Finding Alternative Sources of Financial Aid
When college scholarships and grants are not enough, and student loans are not an option, students have some other, alternative sources to find ways to pay for college. Employer-paid college assistance and tax savings plans are just two alternative ways to pay for college.
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Scholarship Lotteries
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Although scholarship lotteries are becoming rarer due to regulatory restrictions and economic nonviability, some educational lenders still offer small scholarships of around $1,000 to visitors to their websites. The odds of winning a scholarship lottery are much higher than if you apply for a traditional scholarship or grant for which you are eligible. The lending institutions will collect your email address to contact you if you win the scholarship. They may also use your email address for commercial purposes, which you will probably have the chance to opt out of.
Volunteer
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Some federal and state volunteer programs offer educational awards and student loan forgiveness. For example, Teach for America offers an educational award of $10,700 over two years of service to be used toward your existing student loans or to pay for future educational expenses, in addition to a salary as a teacher. Some states also offer student loan forgiveness programs for professionals in high need areas such as health care and teaching.
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College Employment
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If you work for a college or university, you may be able to get your tuition and fees waived. If your spouse or dependents attend the university, they may also take advantage of waived tuition and fees. The waiver policy will depend on the particular college or university who employs you.
Employer
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Your employer can provide you with up to $5,250 toward your educational expenses that is tax free. Certain items cannot be paid for with this money, such as textbooks. You can also not work for several employers to get $5,250 from each employer as this is the total amount you can receive in tax-free income each year. You may have to sign an agreement that you will remain an employee for a period of time after you complete your program. You may also have to maintain a certain grade point average, provide receipts for reimbursement of educational expenses and complete the course of study. You do not necessarily have to work toward a degree to be eligible for employer-paid tuition assistance. Some employers may allow you to take a few courses for professional development.
Savings Plans
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Most states offer savings plans for college for families under Internal Revenue Code 529. Two types of plans are available. One locks in current tuition for future college expenses at an in-state college. The other is a more flexible savings plan, but it does not lock in current tuition rates. Anyone can contribute to prepaid tuition plans, and they are usually exempt from both state and federal taxes. If the family moves out of state, the child can still attend a state college in the state of origin, but he may have to pay the difference in in-state and out-of-state tuition. Some plans will still treat the student as if he were a state resident, however. College savings plans are higher risk but may offer better returns over time than a prepaid college plan. They work much like a 401(k) but have higher contribution amounts and better tax status. Distributions of both types of plans have little impact on a student's financial aid eligibility as they are treated as an asset of the account holder, not of the child.
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