5 tips for making college more affordable

Apply to financial ‘safety,’ ‘target’ and ‘reach’ schools. College counselors typically recommend applying for three types of schools, based on the student’s academic credentials: “Safety” schools that are virtually certain to say yes, “target” colleges that are likely to accept them and “reach” options where acceptance is a long shot.

Families should also include at least one financial safety school — a college with costs they know they can handle — as well as target schools that could be affordable and a reach school that may surprise them with generous financial aid. The net price calculators available on every college’s site can help identify likely candidates.

Consider alternatives. Not every career requires a four-year degree. For those that do, a year or two of community college can significantly cut costs but also may increase a student’s risk of dropping out. Community college may be best for self-motivated types who are determined to get a degree and who can do the legwork in advance to ensure that their credits will transfer to the desired four-year institution.

For kids who aren’t that motivated or are unsure what they want to study, a gap year may be a good option. They’ll have another year to grow up and get focused, without racking up college expenses. They could even get a job to pay some of those costs.

And, speaking of motivation …

Encourage focus. It’s a lot to ask 17- and 18-year-olds to decide what they want to do for the rest of their lives. Dithering is expensive, though. Most colleges have career counselors who can help students sort through their options, and internships can offer real-world glimpses of future career paths.

Trim expenses and tap assets. Cutting discretionary expenses can free up more money for college bills. The usual suspects: eating out less, buying used instead of new, vacationing cheaply, combing your bills for “leaks” such as memberships or subscriptions you’re not using. If your student is attending college more than 100 miles away and won’t have a car, your auto insurer may give you an away-from-home discount.

Tax breaks, such as American Opportunity or Lifetime Learning credits, may also help make ends meet. Withdrawals from 529 college savings plans are typically tax-free when they’re used for qualified education expenses.

Selling nonretirement investments and other assets can help pay for college while possibly increasing financial aid in future years. (While federal financial aid formulas typically ignore retirement funds, money in savings and brokerage accounts reduces need-based aid.) Consult a tax pro first, since asset sales can have tax consequences.

Don’t pause retirement contributions, however. You can’t get back the tax breaks and company matches you’ll lose, or the future tax-deferred earnings that money could have earned. Retirement is even more expensive than a college education, and few of us can afford to stop saving for that goal.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of Your Credit Score. Email: lweston@nerdwallet.com. Twitter: @lizweston.

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