With college costs outpacing inflation and student debt reaching a record $1.5 trillion, it is easy to understand why price plays a role when choosing a college. In the past 10 years, the cost of in-state tuition at a public, four-year institution increased at an average rate of 3.1% per year beyond inflation (The College Board).
Still, there are ways to save money.
Some families that once felt that they had no control over college costs are finding that shopping for a college can be similar to other buying experiences. An increasing number of institutions are offering tuition “deals” for out-of-state students.
Many public colleges have different costs for in-state and out-of-state students. In 2018, the average cost of tuition and fees and room and board for an in-state student at a public, four-year college was $21,370, compared with $37,430 for an out-of-state student (The College Board).
Regional agreements help students save money
Regional “compact” agreements involving multiple states help students save money when attending an out-of-state school.
Fifteen states comprise the Southern Regional Education Board’s Academic Common Market. Eligible students save money on tuition if they are pursuing a degree program that is not offered in their home state. They can enroll at an out-of-state college at in-state rates.
New England residents may receive a tuition break at 82 public colleges in six states that are part of the New England Regional Student Program. More than 800 undergraduate and graduate programs are available. According to the New England Board of Higher Education, participants in the 2017-2018 academic year received an average tuition break of $8,200.
At the Midwest Student Exchange, public universities in nine states agree to cap their costs at 150% for certain programs. Participating private institutions offer a 10% reduction on tuition.The Western Undergraduate Exchange program enables students to pay no more than 150% of in-state tuition costs at participating public colleges in 15 states.
Some institutions offer reciprocity
Some colleges allow out-of-state students to attend their institution at the same price as that of a leading public college in the student’s home state. The University of Maine at Orono, for example, recently began offering students from California, Connecticut, Illinois, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Rhode Island, and Vermont this reciprocity in price. To be eligible, students must earn a 3.0 grade point average and score a combined 1120 on the SAT exams.
In the 2016-2017 year, students who met the academic standards received an average of $13,200 off Maine’s out-of-state tuition and fees. Students with lower GPAs and SAT scores were eligible for a $9,000 discount.
Understanding veterans’ benefits
Through the federal GI Bill, veterans may pursue a college-based education or other options such as vocational schools, entrepreneurial training, or tutoring. In addition, some states offer free tuition for veterans. More than a dozen states offer waivers for tuition and other college expenses.
What about travel abroad?
The desire to travel outside of the United States may not be as costly as it sounds. Depending on the college and the length of the trip, a travel-abroad program may mean that the parent will not have to pay full tuition for the semester, which could represent significant savings. In some cases, a semester on campus is more expensive than a semester abroad.
Meet with a financial planner
Managing costs should be part of the discussion when creating a plan to pay for college and determining how to save, including how to optimize savings in a 529 college savings plan. In addition to seeking advice from a financial expert, parents may want to meet with a college admissions consultant as well as search college website financial aid pages and contact financial aid officers at the schools they are targeting.
For informational purposes only. Not an investment recommendation.
This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions. Putnam does not provide tax or legal advice.