With the cost of higher education skyrocketing, American families are looking for any financial edge they can when planning for college. By electing to attend higher learning institutions in-state, future college students can save a substantial amount of money on higher education costs. Many families and future college graduates want to know what state has the cheapest in-state tuition.
On average, California provides its residents with the cheapest in-state tuition in 2021. But tuition is only part of the cost of attending an institution of higher learning. The cost of room and board, as well as the cost of books and supplies, must also be considered.
The college savings experts at Sootchy provide clients with a comprehensive approach to saving for higher education. If you want to get started paying for your child’s college tuition, please download our app.
The State with the Cheapest In-State Tuition
California residents enjoy the cheapest in-state tuition in the country. With an average cost of $3,188 per year, students that attend college in-state receive a considerable discount compared to those attending California colleges from out-of-state. Out- of-state students pay an average of $12,565, an amount that’s over four times the in-state average. Here is a list of ten colleges with some of the cheapest in-state tuition in California.
- American River College - $1,104 per year
- Barstow Community College - $1,104 per year
- Cosumnes River College - $1,104 per year
- Folsom Lake College - $1,104 per year
- Sacramento City College - $1,104 per year
- Taft College - $1,104 per year
- Copper Mountain Community College - $1,112 per year
- Woodland Community College - $1,124 per year
- Imperial Valley College - $1,126 per year
- Lassen Community College - $1,127 per year
Yet, tuition costs represent only one portion of the financial burden that makes up higher education rates. The cost of books and supplies for the colleges listed generally costs more than annual tuition. Moreover, on-campus living is not even offered by eight of these colleges, meaning that students will have to either live at home or find housing in a notoriously expensive real estate market. Alternatively, the cost to live on campus at Taft College, for example, is $6,721, while at Lassen Community College, on-campus lodging costs $10,098.
Tuition aside, the cost of attending college in California for in-state residents is high. For instance, the average cost of books and supplies is $1,286. Additionally, the cost of living on campus in California in 2021 is $16,788. For those looking to live off-campus, the cost increases by $3,000 to $19,815. In other words, in-state tuition costs should not be your only cost concern when considering which higher learning institution to save for.
Why In-State Residents Should Consider Using a 529 Plan
529 plans are invaluable savings tools for families looking to invest in future higher education costs. These “tax-advantaged savings plans” come in two different forms. A 529 savings plan allows families to invest money in the market to pay for qualified higher education expenses. In other words, you can invest your money in both mutual and exchange-traded funds. Moreover, your 529 savings plan will be managed by a financial professional, thereby alleviating the pressure of gauging market forces.
Alternatively, a 529 prepaid tuition plan allows families to purchase college credits at current tuition rates. That means that you can pay today’s rates instead of being subject to the inflation of tuition costs that will take place over the next 18 years. Additionally, 529 plans are not subject to federal income taxes. This means that your money can grow tax-free after your initial investment.
The Benefits of Using a 529 Plan
California, for instance, offers residents a 529 savings plan that they can use for eligible higher learning institutions. These plans allow you to contribute up to $15,000 to a 529 account without being subject to a gift tax. Alternatively, you can open a 529 plan with as little investment as $25. Anyone can be named a beneficiary of a 529 plan, including people outside your family. Read our article on 529 college savings plans by state if you would like more information about the rest of the country.
Moreover, when applying for financial aid, the funds of a 529 plan will not considerably detract from the amount of aid your child is eligible for. Although FAFSA counts 529 plan funds as an asset when calculating eligible aid, 529 plans only reduce the amount of aid offered by 5%. In other words, a 529 plan with substantial funds will not be a deterrent to your child receiving adequate financial aid. Considering that other custodial accounts face aid reductions as much as 25%, a 529 plan offers a clear advantage. Once the higher education bills start rolling in, you can withdraw as much as $10,000 a year to help pay for qualified higher education costs.
Here is a brief list of what are classified as qualified higher education costs:
- Tuition
- Fees
- Books
- Supplies such as laptops
It should be noted that 529 prepaid tuition plans cannot be used to pay for room and board, with very few exceptions. To do so, a student must be enrolled in an eligible institution and maintain at least a half-time student status. Additionally, both on- and off-campus lodging can be eligible for consideration as a qualified higher education cost. This requires that the student is actively enrolled in a program that offers a recognized education credit. Given the cost of books and student lodging in California, a 529 savings plan would prove critical in helping students avoid crippling student loan debt.
Start Saving For College Tuition Today
While in-state tuition might be cheap in California, the cost of books, supplies, and student lodging still represents a substantial higher education cost. 529 plans offer families a way to better plan for and eventually pay that cost. Whether you are opening a college fund for your kids or starting a 529 for yourself, download the Sootchy app today.
