It Doesn’t Take a PhD to Save on College Expenses

October 17th, 2019 by Jim Allen

With college costs skyrocketing and student loan debt increasing to crisis levels, just selecting the right college can have a huge impact on the total overall cost of a college education. Here are a couple of tips on how to lower the cost of your college education.

Complete the FAFSA Process as Early as Possible
If you have children who are already in college or will be enrolling next year, the earlier you file your student aid application the better your chances will be of receiving some financial aid. The Free Application for Federal Student Aid (FAFSA) window opened on October 1st, and those who apply as close to that date as possible (for instance during the first three months) tend to receive twice as much in grants than students who file later, according to Mark Kantrowicz of Saving for This is because each college gets a fixed allocation of funds and they are given out on basically a first come first served basis until they are depleted. While the deadline for filing FAFSA is midnight of June 30 2021, most colleges will have long ago handed out their financial aid by then. So the early bird gets the worm when it comes to filing for financial aid.

Higher SAT & ACT Scores can Potentially Increase your Scholarship Money
Your student’s SAT or ACT test scores may not be required for application to all colleges, but test scores are certainly important when it comes to qualifying for merit based scholarships. Since many colleges want to attract the best and brightest students, they will offer generous scholarship packages to those students. One of the primary determining factors could be those SAT and ACT test scores. So trying to get the best score possible may lead to getting the best financial aid package possible. It is worth making the effort to improve your SAT or ACT scores.

Using Your State’s College Savings (529) Plan can Save More in Taxes
College savings or “529” plans can provide significant tax benefits when saving for college. The contributions grow tax deferred and can be used tax free to pay for qualified education costs like tuition, room & board and books. You do not receive a federal income tax deduction for contributions to a 529 plan, but many states do allow for a state income tax deduction. Unfortunately, California has not been one of those states. But, a new law (AB211) has recently passed the California legislature that will allow a state tax deduction for contributions to a 529 plan.

The law, which should be signed by Gov. Newsome any time now, would allow a state income tax deduction of up to $5,000 for a single person and $10,000 for a married couple as long as the contributions are made to the California state 529 plan – CA ScholarShare. There will be a phase-out of the tax deduction based on certain income levels. The fact that you can now potentially get a state income tax deduction in addition to the federal tax benefits makes using a 529 plan even more compelling as a college savings strategy.

Don’t Forget About Community College
While it might sound enticing for new college students to attend college out of state and get the full college experience, it probably isn’t worth mortgaging your retirement or incurring a mountain of debt to give your children this experience. The reality is that most students entering college really don’t know what they want to do or be, so why spend enormous amounts of money paying for 2 years of general education that can obtained at ¼ of the cost (or even less) by attending community college? The savings from those two years of community college might be used to help pay for graduate or law school should the student wish to pursue that path.

In addition, many of the most popular public colleges, like those in the University of California system, that are nearly impossible to get into, will give priority enrollment to graduates of their local community colleges. In the long run, you will likely save money and give a boost to getting your child into their desired college when they are ready for those final 2 years.


Planning for college is usually an important goal of most of our clients. However, our job is to make sure that sending you children to the college of their dreams is not going to affect your chances of having the retirement of your dreams. If you need help with planning and saving for college costs, please contact us for a complementary consultation.