Mellody's Math: Tips on Paying for College

As the price tag for a college education continues to grow higher and higher, parents and students are becoming more and more focused on how to finance it.

According to the College Board, the average cost of a four-year college education has jumped 43 percent at private colleges and 49 percent at public universities since 1992.

Last year alone, the average annual cost of tuition, room and board at a four-year private college rose 5.3 percent to $23,578 (public universities tend to be more affordable at an average cost of $9,000 per year).

But tuition at many universities is increasing even faster — University of Arizona up 39 percent, University of Virginia up 30 percent and the State University of New York up 28 percent.

Compare these increases with the more minimal increase of 2.2 percent in personal income, and college becomes a more difficult endeavor to financially handle.

Knowing the Options Pays Off

Although the costs are high for private universities, according to U.S. News and World Report, only 6 percent of U.S. undergrads actually pay $24,000 or more a year in tuition and fees, and more than 40 percent of undergraduates pay less than $4,000 in tuition annually.

Many parents and students are asking how this is possible. The answer is through hard work and diligent research. Here are some of the ways to ease the burden:

I Promise U: Similar to frequent flier programs which award miles for every purchase, Upromise is a loyalty program where members are credited with a percentage rebate each time they make a purchase at a participating Upromise vendor or with their Upromise credit card.

Depending upon each member's preference, the rebate is then either invested in a 529 plan with a Upromise partner or deposited into a Upromise account where it sits (without any interest gain) until the member decides to make a withdrawal. Through the use of this free service, Upromise estimates that families can save between $13,000 and $20,000 (assuming an annual return of 8 percent over a period of 15 years).

Aim for Honors: Almost every college awards funding to students based on their scholastic performance. In fact, at 331 private schools, about 76 percent of first-year students received a partial academic scholarship this year with the average award being $7,000. According to the National Center for Education Statistics, there are 750,000 scholarships earmarked for qualified students, totaling more than $1.2 billion.