Stuck In the Middle: Paying for College and the Middle Class

Paying for College without Breaking the Bank

College students often joke that their four-year bachelor’s degrees have been devalued to the point that they are nothing more than modern-day high school diplomas, the bare minimum to be considered for any living-wage job outside of the trades. This is a slightly cynical way of looking at higher education, but it is true that a bachelor’s degree is not what it used to be.

Although the value of a bachelor’s degree has gone down over the years, the same cannot be said about its cost; tuition, books and other expenses related to college have risen steadily over the years, a trend which shows no sign of turning around. Paying for college is getting more and more difficult, especially for the working and middle classes, so knowing the current state of student loans and the options for repayment is critical.

Current Trends

According to an May 2017 USA Today report, The Federal Reserve reported that student loan debt recently surpassed that of credit cards, making up a staggering $1.4 trillion of the $20.4 trillion in national debt. Sixty-eight percent of graduates in 2015 graduated with debt, and the average cost of college per student was about $30,000. Even before calculating interest, $30,000 dollars is a lot of money to owe right out of school, and there is no guarantee of employment afterward. More and more students are wondering how to pay for college without drowning in debt.

A recent article published by Forbes stated that 70 percent of millennials are more concerned with student loan debt than they are with the threat of war, even nuclear war, with North Korea, which is the most substantial security threat faced by the United States today. This may seem like simple self-centeredness on the part of students who are in debt, but Michael Durkheimer, the Forbes contributor who wrote the article, defended the notion:

“While North Korea presents a potentially catastrophic future threat to America, student debt is a current, everyday crisis for over 44 million Americans who shoulder over $1.4 trillion in loans . . . [and] many view the massive burden of loans, sometimes reaching over $100,000 at graduation, as essentially a modern form of indentured servitude.”

This may seem like a stretch, but it is not without merit; students coming out of school with crippling debt are forced to make money their top priority instead of entrepreneurship or public service positions, which are notoriously underpaid.

How to Pay for College

Unless your family is wealthy, the prospect of paying for college is daunting. The numbers put forth by the College Board validate students’ reluctance, reporting that the average cost for the 2016-2017 academic year was about $33,000 for private colleges, about $10,000 for state residents at public institutions and around $25,000 for out-of-state residents attending public universities.

These numbers are not particularly uplifting for working-class students, but there are some things you can do to reduce or possibly eliminate your post-graduation debt.

1. Complete a FAFSA

Many middle class families don’t complete the FAFSA (Free Application for Federal Student Aid) because they’ve heard that if your household income is more than $50,000, you won’t qualify for financial aid.

What many families are not aware of is that by filling out FAFSA, your student becomes eligible for other forms of financial aid that is not awarded based upon income.

So, you should fill out the FAFSA because it could qualify your student for scholarships, grants, and low-interest loans you may not be aware of.

2. Apply for Scholarships

The process of completing the application forms can be a hassle, but you should still spend the time looking for them and applying. In addition, invest the time in applying for backyard scholarships. Backyard scholarships is free money from small local organizations such as the  American Legion, Veterans of Foreign Wars (VFW) or small nonprofit groups.

The scholarships may only range from $100 to $300, but every penny helps when paying for college. These local scholarships are often overlooked because of their low amounts, but they are usually the easiest scholarships to qualify for.

Here’s a college tidbit for you… The vast majority of scholarships are not going to pay all of your tuition; only about 20,000 college students, or 0.3%, enjoy full-ride scholarships. Even if scholarships won’t pay the entire cost of your college expenses, they will at least help relieve some of the financial burden.

3. Attend an In-State College or University

While you may have dreams of attending that large popular out-of-state school, it will cost a lot less to go to an in-state college or university. Students living in-state get lower tuition because their families generally pay taxes and those taxes help to fund those schools. When you live out-of-state, you don’t receive that same tax advantage so, it cost you more to attend.

Another option is to consider a school from a bordering state that has a “reciprocity agreement” with your state. This policy allows students from neighboring states to attend college for reduced tuition, instead of the full out-of-state price.

4. Attend a Two Year Community College

Spend your first two years at a local junior or community college. It will allow you to complete most, if not all of your “Gen-Ed” courses or university requirements and will greatly reduce your college costs. You can then transfer to a four-year college or university, hopefully the school of your choice to finish your college education.

Another advantage of going to a two year college is that if you should decide along your college journey that four years of college is not the way to go, you have an opportunity to get an associates (two-year) degree or certificate.

5. Consider Loan Forgiveness Programs

If the average cost of college has you worried, you should definitely look into loan forgiveness. Public Service Loan Forgiveness (PSLF) is part of the College Cost Reduction and Access Act (CCRAA), which was passed by the U.S. Congress in 2007. PSLF offers loan forgiveness to people who work for a qualified public service employer as defined by the IRS.

Loan forgiveness is available for Subsidized Direct Loans, Unsubsidized Direct Loans and Direct Consolidation loans. Additionally, if you are a parent and took out a Direct Plus Loan to help pay for your child’s education, you may be entitled to loan forgiveness.

Final Thoughts

Higher education is expensive, but the benefits of a college education in today’s competitive market are still substantial. Paying for college is challenging, but taking advantage of all available resources, namely scholarships and loan forgiveness, will help you minimize the amount you or your children owe after graduation.

About the Author

Johnny Rogers and His wife Helena are the owners of College Tidbits – The Online College Planning Guide. If you found this article useful, they would greatly appreciate it,  if you would consider Liking their Facebook Fan Page or Following them on Twitter.

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