College bills coming due? Here are some smart tips before you pay
With the cost of college rising each year, we did the math to see if it’s possible for students to pay their own way through school.
In Pennsylvania, the worst state for affordability, students have to work 120 hours a week to cover in-state tuition and housing, according to price data from College Tuition Compare and labor/wage data from the National Conference of State Legislatures.
Granted, price data aren’t perfect: a recent University of Pennsylvania study found that many colleges’ net price calculators don’t correlate with the true cost of a university degree.
That said, how can you negotiate your kid’s college bill down and pay what you can afford?
First, you can appeal your kid’s financial aid award letter.
“For some families, a change in financial status may have occurred since the submission of your Free Application for Federal Student Aid form and may not reflect your current income,” notes Fred Amrein, founder of PayForED.com, a Newtown Square consulting and software firm that helps parents and students maximize financial aid and minimize college costs. He’s even put together a sample “Financial Aid Appeal letter” as a guide.
Second, here’s a list of tuition bill items to review before you pay:
• Room size: Prices can vary depending on room selection with a single room being the most expensive.
• Meal plan: College freshmen may not have a choice in the meal plan. If you think the meal plan is too much, ask if it can be downsized.
• Health insurance: This is a fee sometimes listed on the bill that can usually be waived with proof of your child’s health insurance.
• Payment plans: Check with the bursar for payment options, specifically tuition installment plans. Is there a fee to set up the installment payment plan? First payment’s usually due in August.
• Federal loans: Tuition bills indicate what federal loans you are eligible for, so student and parent must understand the type of loans they will be accepting.
Savings and tax credits
If you have money in your 529 college savings plan, remember qualified expenses include tuition, fees, room, board, books, computers, and supplies directly related to courses.
Often overlooked? The American Opportunity Credit. This is a tax credit per student that can add up to $2,500 per year, and is only available for the first four years of college. However, sometimes tax years and school years don’t match, so check with an accountant.
IRS tax transcripts
When filling out financial aid applications, students and families need two years of tax information to complete the Free Application for Federal Student Aid form.
The IRS Data Retrieval Tool is available to use with the 2019-20 FAFSA Form. This tool is the fastest, most accurate way to input tax return information.
Students and parents can use the IRS Data Retrieval Tool to access returns from within the FAFSA.
Don’t have a copy of your past tax returns? Here are some options:
• Contact the tax preparer or provider who filed your return.
• Download a tax transcript at Get Transcript Online. Or use Get Transcript by Mail. The IRS will mail a transcript to the address on a return within five to 10 days. (Visit https://www.irs.gov/individuals/get-transcript.)
• Call the IRS’s automated line at 800-908-9946 to order a transcript.
Funding financial shortfalls
After reviewing the bill, you may fall short on how to pay the rest of the tuition. Most families finance the cost of college education with:
• Parent PLUS loans.
• Private student loans.
• Home equity or personal loans.