Shift Income To Find Tax Breaks
Careful tax planning could help you essentially create your own financial aid. Krishnaswamy points out that parents who are sitting on large stock market gains could give that stock to a child the child then sells the stock to fund college costs. This works because the childs tax rate is typically much lower than the parents.
If the stock sale lets the student pay at least 50% of college costs, the IRS might see that student as an independent tax filer, and therefore eligible for the $2,500 annual American Opportunity Tax Credit.
Some tax credits can only be used to offset taxes owed. Others can be refunded and some are hybrids. The American Opportunity Tax Credit is a hybrid just $1,000 of that tax credit is refundable, so a student would need income to take maximum advantage. That income might come from a family business, where legitimate employment is another way to shift income from the parents tax bracket to the childs.
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Choose A School That Pays You
Some schools will pay you to focus your studies on a single subject, which they dictate. Schools such as the Webb Institute and the Curtis Institute of Music offer a select range of academic programs and pick up the tuition cost for every student.
However, its important to think through the decision before you commit to this course. You dont want to get caught up in taking free college courses, then graduate from such a program and realize that youre not interested in pursuing a career in what youve just studied.
You Can Get A Roommate
Although a roommate isn’t a required step for moving out, getting one is a great way to save on rent because you can split a higher rent among the roommates. Roommates may even allow you to move into a larger place than you can afford on your own.
Your ability to move out may ultimately hinge on your ability to secure affordable rent, so give the idea of roommates some serious thought.
Choose your roommates carefully, however pick people who have similar lifestyles as you if possible. Likewise, put your individual financial obligations down on paper, as friendships can otherwise deteriorate quickly in difficult living situations. Protect yourself against identity theft by securing your personal information in a place that cannot be found or accessed. If possible, sign separate leases with your landlord so that you will not be held responsible if your roommates skip out on the rent or other bills.
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Top Lenders Offering Private Student Loans Without Cosigner Requirements
|Stated eligibility criteria|
|Two years of credit history, $24,000 minimum income||If you dont meet those requirements, you could still qualify for an Ascent income-share agreement-like loan|
|Good credit, no prior student loan default||Noncitizens and non-permanent residents have to find a cosigner|
|If youre unsure if you can qualify on your own, try the lenders prequalification tool|
|Noncitizen students without permanent resident status are eligible with a cosigner|
|ELFI has a minimum loan amount of $10,000|
|GPA and school graduate rates vary by your year in the degree program||Your academic success, job experience and projected postgraduate income determine the fate of your loan application|
|Attend a degree program in the U.S. or Canada and be within two years of graduation||Your future earning potential, not your credit score, is used to determine your eligibility|
|PNC||Satisfactory credit, meet unspecified debt-to-income criteria||Students must be citizens or permanent residents living in the U.S. for at least two years, enrolled at least half time cosigner required for 17-year-olds|
|Attend an eligible graduate school in an eligible state||International students and American students studying abroad are eligible to borrow|
|Good credit||Half-time enrollment is required for all SoFi loans|
Can You Afford To Move Out On Your Own
As well see, the cost to live alone depends a great deal upon what youll have to pay for housing. Chances are, youll fixate on the monthly cost to rent an apartment with or without roommates in your area. But, before you move out on your own, consider all of the new expenses youll incur living alone.
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Apply For Financial Aid
Of all the college-funding methods discussed is this guide, the first one were discussing is perhaps the most sure-fire. Its federally mandated financial aid. The reason that it’s perhaps the best way to pay for college is that its virtually guaranteed if you qualify, and many families do. Plus, applying isnt difficult and those who qualify often go on to achieve their collegiate dreams. There is a strong connection between applying for financial aid, enrolling and ultimately earning a bachelors degree. But millions of families who would qualify for financial aid never file the documents.
There are two main types of financial aid from federal institutions. The first is the Free Application for Federal Student Aid : a form that determines whether students qualify for a wide range of financial aid. Based on a students individual or family income, FAFSA can automatically qualify college applicants for a host of loans and grants, including Stafford Loans, PLUS Loans, Federal Pell Grants and other need-based grants. FAFSA is also the benchmark used by most colleges to distribute their own need-based scholarship packages.
Parents can file the FAFSA starting October 1 of each year. Its important to file early to capture any money that students qualify for, especially for low-income students. If you dont start early, you might miss the ability to get the Federal Supplemental Education Opportunity Grant , which can run out on some campuses.
Working While Attending School
In addition to potentially helping you qualify for financial aid, your FAFSA may qualify you for federal work-study programs. Of course, finding a part-time job that isnt associated with work-study is also an option.
You will need to determine how many hours per week you can work and still do well in school. And youll also need to find a job that is willing to accommodate the work-school balance you require. For example, its important to find an employer who will offer flexibility in scheduling during, for example, midterms and final exams.
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Look For State Or School Aid
As was touched on above, many colleges will offer their own financial aid packages, as do individual states. Students can contact a college financial aid counselor if theyd like to learn more about the options that may be available.
Many colleges award merit-based scholarships not only to incoming students but also to upperclassmen. Even if students dont get this type of aid their freshman year, they should continue trying throughout their time in school.
Many academic departments at schools will have their own scholarships available as well.
How To Get A Student Loan Without A Cosigner
When you take out student loans, there are two primary options available: Federal loans and private loans. As youll see below, undergraduates never need a cosigner to get federal student loans, while those pursuing a graduate or professional degree could apply with one to secure supplementary grad PLUS loans. However, this can be trickier when it comes to private student debt.
Federal loans should usually be the first choice as you decide how to take out a student loan, as their repayment plans provide a great deal more flexibility. That flexibility includes options such as income-driven repayment plans, forbearance and deferment, as well as federal forgiveness programs.
The vast majority of loans are federal loans, with MeasureOne reporting that private loans accounted for approximately $139 billion of the $1.7 trillion student loan market by September 2020.
Private student loans, on the other hand, dont generally offer these same benefits. While some private student loan lenders offer hardship options for those who experience unemployment or similar financial emergencies, these options vary per lender. Thats why you should typically only use private student loans to supplement your education costs, not as a first choice.
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Where To Apply For Student Loans
Applying for student loans can be a difficult experience. From deciding between private and federal student loans or a combination of the two, to the unique processes each lender needs you to follow, it can be stressful and confusing. So how do you know youre making the right choices to afford your college tuition as easily as possible?
Purefy is here to help. Heres an at-a-glance infographic to keep handy that explains the entire student loan application process.
And if you need additional private student loan help, visit our rate comparison tool that shows you interest rates, terms, and eligibility requirements from multiple lendersall in one place with just one quick and easy form.
Find your best interest rate in seconds, choose the right solution for your needs, and apply for your top private loan option, simply and conveniently.
Get An Estimate Of What You May Pay Out Of Pocket
Colleges use a formula to figure out how much they expect your family to pay out of pocket versus how much will be covered by aid. The Expected Family Contribution is an estimate of the amount your family can put toward one year of collegemeasured by factors such as income, assets, the number of kids in college simultaneously, and possibly home equityand is used to determine how much federal and institutional aid you’re eligible for.
When your kid applies to college, you submit one or more detailed financial applications. The federal one is called the Free Application for Federal Student Aid . Many colleges also require the CSS Profile application for institutional aid, and some have their own financial aid application. From the information on these forms, the school will determine your EFC for freshman year. You can get a general estimate right now with the free EFC calculator from CollegeBoard.
“Focus on schools where the out-of-pocket expenses make the most sense for your budget,” says Messinger.
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Decide If You Want To Move Out Alone Or With Roommates
Once youve figured out how much you can spend on rent monthly , decide if you can afford to get your own place or if you need to live with roommates.
Each option has its own set of pros and cons.
Its awesome living on your own because you can do things your own way and not have to worry about anyone telling you otherwise.
On the other hand, it can be quite pricey because you have to pay for rent, utilities, furniture, appliances, tenant insurance, and more all by yourself without sharing the cost with someone else.
It can also get a little lonely so its important to constantly motivate yourself to go out and interact with others.
Living With Roommates
Living with others is a great way to save money because you can split rent, utilities, furniture, appliances, and household items.
There will most likely also be constant interaction with your roommates so there is less of a chance for feeling lonely.
Although there are cost savings and more chances for social interaction, there can be a lot of headaches that come with living with roommates.
Its all about finding the right people to room with, which I will talk about in my next tip.
Borrow Through The Federal Direct Loan Program
The Direct Loan, which is designed exclusively for students, is the safest loan to use and has built-in safety nets if you graduate without a well-paying job. Provided by the U.S. Department of Education, the Direct Loan is currently available in four options: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Direct Subsidized Loans are only available to undergraduate students with demonstrable financial aid . These loans do not accrue interest while students are in school, or for the first sixth months after school is finished.
Direct Unsubsidized Loans are available to eligible undergraduate, graduate, and professional students. Demonstrable financial need is not required to earn these loans, though the amount you borrow is determined by your cost of college attendance and the amount of financial aid youre currently receiving. Direct Unsubsidized Loans accrue interest the moment they take effect.
Direct PLUS Loans are available to eligible graduate and professional students, as well as dependent undergraduate students that may need extra assistance with costs not covered by other forms of financial aid. You do not need to demonstrate financial need to apply, but you will need to conduct a credit check. Direct PLUS Loans are unsubsidized, so they accrue interest the moment they take effect.
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Submit A Css Profile For Institutional Financial Aid
Besides federal aid, you may be eligible for institutional aid, which comes from the school you attend. To qualify, you must submit the CSS profile.
To do so, create an account. Then, select the schools youre interested innot all schools participateand provide information about yourself, your familys finances, and your assets. There is a $25 fee for submitting the profile, and youll have to pay $16 for each additional report.
The College Board has a comprehensive guide on how to complete the CSS profile if you need additional help.
What Else You Need To Know
In certain circumstances, saving for your own education expenses is a fantastic idea. Youll avoid paying taxes on the earnings, reap potentially large state tax benefits depending on where you reside, and youll have the ability to transfer the money to a different beneficiary if you dont use the money yourself.
But there are some other things you need to know:
- Some plans will require you to have the account for at least a year before using it.
- You need to check plan fees and expenses to make sure that saving for the short term will actually be beneficial to you.
- Only five states give tax incentives for investing in an out-of-state plan.
- Some investments are riskier than others so make sure that you are comfortable with where your money is invested. Research a plans performance before signing up.
If you want to get started saving in a 529 plan for yourself, you can look at plans both in and out of your state for options that best suit you. Be sure to factor in all variables so that you come out ahead.
Are you using a 529 to pay for education expenses?
Robert Farrington is a brand ambassador for ScholarShare. All opinions in this article are his own.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
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Apply For Grants And Scholarships
There are thousands of programs, institutions, companies and organizations that give away free money. Grants are based on need, while scholarships can be based on a number of qualifiers, including academic and athletic merit.
You can apply for grants and scholarships at the federal and school level when you complete your FAFSA. Ask your high school guidance counselor or college financial aid office if youre eligible for any local programs or apply for scholarships offered by specific colleges.
To find independent scholarships, you may also use online tools like Scholarships.com,Fastweb and the College Boards scholarship search. You can customize your search based on any number of factors, including but not limited to:
- Physical disabilities.
The earlier you start your search, the more free money you could qualify for. Many grants and scholarships are available on a first-come, first-served basis, so the sooner you apply, the more money you could score.
Choose An Affordable School
Paying for college will be exponentially easier if you choose a school thats reasonably priced for you. To avoid straining your bank account, consider starting at a community college or technical school.
If you opt for a traditional four-year university, look for one that is generous with aid. Focus on the net price of each school or the cost to you after grants and scholarships. Use each schools net price calculator to estimate the amount youll have to pay out of pocket or borrow.
Just because one schools sticker price is lower doesnt mean it will be more affordable for you, says Phil Trout, a college counselor at Minnetonka High School in Minnetonka, Minnesota, and former president of the National Association for College Admission Counseling. For example, if a $28,000-a-year school doesnt offer you any aid, and a $60,000-a-year college offers you $40,000 in aid, the school with the higher sticker price is actually more affordable for you.
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Take College Courses While Still In High School
While attending high school, some students choose to simultaneously take a college course or two. This is possible at community colleges that dont require students to have high school diplomas to attend. You may also be able to take college courses online.
This can be a great option for students who may not qualify for AP courses at their high school, but still want to get a jump-start on their college education. By taking a class or two at the community college during two high school semesters, a student can eliminate one semesters worth of general education requirements. If the student is transferring to a large university, this could net a savings of several thousand dollars.