Daily Money Tip: Tuition Reward gives points toward college costs

Paying for college tests the financial mettle of every family. So we highlight a program that may help you save and get a tuition discount regardless of whether you qualify for financial aid.

The Tuition Reward Points program offers discounts off the "list price" of college when you make deposits to a qualifying account at a participating institution. Similar to frequent flier miles, you save and you earn points, which add up to dollars off of the college price tag.

This isn't a 529 plan, and these Tuition Rewards Points aren't "hard" dollars, so the savings aren't considered to be a family asset and thus have no effect on the Expected Family Contribution (EFC) calculation. You can start the Tuition Rewards at birth, and can open an account for your child, grandchild, niece, nephew - anyone in your family.

Tuition Rewards grants the account holder 5 percent of the account value in points (a $10,000 savings account would receive 500 points per year; you don't give up any interest, either). You don't lose points if you withdraw money, you just receive fewer points the following year (if you take the account down to $8,000, you receive 400 points, for example, the following year). If done in conjunction with a 529 plan, you'd get 10 percent of the account value in reward points.

Founded by Jim Johnston, former director of admissions and financial aid at the University of Pennsylvania's Wharton School, Tuition Rewards points "aren't actual money," says Johnston. "The colleges contractually agree to simply reduce their tuition."

There is a trade-off in the Tuition Rewards program: Once you enroll, the participating colleges then have access to Johnston's SAGE Scholars database of students for recruitment purposes. (But so do Facebook and Google, and the NSA, for that matter.) Plus, you can always save via a traditional 529 plan.

Who might this help? "The families who need a nudge to save for their kids' education, the colleges who get unlimited access to our kids at no cost and can do e-mail blasts for recruitment events, although they get no information about the kids' families' financial assets," Johnston said. "Third are the financial providers who use the program to distinguish themselves from the competition."

Each Tuition Reward point is equal to a $1 tuition discount. You can earn points for up to one full year's tuition, or 25 percent, of the cost of four years of college. Local institutions participating include Drexel, Duquesne, Holy Family, La Salle, and Moore College of Art. (See a national list at www.tuitionrewards.com.)

Ask your financial adviser, credit unions or savings societies if they offer Tuition Rewards as a free service.

Finally, you don't need to pay for scholarship searches. Any student or high school guidance counselor can do a free search online. Two resources are available at these web sites: www.Finaid.com and www.FAFSA.ed.gov.