Yesterday, I read an article about a woman who had accumulated $555,000 in student debt. Originally she took out only $250,000, but fees and interest have more than doubled what she owes. You can read more about her cautionary tale here. Her story caused me to reflect on how blessed my children will be to graduate without any debt.
I know that a lot of parents are worried about how they are going to pay for college since tuition is rising at a faster rate than their salaries. Many parents have had financial setbacks in the last decade, but have an annual income that will prevent their children from receiving financial aid. So I thought I would share some steps we have taken to save on college expenses.
First, I should let you know that we have saved for our children’s education. However, we have decided not to use it and instead keep it as an emergency college fund, should our financial situation change. Furthermore, our children do not qualify for any financial aid, are not talented athletes, and lack diversity on their ancestral tree. I told my daughter to look into scholarships for the children of veterans. She came back and said, “I meet all of the requirements except one, my dad is still living”. That put scholarships into perspective for us: We are thankful that our children do not qualify for some of the scholarships that are available.
How to Save Money on College Expenses
1. First, look into the requirements of all of the colleges your child is or may be interested in attending when they first enter high school. This is easily done online. If a college has a requirement for a certain level for foreign language, you can save money and time by meeting that requirement in high school. Also, if your child meets or exceeds their requirements, they are more likely to receive school based scholarships.
2. We allowed our children to begin taking classes at a community college their junior year of high school, instead of taking A.P. classes. We did this because medical schools do not accept A.P. credits, so they would have had to retake any A.P. classes at the university if they wanted to pursue a career in medicine. One perk to taking community college classes while you are in high school, is the tuition is often greatly reduced and in some states it is free.
3. Think outside the box when it comes to scholarships. My daughter accumulated over 24 credits at the community college while in high school, which meant that she qualified for transfer scholarships in addition to the academic scholarships for recent high school graduates. Are there scholarship programs through your work, service club, insurance company, or bank? Be sure to investigate all of the scholarships that your child may be eligible for.
4. Take advantage of local universities. The cost of room and board is much greater than tuition and books. If your child can live with you, it will greatly reduce the expense of college. I know many say think it is uncool to live at home while you are going to college, but it is possible for your child grow and become independent even while living at home. I think learning to stand up to social pressure and make wise financial decisions are as important as the classes they take in college for their future. And it will be easier for your child to follow their dreams, if they don’t have to spend 10 years paying back education loans.
5. Make sure your child knows that they are in college to get an education. Scholarships require that students maintain a certain G.P.A. to continue receiving funds. It is not unreasonable for you to let your child know that if their G.P.A. slips below a certain level that your contribution will stop. My rule is that I will only pay for a class once. If they do not pass or they choose to drop a class past the refund date, they must pay for it the next time they take it.
6. Most universities will help match students to scholarships. Often, you can request to be put on a mailing list when new scholarships become available. There are many scholarships available through companies that are based on a written essay rather than income or grades. If your child balks at writing an essay, tell them to do the math: “You could receive a $1000 scholarship and all you have to do is spend 4 hours writing an essay. Can you find a job that pays $250 an hour?”
7. Look at the terms of scholarships carefully. One of my daughter’s scholarships says it is for 10,000.00, but she can only use $1,000.00 per semester for 5 years. Because she arrived at the university with a year’s worth of classes under her belt, she is on the 3 year plan, so it seemed like she wasn’t going to fully benefit from this scholarship. However, the terms of the scholarship allow her to apply $1000 towards summer classes each year. So she takes one or two easy classes each summer using this scholarship. Not only does this allow her to use more of her allotted scholarship money, but it also reduces the load she must carry in the fall and spring semesters, making it easier to maintain the G.P.A. required to continue receiving this scholarship.
8. Do the math on scholarships. My daughter could easily have received a scholarship for $500.00 per semester to play in the school orchestra. The stipulation was that she would have to show up for rehearsals, play in performances, and practice at home. We figured that she would spend approximately 10 hours per week on these activities. This means she would have earned approximately $3.00 per hour on this scholarship. Now if she had been a music major, she would have been required to participate in the orchestra and the scholarship would go towards an activity that fulfilled a requirement. But she is a BioChem major, those 10 hours would come at the expense of studying for other classes and so she would have had to quit her job tutoring where she worked 10 hours a week and made a little over $10.00 an hour. So accepting that scholarship would have been a net loss of $7.00 per hour.
9. Encourage your child to get to know their professors. This is possible even with a class size of 300 students. Teachers remember students who are interested and do well in their classes. Every job my daughter has held at the university was because a teacher let her know of an opening and recommended her for the position. (At this point most of my daughter’s earnings are going into her own graduate school education fund).
10. Take classes at both a university and a community college. Most of my daughter’s scholarships require her to be enrolled for 12 units at the university. Most semesters she has taken between 12 – 13 units at the university and then taken one lower division class at the community college. She meets the requirements for the scholarships and the one class that we pay for out of pocket is a fraction of the cost of a university class.
11. If you start off at a Community college, start taking classes at the university as soon as you have met the prerequisite classes. My daughter has some friends that are staying at the community college until they complete their A.A. and then transferring to the university. The problem is that with class cut backs, some of the university classes are only offered once a year or every other year. For many majors, upper division classes must be started in your sophomore year to finish in 4 years. So if your child stays at the community college for 2 years to finish their A.A., they might still end up spending 3 years (or 4) at the university completing their degree. Unless your child is in a special program (i.e. nursing, police, fireman, dental hygienist, etc.) or in certain states (like Virginia which has a 2 + 2 program) it does not make sense to tarry at a community college for the A.A.degree.
12. Whenever possible, buy used books from Half.com or Amazon. At the end of the semester, sell them back on Half.com for close to what you paid for them. If we have to buy new books, which sometimes happens with new editions, we go through a discount bookstore like Barnes and Noble. You can find more ways to save money on college text books here.
13. Pack a lunch, a water bottle, and BYO coffee. The cafeterias on college campuses have given way to major food chains who overcharge students for their legal stimulants. It is easy for a college student to blow over $10.00 a day on food on campus. That adds up to $7200 over the course of 4 years! No matter where they live, they can bring a lunch, snacks, and a refillable water bottle to help them save money. This will also help them form a life-long frugal habit.
14. When a company sends my daughter a student loan application, I show it to her and say, “this is what we do with credit card and loan applications” as I send it through the shredder. Technically, I am probably guilty of tampering with mail, but really I think these companies who prey upon young people are committing a crime!
15. Go with your child when they enroll. When my daughter was in line to get her student I.D. card, a bank representative approached her and offered to make her I.D. card a bank card and then offered her a credit card application. All of the students who were by themselves started filling out the applications, all of the students who were accompanied by their parents looked at their parents, who gave a quick shake no, and then politely refused the offer. I know a lot of parents think that since their kids are 18, they need to make their own decisions, but I think college students can benefit from a little guidance on financial matters.
Edited on 9/14 to add 16. Graduate school may be more affordable than you think. We hear how expensive medical school and law school are and tend to think that those high costs apply to all graduate schools, but other graduate programs are much more reasonable! My daughter graduated with a double major and no debt and started looking at graduate schools with the thought that she would use her college fund on grad school. We were surprised to learn that many universities cover tuition, living expenses, and provide a salary for Ph.D. students. Why? Because graduate students serve as graduate assistants and researchers. Surprisingly, it may cost less to skip the Masters degree and apply directly to a Ph.D. program because there are more paid graduate assistant programs for Ph.D. students. It will take longer to get the Ph.D, but it will cost less than getting a Masters degree and then getting a Doctorate degree. However, there are many part-time graduate assistant programs for students working towards their Masters and the university will often wave some of tuition fees and provide insurance with those part-time positions. If your child wants to go to graduate school, start researching the options for their chosen field early so they can make the best decision.
I know that these suggestions will not work for every family, but they are helping us in our goal to have our children graduate from college debt free. And if our kids do not have to touch their college funds, they will not only be debt-free, they will have a nice little nest egg as they start off on their own.
While we have not had to use our kids’ college funds, I still think it is important to set aside money for your kids college education if possible. Just knowing that we have money set aside provides us with inner peace and you can’t put a price tag on that. However, I don’t think you should put money in a college fund at the expense of your retirement fund or instead of paying off your current debt. Every year we hear the hype about how the cost of a college education is increasing and it is easy to react in fear and make a poor financial decision based on the projected costs of college. I have also witnessed friends discount their ability to afford college because they didn’t create a college fund and have turned to education loans without researching all the ways they could save money on college expenses.