There are several ways to pay for college without resorting to college loans. Loans are a type of financial aid that must be repaid, with interest. College loans leave you with a financial obligation after completing college. This strategy can be a great path into careers that have the possibility of lucrative paychecks. But for many of us, it’s not the best option.
Therefore, in the information below we are concerned only with methods of paying for college that will not accrue debt.
These more advantageous types of financial aid include tax-advantaged savings plans, high school dual credit programs, various types of scholarships, employer tuition assistance, other sources of financial aid, a pay-as-you-go plan, and some thought-provoking suggestions to define a satisfying career path.
529 tax-advantaged college savings plan
With 529 plans no taxes are owed on investment earnings while the money contributed is in the plan OR when they’re distributed, as long as they’re used for qualified education expenses. This includes tuition, textbooks, and school supplies. Room and board that are part of an official college or university housing program also qualify.
If 529 plan distributions are used for any other purpose, the child whose name is on the account must pay the income tax PLUS a 10% penalty on the amount used. Chances are that the child won’t be in a high tax bracket at that time, so the tax bill might not be high. Still, it’s better to avoid paying any tax penalty.
529 plans are defined in Internal Revenue Code Section 529. There is a limit on the amount that can be contributed each year. For more information on 529 plans, go to College Savings Plan Network and Saving for College.
In Washington State, the 529 prepaid college tuition plan is called the Guaranteed Education Tuition Program or GET. With GET, you prepay for your child’s college tuition today. Your account is guaranteed to keep pace with college tuition, and you can use it at almost any public or private college in the country.
Custodial Roth IRAs
A custodial Roth IRA is established and managed by an adult (usually a parent or grandparent) for the benefit of a minor. There is a limit on the amount that can be contributed each year. When the child is no longer a minor, he or she assumes full control of the IRA. Early distributions (generally defined as those occurring before age 59½) from a custodial Roth IRA that originated from the contributions to the plan aren’t taxable. With a couple of exceptions, money taken out of a Roth IRA after age 59½ are also not taxable.
For example, suppose an adult contributes $75,000 over the course of several years to a custodial Roth IRA. In addition, due to interest, the value of the account has grown to $125,000. The IRA’s beneficiary could take out $75,000 tax free to pay for college expenses. The remaining $50,000 could remain in the IRA and continue to grow tax-free until the child reaches age 59½.
When the child reaches age 59½, the funds can then be withdrawn also without being taxed. Further, tax-free distributions are also allowed for account owners under 59½ up to $10,000 when used for a first-time home purchase. So, a custodial Roth IRA can serve your child in more than one way, for education expenses and for a first home purchase.
Washington State K-12 Dual Credit Programs
Dual Credit programs allow high school student to earn college credits. These programs are administered by the Washington State Office of Superintendent of Public Instruction (OSPI).
These programs allow high school students to take college-level courses. Upon satisfactory examination, students can earn up to one year of college credit by the time they graduate from high school.
These programs include Running Start, College Success Foundation, and other programs. For more information, visit Dual Credit Programs at OSPI.
Washington State College Bound free tuition program
Washington State College Bound provides eligible students free public college tuition, or an equivalent amount for an approved private college or career school. Students must apply for financial aid and attend a participating college in Washington. More info: College Bound | WSAC (wa.gov)
Washington State WISE Scholarship for Women in STEM
WISE (Women in STEM Excel) Scholarship is designed to support Washingtonian women interested in a career in a STEM field. The awarded scholarship funds can be used at any college or university to offset the cost of tuition and educational expenses, including things like supplies and textbooks, required technology, transportation costs, and on-campus expenses. Washingtonian women welcome to apply for the scholarship to pursue a degree in a science, technology, engineering or mathematics-related field.
- The 2023 WISE Scholarship application period is open until November 17, 2023. Read the following instructions to apply and submit your application and letter of recommendation: Scholarship Application | Anderson Sobel Cosmetic Surgery
Seattle’s free community-college program
Seattle Promise is a college tuition and success program launched by Seattle Colleges, Seattle Public Schools, and the City of Seattle following passage of the Families, Education, Preschool, and Promise (FEPP) Levy in 2018. The program has three core components:
- Free tuition at any of the Seattle Colleges: North Seattle College, Seattle Central College or South Seattle College for up to two years, 90 college credits or a student’s first degree, whichever comes first.
- Equity scholarships, which provide flexible funding to students, for books, transportation, housing, etc. for those with financial need.
- Student support and advising beginning in the junior year of high school and lasting through completion of a degree, certificate, credential or transfer to a four-year institution.
All graduating seniors attending Seattle public high schools are eligible for the Seattle Promise program regardless of grade point average (GPA), income, ability, or country of birth. The application for the Fall semester beginning in September is usually due the prior February. More info: Apply | Seattle Colleges
College scholarships, grants, and fellowships
Scholarships, unlike student loans, is a type of financial aid you do not repay. Rather, you earn the money by meeting certain qualifications and then applying successfully for the funds. Most people are aware that there are scholarships for academic, athletic, or artistic talent, or for those who demonstrate financial need. However, there are also thousands of scholarships available for many other reasons. Scholarships are available for students who are interested in certain fields of study, who live in certain areas of the country, or who are members of an underrepresented group.
Grants are a type of scholarship, being money awarded to students meeting various criteria to cover education costs. The main difference is simply the terminology used by the organization or institution awarding the scholarship or grant.
Fellowships are another type of scholarship. Like scholarships and grants, fellowships can be awarded for many different reasons. There are fellowships for undergraduates (pursuing a Bachelor’s degree), for graduate students pursuing doctorate degrees (Doctor of Philosophy aka PhD), for post-doctoral studies or research, for visiting students, for professionals already working in certain fields, and many other criteria, including academic achievement and underrepresented students, among others. Some fellowships require service in return, such as teaching or research. It’s worth examining fellowship opportunities to think about how you might use this resource in your overall pursuit of a career. Maybe a fellowship is not available now but could be in the future if you are considering a career in certain fields.
Search for all possible scholarships, grants, and fellowships to ensure that you find any and all scholarships for which you qualify. Listed below are some ways to do that:
How to find college scholarships, grants, and fellowships
A full scholarship from one source tends to be available only to a select few, often those with the highest academic, athletic, or artistic talent. For the rest of us, receiving most or all direct education costs through scholarship might be achieved by receiving funds from multiple sources. You can only find available sources if you search thoroughly and then apply for all possible funds.
- FastWeb scholarship search is a scholarship search tool that will help you compare your qualifications with all available scholarships. Simply fill out a profile and awards that fit your qualifications are identified as possible sources of financial aid. To use this tool most successfully, search thoroughly and apply for every available award.
- You may not realize that financial aid is something you should re-apply for every year. Even if you don’t qualify one year, many factors can affect who is offering aid, to whom, and how much. A change in any of these circumstances might affect your eligibility for student aid from one year to the next.
Other sources of financial aid
There are a few other sources for financial aid. These include: federal and state government aid, military benefits, study abroad programs, and several other specific sources.
It’s in your best interest to research all other forms of financial aid and leave no stone unturned. If you qualify, you have nothing to lose by finding and applying for all available aid.
For information about these other sources, visit FinAid – Other Types of Aid. This page includes some forms of financial aid we’ve already mentioned, such as tax benefits and employer tuition assistance, as well as other financial aid options.
Employer tuition assistance
Another way to pay for college is to find a job in a company that offers tuition assistance. A few companies with locations in Washington State that offer tuition reimbursement include Amazon, Google, Microsoft, Starbucks, UPS, and Verizon. But there are many, many others. However, there are often caveats to employer education benefits:
- Employer tuition assistance is typically available only to employees who have worked for the company for a minimum period, typically at least one year.
- To receive the benefit, usually you must pay for and complete courses out of pocket, then apply for reimbursement of the tuition upon successful completion.
- Textbooks and other costs are often not included in employer reimbursement programs and these costs can be substantial ($200-$300 per term,).
- There are restrictions on how much reimbursement you can get per year, which may not be enough to cover tuition costs. So, this may require that you stretch out a degree program longer than the typical two years (associate degree) to four years bachelor’s degree).
- There may also be restrictions on the types of schooling or college degrees that qualify for an employer’s program. For example, a company may reimburse only for business degree but not arts courses, or a law firm may only reimburse law courses.
So how can you best take advantage of tuition reimbursement? Start with companies you think you’d like to work for and see if they offer tuition assistance. Then explore entry level positions based on your current skill set, determine possible career paths, and see if any of them appeal to you.
Pay-as-you-go
Another option is to simply pay for college tuition and books as you sign up for each term. It sounds radical today, but this is the method used by many students for most of the twentieth century.
The following list offers several ways to reduce your overall college costs that can make the pay-as-you-go option doable.
- Work for a few years after high school and postpone college until you save enough to pay for most or all basic education costs (primarily, tuition and books).
- Attend college part-time while you work fulltime, taking longer than the usual two to four years to complete an associate’s or bachelor’s degree.
- Attend college fulltime during the academic year (September-May) and work fulltime during summer (June-August) to accrue money for college costs.
- Attend a two-year community college for the first two years (which has lower tuition costs), and then transfer to a four-year university for the third and fourth year. One key here is to research which college and courses are transferrable to your university of choice. Note: In November 2017, Seattle Mayor Jenny Durkan signed an executive order issuing a mandate for a free college tuition program to be put in place by 2020. For the most up-to-date information and whether or not you quality, speak with a high school counselor.
- Attend college via an online university, which often have lower tuition costs.
- Attend a state college or university rather than a private university.
Any of these can be combined with partial scholarships or tuition reimbursement programs.
We think these pay-as-you-go options are preferable to completing a college degree saddled with student loans that will take you many years to pay back.
Inspiration from others who have done it
Finally, if you think achieving success isn’t possible due to your circumstances, think again. Here’s some real-life inspiration from those who started with challenges and achieved great success:
- 21 billionaires who grew up poor (from BusinessInsider.com)
- How three leaders worked their way up from the (very) bottom (from Reuters.com)
- 16 People Who Worked Incredibly Hard To Succeed (from BusinessInsider.com)
- 12 Famous People Who Failed Before Succeeding (from wanderlustworker.com)
- 101 Inspiring Quotes From the Most Successful People in History (from Inc.com)
Many other people from everyday walks of life have achieved happy, secure lives, though perhaps not as spectacular as these famous people.
Explore career options
If you’re not sure college is for you, or you are unsure what career path you want to take, you might simply postpone the decision. Instead of going to college right out of high school, plan to get a job and work for a year or two (or more).
During this postponement, you can explore different types of jobs, work at different companies, and think more in-depth about what type of higher education is right for you based on the type of work and career you desire. Then use the above suggestions to embark on the necessary degree path.
The articles in the links below offer more ideas for career alternatives that don’t require a college degree. Explore these options in your quest to define a satisfying career path.
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