Creative ideas to offset college tuition?

rnorwo1

DIS Veteran
Joined
Jun 23, 2006
I have a question about shuffling money around to pay for tuition for our oldest DS, who will be starting college in the fall. He received the maximum merit scholarship at the school he will be attending, but there will still be significant out-of-pocket expense.

(Before posting this, I searched the forum for “college tuition” and read countless debates about using community colleges and in-state schools, etc., but those are not options with my son’s field. Our other two children do not have such particular interests and talents, so they will absolutely, without question, go to the state school, to which oldest DS received a full-ride. We have been debt free since paying our 30-year mortgage off in just a little over 5 years, we drive 20-year-old vehicles, and live very sensible lives. Our kids have also adopted our financial sensibility. Even though I’ve been in a fetal position about the finances of paying for college for a week now, we are certain this is the best path for him. None of this is relevant to my question, but I wanted to put it out there to avoid a repeat of the debates we financially savvy people love to engage in )

The plan is to have him borrow as much as he can in his own name, but, while I still don’t understand how much that is, I am certain there will still be a nice chunk of change still owed to fully cover expenses.

We have 529 plans, but, again, we will not have enough for him since we started saving so late (have already rectified this for his younger brothers).

I’ve looked at parent plus loans and cringe at the interest rates and fees. I just don’t know if I have it in me to do that. We Have also considered HELOC and 401k loans; again, that goes against the very essence of my DNA.

We have a savings account that we were using for a down payment for a cabin in the mountains (intended to rent it out to pay for mortgage and it would be our retirement home) that will cover two years of college expenses. Although emptying this account would make me sad, it doesn’t make me physically ill like the other options above.

If we go this route (using cash after he has maxed his student loan options), is there a creative way to funnel it in any way to reap any sort of advantage? I’ll definitely check and see if I can pay with a credit card for rewards if they don’t charge fees, but I was wondering if I should maybe deposit it into the 529 and then withdraw? I’ll absolutely talk to our accountant first, but I was just wondering if anyone else has done something similar? I thought I remembered reading something about the advantages of a Schwab account to do something similar, but I can’t find anything like that now.

I’m also wondering if I shouldn’t use his brothers’ 529 or stop contributing to theirs; while my accountant said our state’s tax benefits are good, they certainly are not earning significant money. Again, I’ll discuss with the cpa, but I’m wondering what others have done.

Sorry for the long post- it’s proportionate to my anxiety over this! I am looking for every nickel and dime to offset this.

Thanks for any tips!
 
Have your son get a job. Tell him that you don't have enough to pay for his school, and he'll have to offset it with job earnings and loans.

Your kid is an adult now. It's time for him to take adult responsibility. He will do much better in school if he's paying for it himself.

What your suggesting is to take his loan money and gamble with it to grow it when the market is near its peak. This seems too risky to me. I don't see how this is any different than borrowing on margin or investing in leveraged ETFs. Sounds like a terrible idea this late into the cycle.
 


(Before posting this, I searched the forum for “college tuition” and read countless debates about using community colleges and in-state schools, etc., but those are not options with my son’s field.

I wish I had some good tips for you, but having had four kids go through the college decision process (youngest is in his last year of undergrad), my perspective is that there really are no good tips, except avoid loans for undergrad as much as is humanly possible. The only field that I can think of where it might not be the worst idea to take out a lot of loans for undergrad is engineering, because it seems that a bachelors degree in engineering might enable someone to obtain a job that pays enough to repay the loans. For other fields, though, and certainly the ones my kids went into, a bachelors degree is not enough to really succeed in the profession--that was what convinced them to accept the lesser-ranked undergrad school with more merit money over the more prestigious undergrad school that offered little or no merit money; they knew that they would be pursuing graduate degrees and did not want to acquire a lot of undergrad debt. All of them graduated (or will) with no undergrad debt; two are now at grad schools ranked in the top ten for their fields, both with substantial grants (one is actually getting paid to go to school, while the other has taken out a loan of $10,000 per year to supplement the $60,000 per year scholarship she received).

So I guess my tip is to think very long-term. It's hard when your kid really, really wants a certain undergrad school but the finances just make no sense.
 
Have your son get a job. Tell him that you don't have enough to pay for his school, and he'll have to offset it with job earnings and loans.

Your kid is an adult now. It's time for him to take adult responsibility. He will do much better in school if he's paying for it himself.

What your suggesting is to take his loan money and gamble with it to grow it when the market is near its peak. This seems too risky to me. I don't see how this is any different than borrowing on margin or investing in leveraged ETFs. Sounds like a terrible idea this late into the cycle.
I’m not so sure that is true. This is where having only one child has its advantages, but I have told myself I will do everything in my power to make sure my son graduates college debt free. I’m half way through. He has a 4.0 GPA after 4 semesters and I’ve only required him to pay for books, parking pass, gas, and incidentals. He lives in a dorm. He has not had a job during the school year yet. I have told him he has to get one in the fall since he is only taking 12 hours. I expect him to buy a car for himself his senior year so he has reliable transportation for his internship semester.

I am a retired teacher and I have been subbing to pay his expenses. That’s how we are making it work. I am putting off major purchases until he finishes school.
 
I am confused. A free ride usually means tuition, room, and board. Are you saying that that was turned down?

Yes, the full ride is at our state college, which does not offer his major, so he has declined it. Again, I will not allow our other two kids that choice if given the opportunity, since their interests can definitely be fulfilled there. As much as it goes against our financial practicalities, we are "certain" that this other school is the better option for his future. He received the maximum scholarship at his choice school, but they do not offer full scholarships.

Have your son get a job. Tell him that you don't have enough to pay for his school, and he'll have to offset it with job earnings and loans.

Your kid is an adult now. It's time for him to take adult responsibility. He will do much better in school if he's paying for it himself.

What your suggesting is to take his loan money and gamble with it to grow it when the market is near its peak. This seems too risky to me. I don't see how this is any different than borrowing on margin or investing in leveraged ETFs. Sounds like a terrible idea this late into the cycle.

I really don't understand what you mean about leveraging or gambling. Is that in reference to dropping it in the 529 and then withdrawing? I mentioned that for the tax benefit, not to see if it can grow. I would literally deposit it and then withdraw immediately; admittedly, I need to look and see if this is allowed or if there is a minimum amount of time that it has to sit there, but I was thinking that, since our tax documents just record the deposits for the tax credits, then perhaps doing that would help in taxes. I'm sorry if I'm misunderstanding you and you are referencing something else.

As for your other comments, this is what I wanted to avoid on this thread ;) We have always lived a very financially sensible life, and we have raised three boys who are incredibly responsible and respectful of money, and he will be responsible for what he can be. You cannot possibly know him, but you seem to infer that he is an entitled teen, and nothing could be further from the truth. He is fully aware and prepared to be as financially responsible as is possible for his tuition. This was not a rashly made decision and we believe, although there are no guarantees, that this will eventually pay off for him in many ways, financial and otherwise. I am just looking for any tips that would save anything, just as someone may look for a coupon code for an item or Disney stay.

Freshmen can only take out $5500 in gov loans in their name their first year. So he's either looking at private loans or some other way to make up what sounds like a hefty difference.

That's what I figured. I'll definitely follow up with the financial aid office to get details, thanks!

I wish I had some good tips for you, but having had four kids go through the college decision process (youngest is in his last year of undergrad), my perspective is that there really are no good tips, except avoid loans for undergrad as much as is humanly possible. The only field that I can think of where it might not be the worst idea to take out a lot of loans for undergrad is engineering, because it seems that a bachelors degree in engineering might enable someone to obtain a job that pays enough to repay the loans. For other fields, though, and certainly the ones my kids went into, a bachelors degree is not enough to really succeed in the profession--that was what convinced them to accept the lesser-ranked undergrad school with more merit money over the more prestigious undergrad school that offered little or no merit money; they knew that they would be pursuing graduate degrees and did not want to acquire a lot of undergrad debt. All of them graduated (or will) with no undergrad debt; two are now at grad schools ranked in the top ten for their fields, both with substantial grants (one is actually getting paid to go to school, while the other has taken out a loan of $10,000 per year to supplement the $60,000 per year scholarship she received).

So I guess my tip is to think very long-term. It's hard when your kid really, really wants a certain undergrad school but the finances just make no sense.

I could not agree more; our youngest wants to be a veterinarian, so this is absolutely his path, whether he wants to do that or not (i.e., we will not support an alternative choice, he will be completely on his own). It does not work out for oldest DS, though. This is not about the school, per se, but the major. No school in our state offers it.
 


I’m not so sure that is true. This is where having only one child has its advantages, but I have told myself I will do everything in my power to make sure my son graduates college debt free. I’m half way through. He has a 4.0 GPA after 4 semesters and I’ve only required him to pay for books, parking pass, gas, and incidentals. He lives in a dorm. He has not had a job during the school year yet. I have told him he has to get one in the fall since he is only taking 12 hours. I expect him to buy a car for himself his senior year so he has reliable transportation for his internship semester.

I am a retired teacher and I have been subbing to pay his expenses. That’s how we are making it work. I am putting off major purchases until he finishes school.

Agreed. While I think many kids are not as invested in their education as their parents are, I have no worries about my son giving his all whether he is responsible for the full bill or not. He has worked his tail off all throughout school, and this showed in all the schools recruiting and throwing money at him. Again, there are no guarantees, but I do not think I need to saddle him with extra debt to motivate him. I don't think we will saddle ourselves, either, but I do want to help with what we can without derailing retirement or our other two children's futures.
 
What is your son's major and what state do you live in?

Answered by finding your other thread

https://www.disboards.com/threads/money-decision-question-for-parents-of-art-school-kids.3741406/

Kudos to your kiddo for his successes! It's a tough spot to be in.

Our oldest 3 have gone to instate schools with merit $ and so far after 11 years of college, no one has debt.

But our 2 still in college want to be doctors. We are also looking at how to guide them to pay for it.

Dd is a junior and we've got no idea where she'll go.
 
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What is your son's major and what state do you live in?

Answered by finding your other thread

https://www.disboards.com/threads/money-decision-question-for-parents-of-art-school-kids.3741406/

Kudos to your kiddo for his successes! It's a tough spot to be in.

Our oldest 3 have gone to instate schools with merit $ and so far after 11 years of college, no one has debt.

But our 2 still in college want to be doctors. We are also looking at how to guide them to pay for it.

Dd is a junior and we've got no idea where she'll go.

Thanks, we are very proud of him! Good luck with your kids, sounds like they all will do very well! As we were touring the last college, my DS mentioned something about architecture, and I grabbed him by the arm and started dragging him out of the building, since he could definitely do that at LSU. He just enjoys it, though, it is not what he wants to do for the rest of his life. I could force him to take a related major in-state, but it will likely exclude him from the jobs he wants, or at least make it very difficult to find one. One of the perks of these absurdly expensive schools is that they have industry recruiters flocking to see the students' work, and the school has a lifetime policy of working with students to get them placed in jobs. Again, never a guarantee!

what if he went to the full ride school and finished up at the other? credits transfer and he can work a part time job

Very good idea, but he has pretty much tested out of all the liberal arts/non-major classes with his AP classes, and these schools start with major work right away. I think he has exhausted all the other options for making it cheaper (he did email and ask if there was any way they can increase the scholarship and they said they would get back to him, but, while every penny helps, I don't expect it will be much more). I also hope that there will be additional opportunities in upper class years as they see his work, by applying to be an RA, etc.

Other than that, I know what he will have to pay, so I was just hoping that I could find something a la credit card rewards, tax benefits, or something else I've never thought of to offset some of it. Even getting a few free flights (which I will definitely do if they don't charge cc fees) will make me feel a little better about it!
 
I wouldn't give up your retirement funding or your retirement dream of owning a cabin.

Instead, I would encourage him to take out the max amount of loan he can (federal?).

Then if he needs to apply for a private loan, you could pay towards that as he is in school, at least so that he's not earning interest on the loan.

If you don't want to take out a parent loan, do any of your credit cards have an interest free grace period? Even with the additional fee the school might charge for tuition payments, it would probably be less interest than the life of a loan.
 
I may be totally off-base here, but is he interested in the military? At all?

The Navy paid for 100% of my undergrad, 75% of my master's. I went to a private college (Embry-Riddle), did ROTC, spent 7 years active.
The Navy paid for 100% of my husband's undergrad, Naval Academy, 7 years active.
The Army paid for 100% of my brother's undergrad, West Point, 5 years active.
The Merchant Marines are paying for 100% of my other brother's undergrad, Merchant Marines Academy
The Army paid for 100% of my dad's medical school, Nova Southeastern, 7 years active, plays with the Guard on weekends now.

I don't know that any ROTC units are heavily present in art schools, but they often have cross-city affiliations, where you'd go to a different local college 1-3x/ week for a class. My ex-husband did the same degree program I did and graduated over $150k in debt, from his B.S.! I owed $17k from living expenses. That's it. My minimum obligation was four years of active duty time.
 
Go work for the college/university where your son wants to go. I've heard some give discounted or free tuition to their employees' dependents
 
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I have a question about shuffling money around to pay for tuition for our oldest DS, who will be starting college in the fall. He received the maximum merit scholarship at the school he will be attending, but there will still be significant out-of-pocket expense.

(Before posting this, I searched the forum for “college tuition” and read countless debates about using community colleges and in-state schools, etc., but those are not options with my son’s field. Our other two children do not have such particular interests and talents, so they will absolutely, without question, go to the state school, to which oldest DS received a full-ride. We have been debt free since paying our 30-year mortgage off in just a little over 5 years, we drive 20-year-old vehicles, and live very sensible lives. Our kids have also adopted our financial sensibility. Even though I’ve been in a fetal position about the finances of paying for college for a week now, we are certain this is the best path for him. None of this is relevant to my question, but I wanted to put it out there to avoid a repeat of the debates we financially savvy people love to engage in )

The plan is to have him borrow as much as he can in his own name, but, while I still don’t understand how much that is, I am certain there will still be a nice chunk of change still owed to fully cover expenses.

We have 529 plans, but, again, we will not have enough for him since we started saving so late (have already rectified this for his younger brothers).

I’ve looked at parent plus loans and cringe at the interest rates and fees. I just don’t know if I have it in me to do that. We Have also considered HELOC and 401k loans; again, that goes against the very essence of my DNA.

We have a savings account that we were using for a down payment for a cabin in the mountains (intended to rent it out to pay for mortgage and it would be our retirement home) that will cover two years of college expenses. Although emptying this account would make me sad, it doesn’t make me physically ill like the other options above.

If we go this route (using cash after he has maxed his student loan options), is there a creative way to funnel it in any way to reap any sort of advantage? I’ll definitely check and see if I can pay with a credit card for rewards if they don’t charge fees, but I was wondering if I should maybe deposit it into the 529 and then withdraw? I’ll absolutely talk to our accountant first, but I was just wondering if anyone else has done something similar? I thought I remembered reading something about the advantages of a Schwab account to do something similar, but I can’t find anything like that now.

I’m also wondering if I shouldn’t use his brothers’ 529 or stop contributing to theirs; while my accountant said our state’s tax benefits are good, they certainly are not earning significant money. Again, I’ll discuss with the cpa, but I’m wondering what others have done.

Sorry for the long post- it’s proportionate to my anxiety over this! I am looking for every nickel and dime to offset this.

Thanks for any tips!

What's the major? And is it possible to get a master's (that's usually a 2 year gig) after a free 4 year at the state school?

My daughter has a very specific major choice that isn't at every school, but thankfully, is at many large state schools, so I get having limited options. But, she is adamant about wanting little debt, b/c she foresees a master's likely also needed for her desired career path...so we are purposely looking for schools that meet her financial and major needs. It's why we have the best school for the degree as our "last" applied choice, b/c she doesn't want to pay $62K/year to hit a private school, when she could hit public one for $11K - no matter how much undergrad money she gets, we are almost certain the other school will never be the better overall choice undergrad b/c it just won't be able to compete on price...
 
Is there any way he can become a resident of that state where he will be attending? Is there an in-state rate?

See if his school offers any Federal Work Studys jobs. They are on campus jobs that work around the students schedule and they can usually have some imput as to what the job is. It may be things like working in school library, the information desk, working in a department, etc. Nothing strenuous.

Lastly, he's going to need to get a job. Our daughter is a freshmen this year and about a month after school started, she got a weekend job. She works doubles on Sat and Sunday.
 
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See if his school offers any Federal Work Studys jobs. They are on campus jobs that work around the students schedule and they can usually have some imput as to what the job is. It may be things like working in school library, the information desk, working in a department, etc. Nothing strenuous.

This is what I did. I worked at the school book store. It's not a lot of money, but it definitely took some of the burden off my parents.
 
The maximum amount of Federal Loans he can get is $27,000: 5,500 Freshman year, 6,500 Sophomore year, and 7,500 Junior and Senior Year.

Yes you can put money in the 529 and then take it back out to pay tuition. I've done this with all my kids, kid 3 starting college in Fall. I put all their graduation $$ in the 529 then send a check from the 529 account directly to the college for fall tuition. I then get a break on my state taxes in the form of a credit for my contribution.

Not sure of your income level, but we qualify for the American Opportunity Tax Credit:
https://www.irs.gov/credits-deductions/individuals/aotc

In a nutshell, you have to make less than 160k if married to qualify, and you can get a refundable tax credit of $2500, for paying $4000 in qualifying education expenses. The $4,000 can be cash or loans, the money out of the 529 does not count for this credit since it is already earning interest tax free, can't double dip. You can claim this credit for 4 years. After 4 years there is a Lifetime Learning Credit of up to 2k that can be claimed https://www.irs.gov/credits-deductions/individuals/llc

We've gotten 10k back in tax refunds over 4 years for our oldest DD who is graduating next month. I've saved that money in a special account for her and am going to give it to her when her loans come due. I plan on doing the same with our other two at their graduation.

That's all I know in creative accounting pertaining to college :-)...I have read about a bill that "may" become law that would let you use 529 $ to pay student loans, but no clue what the requirements will be. If I could, I'd of left all my 529 money in the account to grown and took all the Federal Subsidized Loans and then paid them off before the interest starts accruing 6 mos after graduation with the 529 money. I realize that can't be a strategy for you since you said you have to take all the loans anyway and still come up with more.

Good luck on your journey, I know how stressful it is, but it will go fast :-)
 
I see from the other post that we are talking about art schools -- that's a tough one. I'm not sure if he's already committed to one (sent in a deposit) but if not, it might be possible to negotiate with/ask for a reconsideration from the financial aid office at his first-choice school. Even if he's already getting the max in merit aid, there might be some special grants (such as for summer research) that could be added to his aid package.
 
Has he talked to his Guidance Counselor? Explored other scholarships not from the college? Grants?
 

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