Attending a top-flight college can turn into a financial nightmare if a diploma from your dream school leaves you — or your child — drowning in student loan debt. According to the College Board, annual college costs in 2017 will top $42,000 at private colleges and reach nearly $21,500 at in-state public universities, motivating resourceful military families and veterans to seek out-of the-box ways to pay for college.
Aware that college tuition costs have increased faster than the inflation rate for decades, Tom and Tonia Peasley locked in tuition costs for their two oldest children when they were preschoolers by purchasing the Florida Prepaid Tuition Plan.
“It’s an investment decision you make not knowing what you are going to do down the road, but all investment decisions are like that,” Tonia notes. “We looked at it and said this is going to be worthwhile.”
Prepaid college tuition programs allow parents to purchase tuition and fees at today’s price for future use at a state’s public universities. (In many states, optional dormitory plans also can be purchased.) Tuition is paid in a lump sum or through monthly installments spread over five years or scheduled to end during the child’s senior year of high school. Prepaid plans are a form of tax-advantaged 529 Education Savings Plan.
While the Pealseys’ first two children opted not to head to the sunshine state for undergraduate school — their daughter is attending college in Texas and their high-school-age son is weighing two ROTC scholarship offers, they believe their decision to purchase the Florida Plan remains a money-making move since the amount covered by the plan can be applied to other public universities nationwide, transferred to a sibling or used for graduate study.
“We may end up using [the remaining] plan for our six-yearold,” Tonia says. “If he ends up going to school, four years of college will only have cost us $11,500. That would be a winwin.”
Because of financial pressures, some states have eliminated prepaid tuition plans, closed them to new investors or increased premiums over current tuition rates. However, Florida, Maryland, Massachusetts, Michigan, Mississippi, Nevada, Pennsylvania, Texas, Virginia and Washington (Washington’s GET Plan is reopening July 2017) continue to offer prepaid plans to their residents.
The plans can be particularly attractive to military families since a child remains eligible for in-state tuition and fees in the state where the plan was purchased even if the family moves out of the state.
Like most military families that transfer Post-9/11 GI Bill benefits totheir children, Murf and Andrea Clark expected to use the Chapter 33 benefits as soon as their children stepped on campus, but they revamped those plans after speaking to a Notre Dame financial aid officer.
He coached the Clarks on how to “manage” the Veterans Affairs (VA) benefits so the family would qualify for the maximum amount of financial aid once their second child entered college, a strategy that paid off at a rate of two-to-one.
Following his advice, their daughter used her transferred GI Bill benefits during her first two years at Dartmouth University, where the Yellow Ribbon Program covered the balance of her yearly costs. But when their son started at Notre Dame, they shut off VA benefits for both children and took the combined $50,000 in financial aid offered by the two private schools. Once their daughter graduated, their son used his two years of GI Bill/Yellow Ribbon award to pay for his junior and senior years.
“We ended up paying for just two out of eight educational years at these very expensive colleges,” Andrea Clark explains. “I’m not saying that still didn’t hurt a bit financially…but we ended up with enough VA benefits left to cover at least a semester for child No. 3.”
Clark says one lesson learned is to question universities about their financial aid formulas, which can be more generous at private schools, and be willing to negotiate with colleges when comparing aid packages.
“A lot of private schools don’t add BAH to military income,” she says. “You can show a pretty low adjusted gross income as a military family and qualify for a lot of general scholarship money.”
When it came time to dip into their investment savings to pay college bills, the Clarks followed another piece of outside-the-box advice. Rather than take cash out of a stock mutual fund at a low point in the market or apply for a parent loan, they refinanced their three-year-old car at 1.5% interest and then quickly paid off the loan when the stock market rebounded.
“It gave us access to really cheap money,” Clark said. “That’s not an option for everybody, but it is something parents could consider.
One hundred and two. That’s the number of scholarships Marine Corps veteran Stephanie Talcott applied for when looking for ways to pay for her undergraduate degree.
“I only got three, but it was enough that it paid for everything and I didn’t have to take out any loans,” she says. “I didn’t go into debt. I am trying to go back for my master’s degree and I’ve qualified now for a couple of other scholarships. I should be starting back in the spring and my first year will be completely paid for.”
Talcott was forced to be innovative after watching half of her Montgomery GI Bill go to waste when she took so-called “accredited” distance-learning courses from an institution whose credits ultimately would not transfer to a four-year degree program.
“I was stuck not having the credits I needed and not having the money to go to school,” she says. “I had to get very creative.”
Talcott used the websites www.Scholarships.com and www.Fastweb.com to search for under-the-radar scholarships.
“It was like a full-time job,” she admits. “I wrote a lot of essays and spent a lot of time on the computer after everybody went to sleep. It took a lot of time.”
Talcott completed her associate’s degree at a New York community college, taking advantage of a campus program for military spouses that covered daycare costs for her daughter and paid a portion of her tuition. A grant and money saved through the cash-back rewards program Upromise (www.upromise.com) covered the balance of her costs.
After her husband received orders to Florida, Talcott completed her business degree at St. Leo University, combining two university scholarships, outside scholarships and the balance of her GI Bill to complete her debt-free undergraduate education.
Former Florida Institute of Technology student Joshua Lear, 21, arrived on campus with 31 college credits (essentially enrolling as a sophomore), with 19 of those credits coming from College Level Examination Program (CLEP) exams.
“Compared to the AP (Advanced Placement) exams, CLEPs were extremely easy,” says Lear, an Army dependent who took his CLEP exams at on-post Education Centers. “The other thing is usually the ceiling [score] to get credit for the CLEP exam is lower than the ceiling to get credit for the AP exam.”
CLEP is a fast track to a degree since passing a single CLEP exam can earn test-takers as many as 12 college credits. The program includes 33 exams covering five subject areas — history and social sciences; composition and literature; science and mathematics; world languages; and business — and is designed to test what you already know.
By fulfilling his general education requirements prior to entering college, Lear was able to focus his attention on computer programming classes from his first day on campus. That singular focus paid off, earning him summer internships with Parsons Technology and Facebook. When Facebook offered him a full-time engineering job, Lear accepted the position rather than return to FIT to complete his degree.
More than 2,900 schools accept CLEP credits (www.clep.collegeboard.org/exam). Active duty, Reserve and National Guard members, Air Force civilian employees as well as spouses and civil service civilian employees of the Army Reserve, Air Force Reserve and Coast Guard are eligible for DANTES-funded CLEP exams. Inactive Guard or Reserve or Coast Guard Auxiliary are not. The registration fee for each 90-to-120- minute exam is $80. In addition, Military One Source (www.militaryonesource.mil) offers free practice tests on its website.Read comments