The average cost of tuition at private colleges is higher than the median personal income in the United States. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free No, really—the median personal income in the U.S. last year was $33,706. But college tuition averaged $9,970 for in-state students at public universities, $25,620 for out-of-state students, and a jaw-dropping $34,740 for private colleges, according to the College Board. Oh, and that doesn’t include books (which average $1,250/year) or room and board (which average $10,440 for public and $11,890 for private colleges). For a private college, that comes to an average cost of $46,620. Per student. Per year. How the heck are working and middle-class parents supposed to pay for that? One answer is, “They’re not; they should only bother considering public universities.” Another answer is, “With loads of debt.” I don’t like either of those answers, though, so I put together a list of ways that enterprising parents (and their kids) can pay for college without selling a kidney. To give this list even more punching power, I enlisted the help of some personal finance superstars, who you’ll recognize below. 1. Take a deeper look at 529 plans. You’re probably familiar with the fundamentals of a 529 plan; it’s roughly similar to an IRA, but for college tuition instead of retirement. You can contribute money tax-free, up to a contribution limit. “You get a small state income tax deduction, and the appreciation is tax-free when used on education,” explains Jim Wang of Wallet Hacks. In some states, plan holders receive a tax credit, rather than a tax deduction, which is an even bigger win. Basics aside, here are some benefits of a 529 plan you may not be aware of: Multiple Accounts in Multiple States: You can set up accounts in several states, and you don’t have to combine them, either. Others Can Contribute: Your friends and family members can also contribute to your kids’ 529 plans. Depending on the state, they may or may not receive tax benefits, however. Swap Beneficiaries: If one of your children gets a full ride based on their world-class handstand hopscotch skills, you can switch the beneficiary to be another child, grandchild, niece, or second cousin twice removed. For that matter, you can cancel the account at any time, although you may have to pay back taxes on it. Contribute Without Kids: No kids yet? No problem! Because you can add or switch beneficiaries, you can set up an account before you even have children—or the moment you see that plus sign on the pee stick. (Too graphic? Sorry.) 2. Take advantage of the $2,500 tax credit. While we’re talking tax benefits, this is a big one. The American Opportunity Tax Credit offers parents up to $2,500/year, per student, in tax credits. Remember, tax credits come directly off of your tax bill, as opposed to tax deductions which only come off of your taxable income. Not a bad deal, eh? Related: Why a College Degree is Overrated & Unnecessary for Many Americans 3. Route your rental property income towards tuition. Trimming your tax bill is all well and good, but what about ways to cover tuition costs entirely? You hear me talk about rentals all the time—it’s what I teach for a living! But here’s another voice to add to the mix, from family finance expert Greg Johnson of Club Thrifty: “One way we’re planning to pay for our children’s college education is through the money we earn from our two rental properties. Although we also contribute to their 529 college savings accounts, our plan has always been to use part of the rental income to help pay for their college. Imagine you put down $20,000 on a rental property that cash flows $400/month for you ($4,800/year). Buy a second, and your kid’s in-state tuition is covered completely. And when they walk the stage after four years? The rents keep coming, for an extra $9,600/year in retirement income.” Who says you have to choose between saving for college and saving for retirement? 4. Go mortgage-free. Rental properties aren’t the only way real estate can help pay for college. Consider this more conservative approach: “An overlooked and low-risk strategy is to put extra money towards your mortgage, so that it is completely paid off by the time your children start school,” explains Certified Financial Planner Matt Becker of Mom and Dad Money. “You get a guaranteed return at the interest rate of your mortgage, and paying it off frees up significant cash flow that can be used towards college expenses or any other savings needs you have at the time.” Incidentally, this works just as well with your rental properties. Here’s Greg Johnson again: “Even though our kids are still a decade away from going to college, we’ll have both our rental properties paid off within the next 24 months.” Instead of writing the check to your mortgage lender every month, you can write it to Junior’s college. That may not have you leaping into a spontaneous celebration dance, but it’s better than choking down the cost of both, right? 5. Put your kids to work! Cue the obligatory “when I was your age, we actually had to work for what we wanted” commentary. But it’s true—your kids can contribute to their own college education. In fact, if they have some skin in the game, maybe they’ll actually drag themselves out of bed for that 8:00 a.m. class! Consider a strategy that goes like this: You cover a baseline percentage of their tuition (say 50%). For every GPA point above 3.0, you pay a higher percentage of that semester’s tuition. They can borrow student loans to cover their portion, and the better they perform, the faster the debt is paid down. 6. Look into ROTC scholarships. Along similar lines, your child can join the Reserve Officers Training Corps (ROTC) to pay part or all of their way through college. It’s worth noting that ROTC does not guarantee paying for college. They offer generous scholarships, but not every ROTC member receives one. Related: Leasing a Rental to Your College Kid: Smart Financial Move or Potential Disaster? That’s the bad news, but there’s good news, too. Students can sign up for ROTC without committing to military service. They can sign up, apply for ROTC scholarships, and if they don’t receive one, they can withdraw before making the eight-year military commitment. Other advantages include a virtually guaranteed job as an officer after graduating, excellent leadership and on-the-job training, and they don’t necessarily have to serve as active duty. ROTC obligations can often be met by National Guard or Army Reserve service as well. 7. Research grants and private scholarships. Everyone is familiar with academic and athletic scholarships doled out by colleges. But the bucks don’t stop there. Grants are generally need-based aid, provided by either federal, state, or local governments—or even by the college itself. Read more here about state standards for need-based grants. Private scholarships are a different animal. Most often, they are offered by private entities (foundations, nonprofits, for-profit companies, etc.) and are usually merit-based rather than need-based. But here’s the thing: There are thousands of them, and they can be quite niched and obscure. So, even if the college doesn’t offer a scholarship to your handstand hopscotch champion, the Hand-Walking Hopscotch Association of America might. The trick is finding them, of course. Get some help from NextGenVest, which offers free mentoring and help with finding scholarships, and try out Scholly as well. 8. Negotiate with the college. Everything in life is negotiable, right? If your child isn’t offered the keys to the campus with a huge scholarship, challenge the college on it. Remember, the FAFSA application doesn’t include all of your expenses, and it’s based on last year’s tax return, which may not reflect your current finances. Sit down with your child to write a formal appeal letter (from them), making a compelling case that the college should reconsider offering aid. It never hurts to talk about how good a fit your child is for the college (and vice versa), why they want to go there over any other college, despite generous offers of aid from other schools, etc. Also go over how your financial situation is not reflected in your official FAFSA application. 9. Use the good old Roth IRA. “A Roth IRA can be a great way to prioritize retirement while also keeping the money available for college,” continues Matt Becker. “You can withdraw up to the amount you’ve contributed to your Roth IRA at any time, and for any reason, without tax or penalty. And as long as the account has been open for at least five years, you can also withdraw the earnings penalty-free if the money is used for higher education.” Once again, retirement savings and college savings don’t have to be mutually exclusive. You can put the money away today, with tax advantages, and decide later where it’s most needed. If Junior ends up shaming your family forever by declaring he’s going into stand-up comedy, and you publicly disown him, well, you can always just leave the money in your Roth IRA and use it for retirement. The Earlier, the Better Like every other financial goal in life, the earlier you start saving and investing, the better. Let compounding do the heavy lifting for you. Start socking money into a 529 plan. Buy rental properties, and invest the rental income from them into your Roth IRA. Throw a little extra toward your mortgage. The more you invest—and the sooner—the more options you’ll have. When Junior gets to college, you’ll be in a position to help cover part or all of his college costs at your discretion. And with any luck, he’ll get that handstand hopscotch scholarship, and won’t need your help anyway. You can pop the champagne and retire on the spot, since you have so much invested and ready to roll! What creative strategies are you thinking about for your kids’ college education? What have you had success with? Or for that matter, what clever idea ended up crashing and burning on you? Share below!