How to Pay for College?

It’s finals week at most colleges around the country, and parents of graduating high school seniors are facing a huge question: How to pay for college tuition, fees, and books for next fall?  Well, CNN/Money tried to tackle that question this morning, and boy did they get things wrong!

The article starts off highlighting a couple who have an 18yo and 20yo in college … at Georgetown and Tufts!  It then goes on  to mention financial aid … payment plans with the university … childrens’ college savings plans … student loans … PLUS loans (parents take out) … then HELOCs and raiding retirement savings like IRAs!  The very last paragraph in the article really set me off:

The Mathenys were happy to borrow from their home, but they don’t see anything wrong with kids graduating with some debt too. Says Patrick: “Hopefully the loans will give the kids a lesson they wouldn’t learn in a classroom: financial responsibility.”

No, NO NOOOOO!!!!!  By all the gods known to mankind, why don’t these parents simply sell their children into slavery?!?  It would be quicker, and the end result is certainly the same!  What ever happened to parents caring enough for their children to try to help them achieve a better life than the one they are living??

With this kind of debt-slavery garbage floating around as “good advice” it is no wonder people are wondering if student loans will be the next financial meltdownWe have been setting up an entire generation for failure with this kind of advice.   Some pundits have gone so far as to nickname Generation Y “Generation Debt.”  In fact, I think we are setting up the class system for the next couple of generations into those with crushing student loan debt and those who have the financial freedom that little to no debt brings.  I’ll give y’all one guess where my son will end up!

So as an alternative to this bad advice, I offer my “graduate debt free” plan (for the record, I have NO STUDENT LOANS AT ALL!)

  • Go to a community college for the core curriculum.  This is especially good for students who haven’t decided on a major yet!  Community colleges are significantly less expensive than four year universities, and the credits will transfer just fine.
  • Go to college part-time while working a part-time job.  It may take a little longer, but with student loan pay periods getting as long as mortgages, you will gradauate debt free and be able to keep your money much sooner.  As the part-time job, I personally recommend delivering pizza :)
  • Stick to classes within your declared major and/or minor.  I am not opposed to learning for education sake, but with tuition rising as fast as it is you might want to wait until after you land a good job for the “personal enrichment” classes.  I don’t have a choice, as the GI Bill only pays for classes in my major or minor.
  • Save up over the summer and during the semesters to pay your tuition bill in full.  Those payments plans my college offers really aren’t very good terms, and they already bleed you dry with strange fees (”debt service fee” was the one that annoyed me this semester).  For my college, the business office charges almost $100 for the privilege of breaking your payments into 50-25-25% so the registrar doesn’t drop you if you can’t pay in full.
  • If you do need to take student loans, take only what you absolutely need!  Don’t spend the next fifteen years or more paying on something dumb, like a car that will be long gone by the time it is finally paid for (I’m not kidding, some students use their student loans to “trick out” their cars).  Student loans should be used for tuition and books only.
  • For the students who have no idea what they want to be and no way to pay for college, consider military service.  I’ll be the first to admit the military isn’t for everyone, but if you think your child can hack it and has a desire to serve the GI Bill plus the recruitment incentives (Army College Fund in my case) will help out tremendously.  Patrick from CashMoneyLife went the Air Force route and considers it one of his best moves.

These simple steps are not the be-all and end-all of how to graduate from college without student loan debt, but they are certainly a good start and also what I have done (except the loan part).

Your turn, folks: what kind of advice would YOU give for parents wondering how to pay for college without debt?