If you’ve been to college, are in college or are planning to go, you know that a college degree can cost enough to affect your personal finances for years – sometimes for life. We look at some facts and figures about college, tuition, and some of the ways that students pay for their degree.
Funding College: The Numbers
There are three timelines for raising funds to pay for college tuition: before, during and after. Obviously, having some or all funds upfront is nice. It gives you a 3-4 year head start on students who accumulate college debt. But given the cost of college, it’s not an option for everyone. Earning and paying tuition during college costs you time while you’re studying, potentially delaying your degree with distractions — but it’s a fact of life. Paying for college after graduating — i.e., acquiring student debt — is of course the most costly option because it involves interest payments. Of course, if you drop out of college and have loans, those could come due immediately.
We take a look at the numbers for college enrollments, tuition and other related figures.
According to the U.S. Census Bureau’s Sep 2013 report “School Enrollment: 2012,” college enrollment was down in academic year 2012-2013.
- College enrollment fell by nearly 0.5M (467,000) from the previous year earlier.
- The decline was significantly affected by a reduced number of older students (25 and up). This group had 419,000 less enrollments for 2012-13, compared to the under-24 group, which declined by 48,000.
- Total new college enrollment (grad and undergrad) for the years spanning 2006-2011 was 3.2M.
- For 2012, 78 million people (26.4% of the US population, 3 years or older) were enrolled in school (all levels, including pre-college and college, part or full-time).
- There were 19.9M college students, which breaks down to 5.8M in 2-year colleges, 10.3M in 4-year colleges, and 3.8M in grad school.
- 804,000 students aged 50 or older were enrolled in schools at all levels.
Full data tables for the report, broken down by multiple demographic categories, are at http://www.census.gov/hhes/school/data/cps/2012/Tab05.csv.
What College Costs
According to CollegeBoard.org:
- For full-time students in public 4-year colleges and universities, tuition and fees increased about $1,810 (2013 dollars) between 2008-09 ($7,010) and 2012-13 ($8,820) — an increase of 25.8%. The average room and board is $9,350. Grant aid (all sources) and federal education tax credits and deductions total $5,770. Before tax credits and aid, the student cost is $18,170 — and $12,400 after.
- For full-time students in public 2-year schools, tuition and fees increased about $690 (2013 dollars) between 2008-09 ($2,530) and 2012-13 ($3,220) — an increase of 27.3%. The average room and board is $7,480. Grant aid and tax credits total $4,810. Before tax credits and aid, the student cost is $10,700 — and $5,890 after.
Full table for 2003-04 through 2012-13
Public 2-year students:
|Published Tuition and Fees||$2,420||$2,560||$2,610||$2,600||$2,570||$2,530||$2,790||$2,940||$3,070||$3,220|
|Total Grant Aid and Tax Benefits||$2,840||$2,790||$2,660||$2,570||$2,550||$2,930||$4,040||$4,620||$4,750||$4,810|
|Net Tuition and Fees||-$420||-$230||-$50||$30||$20||-$400||-$1,250||-$1,680||-$1,680||-$1,590|
|Published Tuition, Fees, Room, and Board||$9,580||$9,760||$9,750||$10,110||$10,320||$10,090||$10,540||$10,850||$10,660||$10,700|
|Net Tuition, Fees, Room, and Board||$6,740||$6,970||$7,090||$7,540||$7,770||$7,160||$6,500||$6,230||$5,910||$5,890|
Public 4-year students:
|Published Tuition and Fees||$5,900||$6,320||$6,570||$6,660||$6,940||$7,010||$7,670||$8,170||$8,560||$8,820|
|Total Grant Aid + Tax Benefits||$3,980||$4,110||$4,110||$4,210||$4,350||$4,590||$5,730||$6,100||$5,740||$5,770|
|Net Tuition + Fees||$1,920||$2,210||$2,460||$2,450||$2,590||$2,420||$1,940||$2,070||$2,820||$3,050|
|Published Tuition, Fees, Room, and Board||$13,380||$14,030||$14,480||$14,740||$15,200||$15,260||$16,530||$17,330||$17,740||$18,170|
|Net Tuition, Fees, Room, and Board||$9,400||$9,920||$10,370||$10,530||$10,850||$10,670||$10,800||$11,230||$12,000||$12,400|
College Dropout Rates
According to the OECD (Organization for Economic Cooperation and Development), “the United States now has the highest college dropout rate in the industrialized world.” This is per a Harvard Graduate School of Education report, “Pathways to Prosperity Project,” published in 2011, which also provides the following figures:
- The completion rate of students in elite schools and universities is over 90%. That is, they completed a degree within 6 years.
- For just “very selective” 4-year colleges, 75% of students complete a B.A. degree within 6 years.
- Across all 4-year colleges, however, the average “on time” completion rate of students in is just 56%.
- For 2-year schools, the “on time” (3 years) completion rate is 29%.
- For community colleges, less than 30% complete an A.A. degree “on time” (3 years).
- As of 2007, the U.S. ranked #12 in average college completion rate (40.4%) for the 25-34 year old group, with an Associate Degree or higher. Canada was #1 with 55.8%.
Financial strain is the top reason for dropping out of college, which includes having to quit to support a family or not being able to pay for college.
Student Debt: The Numbers
According to the Federal Reserve Bank of New York’s 2013-Q3 Quarterly Report on Household Debt and Credit:
- $1.027 trillion in outstanding student loans as of Sep 30, 2013 — an increase of $33 billion since Q2.
- At the end of 2012-Q3, the outstanding student debt was $956 billion (an increase from Q2 of $42 billion).
- 11.8% is the increase in the 90+ day delinquency rate for 2013-Q3, compared to 11% for 2012-Q2.
17 Ways Students Have Paid for College Tuition
From common to uncommon, here are some ways students have paid for their college tuition.
- Savings — From a paper route as a kid, to after school jobs in high school, to gifts from family, this is the way many students expect to pay for college.
- Infant scholarships — Of course, “scholarships” such as Gerber’s Gerberlife “Grow-Up Plan” have to be set up when you’re 14 or under, and by your parents. At present, coverage is from $5,000 up to $50,000.
- College scholarships and grants — If a student qualifies and maintain requirements, this is a nice debt-free source of tuition funds.
- College loan — Not everyone qualifies, but this is another common source of tuition funds. Only problem is, when you graduate, the interest rate kicks in. Unless of course you have a loan whose interest rate is active from day one.
- Free financial aid — Between government programs and oddball qualifications for obscure college grants, there are a lot options — too many to list here.
- Contests — On occasion, manufacturers, radio and TV stations, and web sites have been known to hold contests to pay for some or all of tuition costs for winners. Occasionally colleges have contests, such as Cardiff University in the U.K., which launched a contest in 2011 for free college tuition for life.
- Parents / relatives — If a student doesn’t qualify for loans or financial aid because their parents earn too much yearly, that’s when it’s time to ask parents or relatives for a college loan.
- Bootstrapping — Getting creative with a career schedule. Some students take courses by day and work by night, or vice versa if courses allow. Others take mini-breaks, taking courses when they can afford to pay, working and saving when they cannot. Caveat: Some colleges have a “stale” clause that requires repeating certain courses if a degree takes too long to complete.
- Tutoring — There are always a few students who need help with studies, and a number of web sites let students offer tutoring for a feee.
- Being a teaching assistant — This is typically a role for students in grad programs, although it’s not unheard of at smaller colleges for undergrads. Caveat: Most schools have a rule that full-time students are typically allowed around 20hrs max of on-campus work.
- Doing creative gigs — Online writing and submitting photos to micro-stock photography sites are some ways to extra money during study breaks. Success rates vary. Another possibility for some students is building small web sites for local businesses.
- Creating a student-run business. House painting and renovating is fairly common. You make money for tuition and help other students with part-time employment.
- Purchasing an income property. It’s not unknown for students to take a college loan exceeding their costs, add in some savings, then purchase real estate near the school, renting out some of the rooms. This can reduce a student’s yearly costs, as well as bring in some income. Alternately, subleasing a rental property that a student lives can achieve a similar result with less investment and headaches. With mobile apps such as airbnb.com, it’s even easier to find casual renters for properties elsewhere in the country, if you do not necessarily want/ need tenants all year. See the section “Leveraging Airbnb.com for Tuition,” below, for more details.
- Flipping real estate properties. Some students go one step further by buying a rundown property, using a college painting/ reno business to fix it up on the cheap, then selling it for a property. Caveat: Some states have restrictions on how quickly you can “flip” a property (i.e., the buy, fix, sell duration) without actually living there for some time.
- Personal crowd funding — If you feel uncomfortable asking friends and family for money, how about total strangers? A few dozen web sites exist where people can start fund-raising campaigns for charitable, business and personal uses. Students to be are raising funds for college tuition. Graduates are getting funds to pay off student debt. Note that not all crowdfunding sites all personal campaigns. See the section “More on Crowd Funding,” below, for more details.
- Getting a full-time public service job after graduation can qualify employees for a PSLF (Public Service Loan Forgiveness) on their college debt balance on a William D. Ford Direct Loan (only), provided at least “120 on-time, full, scheduled monthly payments on your Direct Loans” have been made, all of which must be after Oct 1, 2007. More details at the Federal Student Aid site.
- Prostitution – We don’t advocate this in the slightest, but it has been known to happen, where students keep a select clientele that sometimes includes faculty, and using the proceeds to pay for some or all of college tuition.
Leveraging Airbnb.com for Tuition
Articles at NeedWant.com document the logistics of how two non-students have used airbnb.com to manage rental properties remotely. Students could follow similar plans, possibly in joint ownership with other students they trust as business partners, to raise some tuition funds.
Jon Wheatley documented his purchase of an apartment in Las Vegas:
- $40K — purchase price.
- $10K — cost of redecorating and furnishings.
- $19,613 — rental revenue from Nov 2012 – Nov 2013.
- $1,634 — average monthly revenue.
- $1,134 — average monthly profit, after cleaning, bills and other expenses are factored in.
- $13,608 — total yearly profit before taxes.
- 4 years or less — time needed to pay off the apartment.
More details on Wheatley’s experience are at NeedWant.com.
Marshall Haas took a different approach, re-renting multiple properties that he rented in 4 locations:
- 4 properties in total — 2 in Santiago, Chile; 1 in St. Louis, Missouri; and 1 in Victoria, British Columbia (Canada) — spread out over a few years, depending on where his business startup was located or where he was working.
- Haas’ 1st Santiago unit was a 2 bdrm, 1 bath, and he used one bdrm, rented the other. Stats: $700/m rent; $40/night Airbnb.com rate; 35% fill rate; $425/m revenue — making his rent only $275/m. Total listing time: approximately 60 days.
- The 2nd Santiago unit was a 2-story loft with 1 bdrm, 1 bath. Stats: $900/m rent; $75/night; 40% fill rate; $900/m revenue — for a profit of $0. Total listing time: approximately 30 days.
- Apartment #3 in St. Louis was a 2 bdrm, 2 bath loft. Stats: $1,300/m rent; $120/night; 55% fill rate; $1,920 monthly revenue — for a profit of $420 after cleaning, rent, utilities. Total listing time: approximately 100 days.
- Apartment #4 in Victoria was a bachelor unit (no bdrm), 1 bath. Stats: $1,050/m rent; $99/night; 75% fill rate; $2,387 monthly revenue — for a profit of $1,037 after expenses. Total listing time: approximately 120 days as of Nov 24, 2013 (still listing).
More details on Haas’ experience are at NeedWant.com.
More on Crowd Funding
Crowd funding makes it relatively easy to ask strangers to invest you — at least easier for most people than asking friends and family.
The success for a campaigner in this sort of approach lies in how a campaign is marketed, targeting the right investors, being candid about how you’ll use funds (and sometimes giving updates about fund use), and staying within the rules of a given crowdfunding site. Sites also have to adhere to SEC (U.S. Securities and Exchange Commission) rules.
The SEC has gotten involved in the past few years because of the boom in investment on crowdfunding sites. Here are some quick details.
- There are 2 types of crowdfunding platforms: reward-based and investment-based.
- On reward-based sites, donors get a reward (physical, digital or a service) for their contributor.
- On investment-based sites, contributors get equity or interest.
- Figures below are based on a research report covering 8 reward-based sites and 6 investment based sites, only. There are in fact many crowdfunding sites not covered in these figures.
- As per the report, the crowdfunding market went from about $32M in 2010 to $123M in 2011 — close to quadrupling.
- Over 31,000 crowdfunding projects were listed in 2011 — an increase from nearly 12,000 in 2010.
- $102M was raised in 2011 on rewards-based platforms – a 266% increase from 2010 in total donations. (Of projects, that received full funding, the increase is 263%, meaning more projects are hitting or exceeding their campaign target.)
- $20.5M was raised in 2011 on investment-based platforms.
9 Crowd Funding Sites for Students and Grads
By no means an exhaustive list, here are a few crowd funding sites that either allow for the raising of funds for tuition or paying off student debt, or might be an opportunity to fund a revenue-generating project that will help pay for the cost of college.
- FundAnything.com allows you to fund raise for pretty much anything. They have an Education category which has campaigns for both raising tuition and paying off student debt.
- Gofundme.com allows participants to raise funds for a number of purposes, including college tuition or even just books.
- Instagrad.com focuses on parents who want to raise funds for their children’s college tuition in the form of gifts – especially during special occasions such as birthdays, performances, sports playoffs – and keep contributors in the loop about the child’s goings-on with updates and photos.
- ProdigyNetwork.com is for those who want to invest in real estate but don’t necessarily want to manage their own property. Prodigy Network allows crowd funding off business properties in their portfolio (currently only in New York City and Bogota, Columbia). Once a property is fully funded, built and operating, investors get semi-annual distributions from rental income. While this isn’t the same as buying a property to rent out on AirBnB.com, investment in a property on ProdigyNetwork could help pay some tuition costs — without the headaches of property management.
- Razoo.com allows people to start crowdfunding campaigns for personal purposes, including paying back college loans.
- ScholarshipProz.com is another crowdfunding site targeted to students looking to raise money for college.
- Upstart.com. Back in 1997, musician David Bowie incorporated himself and sold “Bowie Bonds” to get money upfront from investors, in return for giving up his royalties on 25 albums (recorded before 1990) for 10 years hence. While the average graduating student is not going to be a David Bowie with a diverse income-generating musical portfolio, Upstart.com lets you get crowdfunding now in return for giving up a set percentage of your income over 5 or 10 years. Upstart.com verifies identities and academic credentials, then uses a proprietary statistical model to determine what their earning potential is. The results determine how much funding an “Upstart” (applicant) can get for each 1% of income, for a certain number of years. The maximum allowed share is 7% of income.
- Youvegotfunds.com is another crowd funding site where college grads have raised money to pay off their student debt.
- Zerobound.com takes a different approach to paying off college loans. Participants run fund-raising campaigns to raise money for student debt in exchange for doing volunteer work. Co-founder Kelli Space graduated in 2009 with $200K in student loan debt, got crowd funding elsewhere for $13K, then later started ZeroBound with three friends.
Those are just a few of a few dozen crowdfunding sites. Want info on more?
- Inc.com has a great flowchart covering 22 crowdfunding sites. Follow the yes/ no paths for each question in succession, and the flowchart gives you a suggested crowdfunding site to use. None of the sites listed are for getting personally funded, but if you’re trying to fund a business startup or project, you might find a few options.
- HongKiat.com has a list of 10 crowdfunding sites, some of which are not in the Inc.com flowchart, and a few of which lean towards creative projects.
- Wikipedia.org has a comprehensive list of crowdfunding sites, broken down into categories.
Information for this article was collected from the following pages and web sites: