College costs call for creativity

Crowdfunding, cash back can help pay bills

When her two sons were younger, Sarah McCord says she was a stay-athome mom. But as soon as her oldest hit high school, she went back to work with one goal in mind: covering the kids’ college tuition.

“The cost of school, I think, is exorbitant, and I can’t imagine how (a student) would recoup that if a kid were to finance that on their own,” says McCord, whose salary from her job at a pharmaceutical company covers her younger son’s roughly $17,000 a semester in tuition, room and board. “Entry-level salaries just aren’t going to make a dent in those payments.”

With Americans carrying $1.57 trillion in outstanding student loan debt, many families and students continue to borrow to cover the ever-escalating costs of college tuition. But some also are figuring out more creative ways to pay for higher education, from crowdfunding to corporate reimbursement programs to stashing cash back from purchases they make every day.

“As college costs continue to rise and there seems to be no end in sight, the gap is going to get narrower and narrower at the top of who can really even

afford this anymore,” says Susan Dabbar, founder and CEO of AdmissionSmarts, which helps families navigate the college admissions process, from applications to affordability.

“More and more people are going to be looking for all of these different ways ... to figure out how are we really going to pay for this.”

Last year, 57% of financial aid for undergraduate students came from grants, 34% from loans, 7.9% from education tax benefits and less than 1% from student jobs, says Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.

But Americans also are saving, using tools such as 529 plans, which offer tax advantages to families that invest in stocks and bonds. “Eighteen percent of children under the age of 18 have 529 plans,” Kantrowitz says, “a relatively low number, but it’s been growing. Every dollar you save is a dollar less you’re going to have to borrow.”

Kathleen Surdan of Acton, Massachusetts, opened 529 plans for her three children. But she also saved more than $4,000 over 12 years through UPromise, a site that lets users buy products and services from various retailers online, then get cash back from those purchases that goes into an account.

“It takes 10 seconds to go through that link,” says Surdan, who started out getting a few cents back for purchasing orange juice and eventually saved up to $400 a year booking family trips as well as hotels for her daughter’s out-of-town softball games. When you finally need to tap the money, she says, “they send you a check.”

Surdan’s two daughters, now 23 and 25, and her 20-year-old son received some scholarships. They also had to pay for their books and come up with their spending money. But Surdan says she and her husband paid much of their children’s tuition with savings.

Students also are seeking out novel ways to cover costs.

“There are lots of students using crowdfunding, some with amazing results,” says Dabbar, noting the rise of GoFundMe and other campaigns. One student she worked with had a $12,000 gap between what merit aid would cover and what she needed. “She had a very compelling story . ... She put up a GoFundMe page, and she didn’t’ reach her goal of $12,000, but she raised close to $8,000, which got her that much closer.”

With tuition in the 2018-2019 school year rising 2.5% at a public, four-year, in-state college on average and 3.3% at a private nonprofit school, crowdfunding, cash-back offers and other alternate ways of saving may only go so far. But every little bit helps.

“You’re probably going to have to save and borrow,” Kantrowitz says. “But they can be good ways of helping to defray the costs.”