College Tuition “Hacks”: 9 Alternative Ways to Pay for Schooling

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The average cost of tuition at private colleges is higher than the median personal income in the United States.

No, really—the median personal income in the U.S. last year was $31,099. But college tuition averaged $9,650 for in-state students at public universities, $24,930 for out-of-state students, and a jaw-dropping $33,480 for private colleges.

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 collages). 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.)

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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.

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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!

We’re republishing this article to help out our newer readers.

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!

About Author

G. Brian Davis

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their living expenses. Through his company at, he offers free rental tools such as a rental income calculator, free landlord software (including a free online rental application and tenant screening), and free masterclasses on rental investing and passive income. He’s been obsessed with early retirement since the early 2000s (before it was “a thing”). Besides owning dozens of properties over nearly two decades, Brian has written as a real estate and personal finance expert for publishers including Money Crashers, RETipster, Think Save Retire, 1500 Days, Lending Home, Coach Carson, and countless others.


    • Actually I thought the article did a nice job of touching on several ways that parents can invest flexibly for both retirement and college. No one says parents have to pay for their kids’ college bills. Parents can make that decision based on their own financial reality, and invest in a way that leaves them the flexibility to choose how best to use these sorts of tax-advantaged investments.

  1. Jerry W.

    Actually Brian cannot change the price of college tuition. What he has done is show folks ways that they can provide money for college for their children without going broke and by getting the best tax advantages available. Many folks make college a priority for their children and this article helps them do it in the most efficient fashion. It also helps in showing ways to start even before the children are born. The reality is that education has gotten very expensive, anything that helps pay for it is pretty important. Thank you Brian for taking the time to put this together.

  2. This was a disappointing article. The title is almost a click-bait with suggestions that are actually not alternatives at all. Your example of “alternative” is basically saying rather than of paying with a dollar bill, pay with 4 quarters instead. You don’t get into the fundamental issue of college tuition and offer any value add ways to pay.

    • G. Brian Davis

      The fundamental issue of college tuition is how to either pay for it or reduce it. But maybe there’s a “free lunch” article floating around the internet somewhere, claiming that you can get college for free if you just lend some money to a Nigerian prince or something. Let me know if you find it and it’s useful 🙂

    • Sam your criticism is a little silly. It’s like those hipsters who say someone is not “alternative” enough to be a hipster.
      I for one didn’t come in expecting the equivalent of a stock tip on free colleges. I expect ideas on BiggerPockets, and that’s what Brian gave.

  3. Chris Pung

    I agree with Sam P. that this is kind of click-bait. An article on common college finance topics is not a “hack”. Many of the suggestions are really just “get more income” – by buying a rental property and investing your savings, etc.

    A real hack would be to have your kids buy a house in their name instead of staying in the dorms. They can then take advantage of the low downpayment first-time homebuyers loans. In certain locations it might be cheaper than dorms, thus reducing the actual cost of the college experience. Whether or not the house is cheaper than the dorms, you still have the advantage of having an asset (a real property) versus a liability (renting the dorm room). It can also do wonders for establishing the youngster’s credit. And if the house is big enough, the student can house hack it and rent out rooms to his fellow students or other renters, thus creating an income stream to further offset the cost of college.

    I would love to see a well-researched article discussing using student loans to finance the downpayment on a student’s first house (or even a small apartment building). I believe that the parents can co-sign on the note to buy their student’s house and yet still get the first-time homebuyers loans; this would be great to research also.

    Has anyone out there got any college hacks to share?

    • We considered this and it would be considered an asset for the child and result in a decrease in financial aid. If the parent purchases the property and lets the child rent it, then the child can benefit from the rental income of any roommates and still get financial aid while the parents get to deduct the interest from the mortgage payments. The tax write off benefits are more useful for the parent than for a college student that is usually still considered a dependent.

  4. Dillard Stone

    Best hack ever: Fidelity Investments has credit cards that kick a 2% rebate into the Fidelity account of your choice. For years, everything, from vacations to morning coffee, was put on those cards, and the rebates went into a Fidelity 529. Bottom line: Between market growth and credit card rebates, over 18 years of contributing, $18,000 of our money became $80,000 in a Fidelity 529. I works best if you can do what I did, or if you travel a lot for business and get reimbursed, or if you own your own business. But even if none of those apply, it’s still free money for whatever you can out on the cards. Barclay has a card tied to Upromise, but the Fidelity rebate is better.

  5. Some of the comments above are just crazy. Suggesting that Brian somehow has control over college tuition?

    College tuition is unbelievably expensive, and as parents we should be looking for as many tactics as possible to slim that bill down, and ways to cover whatever costs can’t be eliminated. Which is exactly what this is about.

    Thanks for a great article Brian!

  6. Neil Schlimgen

    Great article Brian. I did not think that it was click bait as it was exactly what I expected. The title was not “Should parents pay for their children’s college?” The debate on whether or not a student should attend college is a personal desicion that is up to the student and their parents. If someone wants to pay for their child’s tuition, by all means they can use their money however it pleases them. I was fortunate enough to pay for a bachelor’s degree without loans through scholarships and hard work, and am very glad I decided to attend school despite the rising costs. The tips about kids getting “skin in the game” and having a GPA requirement are very important. I have seen too many friends not care about their education because it was handed to them.

    Keep up the great articles!

  7. Stan Searcy

    Here are a couple more ideas to consider:
    Talk to the college you think will be the most likely location for your child years in advance of their attendance and find out if you can prepay their tuition. Some may allow you to pay at today’s rate even though your child may not be there for 8-10 years. Would that payment be deductible now?

    Buy a house or duplex today near the possible school location. In fact, buy one at each of the three or four possible schools. ( I have heard of one family who pushed the limits of reasonable by buying houses in several states planning to get a head start on claiming their child was a resident of that state so as to qualify for in state tuition status.)

    Hire your child in your business, get the business expense of paying as a deduction and have his/her income go into a plan for the future.

    My kids learned at garage sales to make investments with very limited money by buying things under market and either selling for a profit or holding for some time. Comic books, marbles, and doll houses can all be bought and owned by your kids. We used to sit in the car before going into a sale and practice what negotiation technique they planned to use. Selling a doll house purchased for $40 at age 12, fixed and improved, when sold for $460 paid for a lot of books.

    You can save a lot of money if your kids go to a good solid junior college for one or two years. People look at the final degree from the four year school and seem to ignore the undergraduate work done elsewhere. Just be sure that all the credits transfer to the four year institution. To really save take more units in those 2 years.

    Enjoyed your article and hope the comments start several conversation in people’s home.

  8. We did a 529 for my son and switched over to a Coverdell, after contributing for 13years, it still only covered the first two full years of school -tuition, dorm and books. (He also works part-time, so that helps as well). So for our daughter’s schooling and his last 2 years we have to get creative. We are rolling over some of the funds in our daughter’s ESA to a self-directed ESA and will use some of the funds to invest in tax lien certificates, bidding on the one’s least likely to get redeemed. Flip and repeat one or two for quick cash flow and buy and hold a few for the monthly cash flow.

  9. Joshua Huston

    I am graduating in April of this year debt-free, with no help from my parents besides an old truck donated as a investment to get grandchildren (somewhat hard to date with transportation) using several of these strategies. I worked in high school and college, went to a lower cost but still quality institution (BYU) and I obtained an ROTC scholarship out of high school and will be serving out my commitment as an infantry officer in the National Guard. Another powerful option is community college for the first two years.

    Even more importantly, it is important to realize that very few 18 year olds truly know what they want to do in life. I think very soon we are going to realize that it might be a better idea learning what that is while getting paid 15,000 a year and then attending college rather than figuring it out over 7 meandering years while paying 20,000 a year.

  10. Jinhee Park

    Going to a cheap community college for the first 2 years and transferring to a 4-year university as a junior and getting a full scholarship such as Jack Kent Cooke Foundation transfer scholarship is the way to go. Community college tuition is only about $24/unit. So the tuition for 1year ends up being less than $1000 in community college. You can apply for Federal Pell grants and State grants to fully cover the tuition and living expenses.

  11. John Wallace

    We decided to only reimburse our children for good grades. They pay all costs up front (this can include scholarships and grants – but no loans) and at the end of the semester we reimburse them 80% for an A, 70% for a B, 60% for a C, and nothing for any lower grades. Now that they have ‘skin in the game,’ it’s amazing how much more dedicated they are to studying than they were in high school. They give us progress reports after every test or graded assignment just to let us know we will owe them soon. Lol. We’re about to have 3 kids in college and I did pick up some good ideas from the post and comments to help us more easily cash-flow all the reimbursements.

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