servicers.
Tuition reimbursement or repayments over $5,250 may generate a tax payment for the employee.
5. Tax credits
Students might consider applying for education tax credits. These include the American Opportunity Tax Credit, Hope Scholarship Tax Credit, the Lifetime Learning Tax Credit, and more. These tax credits reduce the amount of taxes students pay in a given year. Requirements to qualify for tax credits are more intricate than the above suggestions — such as not being a dependent and having income limits. Visit IRS.gov or talk with an accountant to learn more.
If you earn or qualify for any of these options to subsidize college, the money you receive can usually be applied to tuition and other qualified higher education expense such as textbooks, room and board, and travel to and from class.
There are numerous ways to get someone or something else to subsidize college. Use the information we provided as a springboard for researching your options and apply for and accept as many options as you can. Who knows? You or your child may end up going to college for free.
Bonus: Extra-curricular high school activities
When looking for sources to help pay for college, it pays to be creative. There are some extra-curricular activities and student programs that assist in paying for college.
For example, Environmental Learning for Kids (ELK) in Denver CO is a tax-exempt and non-profit with the mission to inspire underserved grade school and high school students to get into STEM (science, technology, engineering, and math) careers. ELK’s Tim Crisman Memorial Scholarship awards $1,500 scholarships to qualifying students and has awarded over $750,000 to date.
Here’s our plan for overhauling the student loan scheme:
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