Attending community college is often a much more affordable choice than going to a four-year public or private university. Students and parents can save money both on tuition as well as travel and living expenses, especially if the student lives at home. This can translate into taking out smaller student loans and paying them off sooner after graduation.
Going to a community college also comes with other benefits. Here’s a closer look at why a college-bound student might consider choosing a community college.
What Is a Community College?
A community college, also known as a junior college or two-year college, provides a two-year course of study that either ends with an Associate of Arts (AA) or Associate of Science (AS) degree. Alternatively, it can provide the equivalent to the freshman and sophomore years of a four-year college, since credits can typically be transferred and used towards a bachelor’s degree.
Community colleges are located throughout the U.S. and come in varying sizes. You can find large community colleges with multiple campuses in urban and suburban areas, as well as small community colleges in rural settings.
Many community colleges also have technical and vocational programs with close links to local high schools, community groups, and employers.
Benefits of Attending a Community College
Here’s a look at some of the advantages of going to a community college vs. a four-year college or university.
A Smoother Transition
The transition from high school to college can be challenging, but attending a community college can be easier for some people.
Community college classes are generally smaller and less intimidating. If you prefer smaller class sizes and not having to walk across a large campus daily with thousands (or tens of thousands) of students, then a community college may feel less overwhelming.
Transferring to a four-year college could also be easier for students who have taken classes from a community college.
If you are thinking about using community college as a stepping stone to a four-year school, you may want to find out if the school has a transfer relationship with any four-year colleges, and what GPA and grades are needed to successfully transfer.
If the school doesn’t have a relationship with a college you’re considering, you’ll want to make sure that the credits earned will count at that college.
Flexibility
One reason that many students opt for community college is the flexibility. You can typically take as many classes as you want, and it can vary from semester to semester.
Community colleges also give students the option to enroll when they want, unlike four-year universities, where you typically need to enroll by early fall.
Rolling admissions give students more flexibility in planning their studies, especially if they are working part time or need to save money to pay for tuition and books. The community college website will include key deadlines and requirements, such as transcripts from high school or another college, and any prerequisite classes.
The schedules at community colleges also tend to be more flexible, often allowing a student to work during the day and take classes in the evening.
A Possible Bachelor’s Degree
A growing number of states are allowing some community colleges to offer bachelor’s degree programs. This means students do not always have to transfer to another college after taking classes the first two years. While many of the degrees are focused on a particular industry or skill, community colleges are adding more degree options.
Obtaining a four-year degree at a community college could save a student the time of researching other universities and colleges, transferring credits, having to move, and potentially accruing more student loan debt.
Community colleges are updating the type of degrees offered to meet the needs of the workforce and often include ones in information management, nonprofit management, and health care.
Learn more at A Guide to Choosing the Right College Major
Price Tag
Community college tuition is typically significantly lower than tuition at public and private universities. Some states even offer free community college.
According to the Education Data Initiative, the average cost of tuition at an in-district community college is $3,400 per year. For out-of-state students, the average community college tuition is $8,210.
For comparison, yearly tuition at a public university averages $9,678 (for in-state students) and $27,091(for out-of-state students). The average student at a private college or university spends a total of $55,840 per academic year living on campus, $38,768 of it on tuition and fees.
Even if you don’t live at home while attending community college, you may be able to find housing that is less costly than living in a dorm or an off-campus apartment in a college town. Plus, taking classes at a nearby community college gives you the flexibility to work part time and earn some income you can use to cover your college expenses.
Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.
Financing a Community College Education
You can cover the cost of community college (and potentially two additional years at a traditional college after that) using a combination of savings, help from family, financial aid, and loans.
A great first step is to fill out the Free Application for Federal Student Aid (FAFSA), which will let you know if you are eligible for financial aid, which includes grants, scholarships, work-study, and federal student loans (which may be subsidized or unsubsidized).
You can also help pay for your community college tuition by working at a part- or full-time job while taking classes in the evenings.
If you still have gaps in funding, you may want to look into getting a private student loan. These are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.
Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and Public Service Loan forgiveness — that automatically come with federal student loans.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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10 ways a 529 college savings plan makes college more affordable
If you’re a parent or a future college student wondering how you’ll ever pay for college, the tax-advantaged 529 college savings plan was designed to encourage saving for future education expenses–even for elementary and secondary students. I’m working with Pelican to help educate people on how to save for college, especially with support from your family and friends.
By saving in advance and allocating 529 funds to various investment options, you might not need to take out any student loans to attend college. That can save a considerable amount of interest over the life of a loan.
Here are ten ways a 529 plan makes going to private school, vocational school, or an accredited college or university (in the U.S. or abroad) more affordable.
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A 529 college savings plan allows you to name and save for a future student or beneficiary, such as a child or yourself. You contribute and choose investments from a menu similar to a retirement account.
Unlike a traditional retirement account, you don’t receive a tax break for 529 contributions; however, your investment growth–such as interest, dividends, and capital gains–is tax-free. That allows your balance to grow faster than it could in a taxable brokerage account.
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In addition to tax-free growth, your withdrawals from a 529 plan are not taxed at the federal (and often state) level if you spend them on qualified education expenses, which I’ll cover. That means you don’t lose part of your account to taxes when you’re ready to spend it on qualified education expenses for the beneficiary.
However, a significant downside of a 529 plan is that if you spend it on anything other than qualified education expenses, your account earnings are subject to income tax and a 10% penalty. There are exceptions, such as when the beneficiary receives a scholarship, veteran’s educational assistance, becomes disabled, or dies.
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Most states offer at least one 529 plan; however, the fees and benefits vary, such as the maximum contribution limit and investment options. You typically don’t have to be a state resident to participate in its plan. For instance, you could live in New York, participate in a Florida 529 plan, and use the money to pay for a school in California.
However, some states that collect income tax offer a tax deduction or credit on your state tax return for residents who choose an in-state 529 plan. That could add up to significant savings, depending on where you live. Therefore, the tax benefits of a 529 planopens pdf file vary depending on your home state, how much account growth you receive, and which plan you choose.
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Most 529 plans have high contribution limits, such as more than $200,000 or $300,000 per beneficiary. That allows you to save as little or as much as you need for your or a child’s education expenses from kindergarten through graduate school.
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While a parent-owned 529 plan is a component of federal financial aid calculations, it’s a relatively small amount compared to other accounts. For instance, savings owned by a future student, such as in a UTMA/UGMA custodial account or a Roth IRA, count more toward the Expected Family Contribution for financial aid.
A 529 beneficiary typically isn’t the account owner. That makes having a 529 plan an advantage for families and students who need financial aid to supplement savings because it won’t reduce their potential aid as much as other accounts.
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A 529 plan offers unique gifting features that make the beneficiary more likely to have enough education funds. Platforms like Pelican make it easy to create your 529 and encourage family members and friends to contribute to a student’s plan.
For instance, a child’s grandparents could add funds regularly over many years or make a lump sum contribution, which can be advantageous for their estate planning purposes.
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Everyone can use a 529 plan because there are no restrictions on annual income. Plus, unlike some education savings accounts, there’s no time limit or beneficiary age when you have to spend it. The funds can be used later if a child doesn’t go to college immediately after high school.
In addition, if a child decides not to go to college or doesn’t need all the funds, you can transfer it to a new beneficiary in your family with no taxes or penalty.
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If you have unused 529 funds but no different beneficiary can use them, cashing out is an option. However, as previously mentioned, you’ll owe tax on the earnings portion, plus a 10% penalty.
Another new option created by SECURE 2.0 called the 529-rollover-to-Roth-IRA begins in 2024. If your beneficiary has a Roth IRA, you can move a certain amount of unused 529 funds to it.
However, the 529 must be open for at least 15 years, and the lifetime rollover limit is $35,000 per beneficiary. Plus, any 529 contributions (and their earnings) made within the past five years can’t get transferred to a Roth IRA.
Note that the rollover Roth IRA must be in the beneficiary’s name, not the 529 plan. That means your child must have some amount of earned income to qualify for a Roth IRA in the first place.
For 2023, you can contribute up to $6,500 to a Roth IRA if you’re under 50 and have that much earned income. So, this tax-free rollover benefit only applies to working older children–but may give them an excellent head start on retirement savings.
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I mentioned that 529 funds can also be used for younger students, a relatively new benefit in the Tax Cuts and Jobs Act of 2017. It expanded qualified expenses to include tuition for kindergarten through high school for up to $10,000 per student annually. You can spend it on public, private, or religious school expenses for a child whether they attend college or not.
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Qualified education expenses for your 529 savings include tuition, room and board, books, supplies, required equipment, special needs services, and computer technology. Plus, you can include up to $10,000 for student loan repayments and costs related to registered apprenticeship programs.
However, 529 funds can’t be used to pay for a student’s education loan interest, extracurricular activities (like sports or clubs), transportation, health insurance, or cell phone. If you’re unsure if a fee is 529-qualified, check with your plan provider.
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As you spend 529 funds, keep physical or digital receipts to prove your distributions are equal to or less than the amount of your qualified educational expenses. Your 529 plan provider will send you and the IRS a copy of Form 1099-Qopens pdf file showing your annual distributions. As I mentioned, you typically also must pay an additional 10% penalty on the earnings portion if your distributions exceed your qualified education expenses.
You might pay your qualified expenses first and reimburse yourself from the 529. Be sure your 529 withdrawals and payments occur in the same calendar year; otherwise, a distribution may be considered non-qualified.
Another way to manage qualified expenses is to move money from a 529 to your bank account or authorize a 529 provider to make a payment. Getting funds upfront may be best when you have large bills, such as college tuition, and don’t have enough to cover it in your bank account before getting reimbursed.
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Once you open a 529 plan, set a goal to make regular contributions. Whether you contribute $10 or $1,000 a month, the sooner you get started, the easier it will be for you and your family to pay for college.
Why not invite other people to make 529 gifts and contribute for special events, such as a future student’s birthday or as a holiday gift?
Check out PelicanInvests.com for 529 plan resources and great ways to share your savings goals, encourage family participation, and hopefully make paying for college much easier.
This article originally appeared on Money Girland was syndicated by MediaFeed.org.
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