Parent to parent: Managing college expenses

By Jeff Hudson

We all know that the cost of college has risen — a lot — in recent years. And I’ve been scrimping and saving all the while.

Like almost every parent of a UC Davis student, I’ve been on a financial roller coaster since my twin sons finished high school in June 2008. That year, the stock market took a dive, and the college account we’d started years earlier sustained a big hit.

Since I initially had one son at UC Davis and one at community college, I adopted a pay-as-you-go approach, and left the college account alone for a while. And the account largely recovered — though recent market volatility has given me some butterflies.

But we’re not done yet: One son has a year remaining, the other son two — and both attend UC Davis now. I wish that I could say I’ve discovered a magic bullet for coping with the fiscal realities of rising UC tuition in an era of repeated state budget cuts. Instead, I’m finding that a strategy of self-denial helps.

Self-denial

Ordinarily, I get a new car once a decade. Currently, I’m driving a 2001 Honda with 178,000 miles. In better times, I might give that aging but reliable car to my kids and get new wheels for myself. Instead, I’ll drive the faithful Honda myself for a while longer.

I also did an in-state vacation this year and put the saved money toward my sons’ participation in the UC Davis Symphony Orchestra’s upcoming spring tour of Spain.

My sons are also contributing toward the cost of the orchestra trip, buying their textbooks and paying certain other items with money earned playing music at weddings and related projects. At the moment, they aren’t working conventional part-time jobs; we’ve urged them to focus on their studies. They’re also living at home, which is an option in our case, to save on rent.

In some families, relatives are cushioning the blow of rising tuition by providing some short-term support to students who are midway through college and find themselves financially strapped. My sons are getting help with tuition this year from their grandparents. This may or may not be an option for your student; every family has its own expectations and unwritten rules about what is appropriate.

Help along the way

There are some other financial strategies available to you and your student. Key among them is making sure your student completes the Free Application for Federal Student Aid (FAFSA), required for most forms of student financial aid including Cal Grants, loans and work-study. Apply beginning Jan. 1 and before March 2.

UC’s Blue and Gold Opportunity Plan will fully cover UC’s systemwide tuition and fees for California residents whose families earn less than $80,000.

My sons have only received a modest amount of financial aid. Our family income is too high to qualify for much financial aid but still sufficiently low that covering tuition involves some interesting choices.

UC Davis offers a variety of undergraduate scholarships. Some scholarships are not needs based, so family income is not always a factor. Current students need to apply for 2012-13 scholarships before Jan. 10.

Look into the Internal Revenue Service Tax Benefits for Education, to review current credits and deductions. Among them, the American Opportunity Credit is available to individuals with a modified adjusted gross income of up to $80,000 for individuals or $160,000 for married couples filing jointly. It provides a tax credit of up to $2,500 per student for four years of college expenses including tuition and course-related books, supplies and equipment — even computers in come cases.

Quarterly tuition and fee payments can be spread out over three months through UC Davis’ Deferred Payment Plan. The deadline to apply for the plan, which has a $25 fee, is Jan. 3 for the winter quarter.

To help students learn to manage their money, the university offers the online CashCourse with pointers on budgeting, dealing with credit cards, saving on rent and food, and more.