Seven Little-Known Ways to Pay for College

(Oct. 8) - Want to cut the cost of college? Look no further than your home computer. Those who opt for the online education route skip the housing, books, student fees, and transportation costs associated with attending a brick and mortar institution. Additionally, recently improved programs by President Obama offer a number of financial Federal Aid options for qualified students of online schools, including:

1. An increase in National Pell Grants to $5,300/year for all students who qualify
2. An increase in Tuition Tax Credits to $2,500/year for families who earn less than $180,000/year
3. Comprehensive improvements to the Federal Family Education Loan Program.

No matter how you choose to study, there are affordable ways to pay for college without breaking the bank, many of which you may have never heard about:

1. Get Federal Grants
"Families who earn under $50,000 a year usually qualify for a Pell Grant," says Lauren Asher, director of the education finance think tank, the Project on Student Debt. "That grant just went up to $5,350 this year." As part of Obama's planned expansion of federal aid, the Pell Grant amount will increase to $5,500 for the 2010-2011 school year.

As an additional benefit, those who will receive a significantly reduced income while they're in school (because they're leaving work to return to school full-time or if they've been laid off) will qualify for more aid simply by letting their aid officer know and filling out a "professional judgment" appeal. "Most people with incomes under $50,000 will not have to answer the questions about assets," says Asher.

2. Government Programs for Single Parents
Robyn Valentine, a communications major at Misericordia University in Dallas, Penn., doesn't worry about splitting her paycheck between rent, tuition, and day care for her 7-year-old daughter. That's because her school helps with all three. As a beneficiary of a federally sponsored program for single parents, Valentine receives free housing, reduced-cost day care, and an $8,000 scholarship each year to help subsidize tuition.

"Without this program, I wouldn't be able to be a full-time student," Valentine says. "I literally left everything I know to be a part of this program. It's absolutely worth it."

3. Support for the Unemployed
"A lot of people don't know there are grants for people changing careers because of the job market," explains Dr. Daniel Green, associate vice president for enrollment at Meredith College in Raleigh, North Carolina. "We need more teachers and more social workers in certain parts of the country, and there's money out there to help."

Funds for laid-off workers come in three forms:

• Grants and free workforce development classes
• Tuition waivers for laid-off workers (offered through individual institutions)
• Student loan forgiveness programs designed for people transitioning into critical needs fields like nursing

4. Full Scholarships for Soldiers
Everyone's heard of the GI Bill, but few know about the Yellow Ribbon benefits that go along with it, To give a boost to veterans who have served at least 90 days of active or reserve service starting on or after September 11, 2001, the Post-9/11 GI Bill provides full tuition, fees, and a partial housing subsidy. Costs that aren't covered by the bill may be subsidized by the schools.

"Each school allots a certain amount of funds for veterans returning to college and the [Veteran's Affairs Department] matches it," says expert Helen Nunn. "Funds and spaces are limited though, so students should contact their financial aid offices immediately."

5. How to Get Major Tax Credits
Even those who do pay for college are eligible to get some of their tuition dollars back through tax benefits. Students who spend $4,000 on qualified educational expenses like tuition, books, and supplies for their first bachelor's or associate degree can write up to $2,500 off of their taxes.

Those pursuing a graduate degree or higher will qualify for a tax credit as well. The Lifetime Learning credit offers those who spend $10,000 on their education up to a $2,000 write-off. Families can deduct up to $2,500 in student loan interest payments from their taxes as well.

6. Serve Others - and Yourself
Students who complete a national service program like AmeriCorps, Teach for America, or the Peace Corps receive an education voucher for up to $10,700 that can only be used to pay back student loans or to pay tuition at an accredited two or four-year institution or vocational school. Nunn adds that schools, civic groups and outside organizations frequently offer private scholarships and grants for service as well. "A lot of our students use AmeriCorps or Peace Corps funds to pay back their student loan," says Nunn.