Financing College No Matter What Your Income Level


If you have kids, then chances are you’ve already thought about college affordability and how or if you’ll be able meet the expenses associated with higher education.

But you shouldn’t allow the worry of college costs to consume your life.  There are many practical and successful ways to pay for college (without drowning in debt) no matter what your income level may be.

Many families labor financially to make ends meet and they feel like it will be impossible for their children to attend a 4-year university.  This simply isn’t the case.  I’m not saying it’s going to be easy, but there are ways to send your children to college on just about any level of income.

Saving For College – Reduce Your Debt

Anyone can save money for college; all you need is to remove the excuses from your life.  Starting with financial basics, the best way to begin saving for college is to pay off all your debt (or at least live within your means and be actively involved in a debt payoff plan).  Sound too difficult you say?  That sounds like an excuse to me.

Living with debilitating debt and allowing bills to circle your life like a vulture is a surefire way to live paycheck to paycheck and never have the available funds to save for college.  What I’m trying to say is this:  paying for college isn’t some magical happenstance that you uncover on some random day.  It’s going to take hard work, and in some cases, a change in your financial landscape.

Regardless of your current income level, you have the ability to save for your children’s college fund. You might have to trim your expenses, adjust your spending habits, and redirect your lifestyle in order to free up money for the college fund.  But if you want to send your kids to college without financing 100% of their education with borrowed money, then you’ll have to decide what’s more important.

Think of it like this; if you can scrounge up even $100 a month to save for your child’s college when they’re born, you’ll end up with $21,600 (and that’s without interest or anything).  Sure, that might not pay for 4 years of tuition, room, and board, but it’s definitely a great start.

Saving For College – 529 Plans and Educational Savings Accounts

A 529 Plan is a tax advantaged college savings account designed to encourage families of any income level to save for their children’s education.  529 Plans are “qualified tuition plans” sponsored by states, state agencies, and educational institutions and are authorized by section 529 of the IRS (hence the name 529 Plan).

The encouragement to save for college within a 529 Plan comes in two forms: the ability to save money free from Federal taxes and the ability to receive a deduction on State taxes.  One benefit to a 529 Plan is that anyone, upon creation of the account, can be named the account’s beneficiary, regardless of age.

The 529 Plan is a lot like a Roth IRA for your college savings fund. The savings will grow tax-deferred and any withdrawal is tax-free as long as you use the money withdrawn for qualifying educational expenses.

A Coverdell Educational Savings Account (ESA) is another tax advantaged college savings account which is meant to inspire families to save for future educational expenses.  The difference between an ESA and a 592 Plan is that an ESA’s beneficiary must be a student under the age of 18.

An ESA also has a maximum annual contribution limit of $2000 and the owner of the account has the freedom to choose what types of securities they would like to invest in (stocks, bonds, ETFs, mutual funds, etc.).

With both types of college savings accounts, you’ll incur a hefty 10% tax if you withdraw any amount of money from either account and use it for non-education related expenses.

Paying For College – Grants and Scholarships

No matter how much or how little you’re able to save for your child’s college education, you’ll always want to be aware of and informed about college grants and scholarships.  After all, this is free money we’re talking about.

Scholarships are offered by high schools, colleges, and other organizations usually recognizing some sort of educational, athletic, or humanitarian achievement.  Scholarships vary by amount and length. Some are one-time gifts and others are recurring payments made as long as grades and other collegiate performances are maintained.

Information about college scholarships is usually available from your high school, your hometown city hall, and the university you wish to attend.  You can also search for scholarships on the web.  Some of these scholarships may be smaller than a say a university’s alumni scholarship, but $500 here and $1000 there really starts to add up.

Grants are another “free money” option.  The government offers need-based grants to families with a low income.  Other organizations are free to offer grants to students that show academic promise or that meet other requirements.

Paying for College – Financial Aid Student Loans

There are numerous kinds of financial aid and student loan programs available, but these loans should be your last resort when it comes to financing college.  I’m not saying student loans are bad, but financially responsible parents won’t rely solely on borrowed money to fund their children’s college.  As I mentioned earlier, if you save even $100 a month, you can drastically cut the amount of money you need to borrow to send your child to college.

There are Federal Stafford Loans, Perkins Loans, Plus Loans, and numerous other student loans available from private institutions.  If you qualify, you can apply for subsidized student loans that are basically interest free until you graduate and begin loan repayment.  FAFSA is your Free Application for Federal Student Aid.

Final Comments

Jamie Scott from CreditDonkey also reminds you that while “student credit cards are a convenient option to help students pay for short-term small expenses such as groceries,” there are other options available for long-term larger expenses such as tuition.

The bottom line is that you’ll probably use two or three different sources to fund your child’s college expenses.  Don’t give up just because of your low income and don’t think that your high salary will always be there for you.  No matter where your income level is at, research, preparation, and responsibility will go a long way when it comes to saving and paying for college.


Today’s guest post is from Jamie Scott, social media advocate with CreditDonkey. Jamie helps parents and students prepare for college by evaluating student credit offers. As a parent herself, she knows all too well the concerns most families have about responsible credit usage.


Scholarships: Military dependents


Are you or your spouse in the military? Do you have a family member that was a veteran of a foreign war? If so, there are scholarships available in these specific categories.

State Provided Education Benefits

Educational benefits for families, particularly the children of deceased, MIA, POW, and disabled veterans, may be available in some states. has developed an on-line general summary of educational benefits for veterans, surviving spouses and their dependents.

Click here to learn more about State Education Benefits.

Private Scholarships and Grants

While looking for money for school many surviving spouses and their families overlook the over $300 million of military – and veteran – related scholarships and grants. These scholarships often go unclaimed.

Visit’s Scholarship Finder today and get started.

Local Scholarships

Also, don’t neglect to search in your military community. Many service aid organizations and associations, like the Navy Marine Corps Relief Society, offer scholarships, grants, and low interest loans to help cover education expenses.


How to raise $15,000 for college


A few weeks ago I attended a virtual college event at College Week Live. I was impressed with the simplicity of the information and wanted to pass it along to all my readers who might not have had the opportunity to attend. This particular session was conducted by Kim Clark, staff writer for U.S. News and World Reports. She outlined some simple steps to raise $15,000 for college:

  1. Up to $2500 from Uncle Sam–via tax credits (Hope and Lifetime Learning Credit)
  2. Child labor–put your teen to work at a summer job ($8 an hour x 40 hours a week for 9 weeks=$2880)
  3. Student loans–Stafford Loan ($5500 max per year at 7%); after student leaves college can sign up for payments based on their income (less than 15%)
  4. Family savings–cut teen to occassional driver and save $; food bills will decline; stop subsidizing entertainment (food and insurance can =$300-$400 a month)
  5. Scholarships and grants–leverage grades, test scores, athletics, arts for merit-based grants; apply for local scholarships
  6. Friends and relatives–ask for college fund contributions instead of presents
  7. Corporate sponsorship–some employers subsidize education for employees and families; UPromise
  8. Reduce college expenses–reduce dorm costs (share with other students); watch meal plans; buy used textbooks or rent; earn cheaper credits at community college, AP classes or dual credit classes; sell student’s car (won’t need one at college)

The bottom line: $15,000 or MORE! Here’s how it all adds up:

  1. Tax break-$2500 per year
  2. Student loan-$5500 per year
  3. Student job-$3000 per year
  4. Parent savings-$4000 per year
  5. Relatives-_____ (fill in blank)
  6. Scholarships-____(fill in blank)
  7. Corporate sponsorship-____(fill in blank)
  8. Reduction in college expenses-_____(fill in blank)

By piecing together all these separate components, there is no limit on how much you can raise for college costs. At the very least you can raise $15,000, at the very most, the sky is the limit!

You can check out U.S. News and World Reports education section: Paying For College for more information and tips.


How Common is a Full Ride?

Every parent wants their child to get a “full ride” or a scholarship that pays the way to school; however, full rides are not very common at all. It is a result of scholarship limits imposed on teams by the NCAA.

Division I programs may award a maximum of 9.9 men’s and 14.0 women’s swimming scholarships. Division II programs can provide up to 8.1 for each gender while Division III institutions may not provide any athletic aid.

With 24-28 athletes on each swim program, the money doesn’t cover too many athletes. “The rule of thumb is: the better the team, the harder it is to get money,” explains former Brigham Young coach Stan Crump. “Fulls are tough to get, but easier as the teams get weaker.”

“If you are not in the top 8 at nationals or an outstanding high school short course swimmer,” explains Florida’s Gregg Troy while talking about men’s swimming, “a full is probably not a reality.”

“Women need to be a top 8 NCAA qualifier or very close to walking through the door,” explains Ohio State’s Bill Dorrenkott, “and even then they need to be able to contribute significantly on relays.”

Dorrenkott broke down the numbers a bit further explaining that “A good scholarship for US National multiple event qualifiers is 30-50% for men and 40-60% for women.” Not a NCAA qualifier as a freshman? You might be as a sophomore, and oftentimes coaches will reward those gains. As SMU’s Eddie Sinnott notes, “At SMU we have a saying ‘If you perform for us we will perform for you’ and we take that very seriously.”

Another coach, who prefers to stay off the record, mentions, “We never give a full scholarship to a high school senior. It’s a $110,000 gamble on an 18-year-old kid. Foreign athletes are another story, though. They’re usually older, more experienced, and you need to pay full to get them.”

Gary Kinkead of Indianapolis explains, ““Championships are not won with 1-3 GREAT swimmers, but with depth and the best way to have depth is to divide up the available scholarships among those talented athletes that you feel can produce the greatest number of championship and consolation finalists.”

Former NC State coach Brooks Teal adds that most schools “will NOT use more than one, perhaps two or three full scholarships” on men. For the women, it’s “very rare, though not unheard of, to have more than four women on full scholarship on one squad.”

So, is it impossible to swim for a top 10 school if you’re not already a top swimmer? Absolutely not! It is very possible to swim there, but you should expect to pay for a significant piece of your tuition.

photo credit: kevin dooley via photopin cc


Federal Tax Breaks for College Parents

ID-100128849Written by Wendy Nelson

Once my oldest daughter had decided on a college and I knew writing tuition checks would be in my near future, I decided to research federal tax breaks for college parents.  Finding this information was not as straight forward as I hoped it would be, but after researching in several different places, I was able to put together some general guidelines.

Top Tips For Claiming Your Kid’s College Expenses on Your Taxes

  • If your Modified Adjusted Gross Income (MAGI) is over $180,000  you cannot take any tax credits or deductions for your kid’s college expenses (based on the rules at the time I am writing this).  If you think your MAGI (usually the same as your AGI) will be close to the limit, but not far over, consider kicking more pre-tax dollars to a 401K or Flexible Spending Account.
  • You cannot claim both a tuition deduction and a credit (either Lifetime Learning Credit or American Opportunity Tax Credit) in the same year.  You need to compare the three and see which, if any, you are eligible for, and which will provide the biggest benefit.
  • Money spent on room and board can never be claimed on your taxes.  Only tuition, fees and sometimes supplies (depending on the deduction/credit) are eligible.
  • You cannot claim your kid’s college expenses if you use the filing status of Married Filing Separately.
  • If you claim an exemption for the student on your taxes, then you can claim the student’s educational expenses.  The student cannot claim these expenses on his/her tax return.
  • If you do not claim an exemption for the student on your taxes, then the student can claim his/her educational expenses on his/her tax return.  You cannot claim these expenses on your tax return.
  • It does not matter whether the money to pay the expenses came directly from you or came from the student.  If you are claiming the expense, both sources are treated as if you had paid them.
  • Your student’s school is required to provide a 1098-T Tuition Statement by January 31.  Use this form when filling out your taxes.
  • If you think you are eligible for a credit or deduction, make sure at least $4,000 is paid towards tuition and fees from an account that you or your child own.

Comparison Table of Federal Tax Credits and Deductions for Educational Expenses

indexDisclaimer:  I am not a tax professional and I am relying on the accuracy of information found on the IRS website and other sites.  If you have further questions on federal tax breaks for college parents, I suggest checking with your tax advisor.  If you do your own taxes, TurboTax makes it easy to enter your educational expenses and will figure out the best credit/deduction for you (if you qualify for one).