If I’m lost in thought, odds are I’m thinking about how I can hoard a few extra pennies.
I try and monetize my whole day. I want to make money on my drive to work, while I’m brushing my teeth and even as I shop at the grocery store. I even try and find ways to make money while paying bills – and if there is one bill where there is money to be made, it’s with your college tuition.
Put it on a Rewards Card
Don’t use cash or a check this coming college semester. Instead, make sure you are paying with your rewards card. The average cost for public college tuition is $12,804. By using a credit card with 1% back, you’d earn nearly $130 every semester.
Even if you don’t have the money in your wallet to cover tuition, you can still take advantage of this opportunity. Most federal loan programs will refund tuition fees, even after you’ve paid them.
Pay Through a 529 Plan
529 plans are state-run investment plans that allow you to save money for college. Most states provide a tax advantage for participation by allowing you to deduct contributions from your state income taxes. They are a great way to save for college. However, you can also use them to make money while paying for your college tuition.
If you have money to pay your tuition, but have no 529 plan, it’s not too late to benefit. Simply open the account with your tuition payment and then make a withdrawal to pay tuition. By contributing any amount of money for any length of time – even a day – you should be able to claim the tax benefit and pocket the tax savings.
Sell Back Those Textbooks
We all know that trying to sell your books back to the bookstore is a horrible adventure, so try selling back your textbooks online this year. Websites like BookScouter.com will help you compare all of the buyback sites to help you get the best rate for your books. Plus, you won’t have to go through the hassle of standing in the buyback line each year. Andy truthfully, college bookstores seems to buy back fewer and fewer books each semester as many of the textbook companies have begun to churn out new additions on a yearly basis.
Most of these sites also offer prepaid shipping, so there aren’t any fees to send your books back at the end of the semester.
Take a Federal Tax Credit
The American Opportunity tax credit was established in 2008 to help offset some of the high costs of attending college. It provides a reimbursement of up to $2,500 on your tax bill. It is even 40 percent refundable, should you owe no taxes. That translates into a potential to earn $1,000 for paying your tuition bill.
You don’t have to pay your bill out-of-pocket to claim the credit. Utilizing student loans, a 529 or plan or your rewards card will all qualify you to receive the credit.
There are a number of other Federal credits and deductions that may be taken instead of the American Opportunity tax credit. You can directly deduct up to $4,000 in tuition expenses from your taxable income. Also, there is the Lifetime Learning credit which reduces your tax bill by $2,000 to $4,000 so long as tuition is paid.
Use Student Loans and Invest Your College Savings
This option has plenty of risks of potential loss, so please consider cautiously before following this option. Given the low interest cost of government student loans, there is the opportunity to take advantage of interest arbitrage by investing your tuition savings in the stock market.
Government loans are currently set at 3.8 percent and interest is tax deductible, which lowers your interest rate by your tax rate. The stock market traditionally earns far more in capital gains. If you have money to pay your tuition bill, you can make money by putting that money in the stock market and paying your tuition with student loans. If you could earn 7 percent in the stock market and loans cost 3.8 percent, you can earn 3.2 percent in interest by investing, instead of paying your college tuition.
By going to college you stand to earn a much higher starting salary, but there’s no reason why you can’t start earning more money while paying for tuition.