Money-Saving Ways to Earn a College Degree

Note: This article is part of Morningstar's October 2014 College Planning Report Card special report.

Parents worried about the high cost of a college education have plenty of company. A recent survey by Fidelity found that 79% of families believe the cost of college is becoming prohibitive, and 65% believe that cost factors mean their children will have to compromise on quality when it comes time to picking a school. 

A look at the latest college cost estimates helps explain why there is so much pessimism. Last year, one year of tuition, fees, and room and board at a four-year public college (in-state) averaged $18,391, and at a private four-year school, it averaged $40,917. Grants and scholarships might help cover some of these costs, but many students don't qualify; those who do typically don't get enough aid to cover all of their expenses.

To help meet the challenge of paying for college today, some students are turning to alternative paths to getting a college degree. That's not to say that the traditional college model of spending four (or more) years at one school while living on or near campus doesn't still apply for many--clearly, it does. But for those interested in routes that lead to the same destination--a college degree--at a lower cost, there are several different avenues worth considering. Here are some of them:  

Earn college credit while in high school: One great, inexpensive way to lower college costs is by earning credits before you even enroll. High school students who take advanced placement, or AP, courses and pass the AP exam can earn college credit that may reduce the length of time it takes to earn their degree and, thus, lower their cost of attendance. The AP exam itself costs about $90 per course. More than 30 AP courses are offered, but check with your high school to see what's available. Also, make sure that the college you plan to attend (or colleges you are interest in) accept AP credits for the course.

Earn credit for things you already know: If you have sufficient knowledge about a specific subject area-- from past work experience or independent study, for example--you might be able to get college credit simply by taking a test demonstrating your proficiency. The College Board, which administers SAT and AP exams, also offers a College-Level Examination Program that allows test-takers to earn credit in subjects such as history, literature, math, business, and world languages at a cost of $80 per test. Exam results are accepted at nearly 3,000 colleges with each college determining the test scores required to earn credit and the amount of credit earned.

Take courses online: Many colleges now offer students the chance to take some or all of their courses online. This can be convenient, especially for students who work part time or who plan to live at home or far from campus while enrolled. However, be aware that many colleges charge the same amount whether classes are taken online or in-person, and some charge more. You also may be required to pay technology and other special fees to take courses online. So, while you might save money in terms of living and transportation expenses, saving on tuition is unlikely. Another option is to take massively open online courses (also known as MOOCs) for free through a website such as Coursera or edX. Courses are often taught by instructors from leading universities, and anyone can sign up. You may even be able to get certification confirming you've completed a course. However, many colleges don't offer credit for MOOC courses, so if you go this route, be prepared to do some research ahead of time to find those that do.

Take a slower path while working: There's nothing that says you have to graduate in four years. Perhaps a slower pace--one that allows you to work part time or even full time while enrolled--makes sense for you. Working your way through school may provide you with an opportunity to try out a certain field before determining whether it's the right career path for you. Plus, by bringing in income while you are still in school, you may help reduce the financial strain on you or your family and avoid having to take out loans or borrow as much as you otherwise would. 

Take an accelerated course load: Or perhaps taking more courses in order to graduate quicker works for you. It won't be easy, to be sure, but by taking an extra course per semester and/or taking classes over the summer, you may be able to shave a semester or an entire year off the time it takes you to graduate, potentially saving you tens of thousands of dollars in the process--not to mention the fact that you'll get a head start on your career and start earning money earlier. 

Join the military: The Reserve Officers' Training Corps, or ROTC, is a great option for students looking for a way to make college more affordable while serving their country. In exchange for a scholarship that may cover the full cost of tuition, fees, and other costs for up to four years, those who enroll receive military officer training and must commit to active duty once they graduate, typically for a period of at least four years. For those joining the armed services right out of high school, skills and training acquired in the military, such as management and computer skills, may be transferable toward college credit as outlined by the American Council on Education in this document. 

Start at a 2-year college: One popular strategy to rein in college costs is to spend a year or two at a community or junior college before transferring to a four-year school for a bachelor's degree. The beauty of this approach is that the student ultimately earns a four-year degree that is every bit as useful as if he or she had spent all four years at the school but at a fraction of the cost. For the 2013-14 academic year, average in-state tuition and fees at public two-year colleges was $3,264 versus $8,893 at public four-year colleges, according to the College Board. But if you choose this path, it is imperative that you find out in advance if credits from the two-year school will transfer to any four-year schools you think you may want to attend. Contact each four-year school's admissions office and ask which credits they'll accept and how the process works so you won't encounter any nasty surprises later on. 

Get an associate's degree: Not everyone needs a four-year degree to launch a successful career. An associate's degree may fit the bill, in particular for jobs that require specialized vocational or technical training. And you don't need a college degree to understand that paying for two years of schooling costs a lot less than paying for four. 

Live at home: If attending college close to home, consider living under Mom and Dad's roof for a little while longer. College room-and-board costs typically run in the neighborhood of $10,000 per year, according to the College Board, which is more than tuition at some schools. If living at home while in college sounds unpalatable to you, your parents, or both, just remember that any money you save now is that much less you may need to borrow and pay off later. And the less debt you have once you finish college, the closer you'll be to getting a place of your own--for the long term.