Whats the best way to pay for college tuition

[MrsPete]

Our state has had a big push the past few years to get kids out of college in 4 years. Too many were taking 5 and 6 years and if you're getting loans that number was just increasing.

Interesting -- and a way of "saving students from themselves"; that is, a way of protecting students who are inclined to over-borrow.

... If you simply look at the scholarship limits that the NCAA and NAIA put on the schools you would realize that there are only 6-12 scholarships to spread between 30-40+ athletes (in baseball). ALL of these coaches stressed to the parents that scholarship money (specifically baseball) is very hard to come by and that "full ride" baseball scholarships are almost unheard of ...

I know you're right ... but all too many parents hear that message and say to themselves, "Yes, but MY child is different, special, genuinely talented." You can excuse students for thinking that way -- they're still kids -- but parents ought to know how to listen.

If they have big aspirations like a doctor, lawyer, etc then go ahead. If they are undecided, I'd strongly suggest staying home and getting as many credits as possible at a local CC, then make the decision.

More than aspirations -- before you borrow that way, you'd better be sure your student actually has the ability /grade track record to prove he's likely to be successful in one of those difficult /big money majors. LOTS of my students claim they intend to go into these high-paying careers, and I want to say, "Uh, you have a 2.1 GPA and have skipped my class 8 times -- you are not likely to be successful in those majors."

 

[a1tinkfans]

A family member did a HELOC for their daughter.. like you they wanted her to be debt free or as close as possible. His loan was called!a major bank... no joke, with a house on the line. It was not a situation of missed payments or anything negative. It was re-structuring per them ...and it was in Very fine print. Read/Tread carefully.

I strongly believe No parent should risk their current or future financial stability / retirement to fund a students education. It’s just not a sound financial idea.
They will have years to pay it back.

My sons undergrad was debt free, Full merit scholarship. Grad school ..loans are in play. We intend to help, but will not be taking on that financial burden.
Imho, The loan rates are ridiculously high and the fees are atrocious! His personal decision. I have no doubt he ll succeed and
Reach his goal..
Best of luck to you and your student.

 

[ClapYourHands]

A family member did a HELOC for their daughter.. like you they wanted her to be debt free or as close as possible. His loan was called!a major bank... no joke, with a house on the line. It was not a situation of missed payments or anything negative. It was re-structuring per them ...and it was in Very fine print. Read/Tread carefully.

I strongly believe No parent should risk their current or future financial stability / retirement to fund a students education. It’s just not a sound financial idea.
They will have years to pay it back.

My sons undergrad was debt free, Full merit scholarship. Grad school ..loans are in play. We intend to help, but will not be taking on that financial burden.
Imho, The loan rates are ridiculously high and the fees are atrocious! His personal decision. I have no doubt he ll succeed and
Reach his goal..
Best of luck to you and your student.

I agree that taking care of one's own financial security is more important than paying for a child's college all out. Our youngest was born when I was in my late 30s and DH was over 40. When she is 18, we won't have that many working years left to make up savings we take out for her education. I absolutely intend to help her financially, but she will have decades of productive working years ahead of her to pay off any loans she takes out. I will not imperil my retirement to allow my children to graduate debt free. Her older brothers will likewise be expected to take on some of the financial responsibility for their education.

Personally, I think having a child partially responsible for the cost helps them have some "skin in the game," so to speak, and take the education part seriously. I skipped one class my freshman year because I was giddy at the freedom to do so. Then I thought, "I'm paying how much money NOT to go to class? That's crazy!" and I didn't skip again.

I would rather "burden" my children with college loans than burden them with my financial insecurity in old age.

 

[sk!mom]

I agree that taking care of one's own financial security is more important than paying for a child's college all out. Our youngest was born when I was in my late 30s and DH was over 40. When she is 18, we won't have that many working years left to make up savings we take out for her education. I absolutely intend to help her financially, but she will have decades of productive working years ahead of her to pay off any loans she takes out. I will not imperil my retirement to allow my children to graduate debt free. Her older brothers will likewise be expected to take on some of the financial responsibility for their education.

Personally, I think having a child partially responsible for the cost helps them have some "skin in the game," so to speak, and take the education part seriously. I skipped one class my freshman year because I was giddy at the freedom to do so. Then I thought, "I'm paying how much money NOT to go to class? That's crazy!" and I didn't skip again.

I would rather "burden" my children with college loans than burden them with my financial insecurity in old age.

We were mid thirties when our youngest was born which Was going to put us at 56 at college graduation if she finished in 4 years. We completely agreed that we wouldn’t want to risk our retirement for college but she was also born as we were coming into our highest earning years. Therefore we paid off our mortgage to free up cash flow and saved aggressively to have a healthy college fund.

I disagree, with the “skin in the game” argument especially with regard to taking out loans. Most 18 year olds have very little idea of the future impact of loans taken today. They just lack that life experience. DD’s “skin in the game” for college was working to cover her own gas/spending money. We had school and barebones living covered. If she wanted to have the funds for going out and Spring Break trips, she would need to earn it. Which she did.

 

[MrsPete]

His loan was called!a major bank... no joke, with a house on the line.

Putting your house up for collateral is insane.

I strongly believe No parent should risk their current or future financial stability / retirement to fund a students education. It’s just not a sound financial idea.
They will have years to pay it back.

I agree that parents shouldn't risk their own financial future to put their children though college, but -- rather than borrow -- the right option is to opt for a less expensive education: start with community college, choose a state school (which, in my state, are mostly stronger academically than then private schools anyway), go part-time, join military reserves, whatever. Start with the idea that borrowing is unacceptable, and work from there -- choices do exist.

I disagree, with the “skin in the game” argument especially with regard to taking out loans. Most 18 year olds have very little idea of the future impact of loans taken today. They just lack that life experience.

I agree.

I'm not at all opposed to students paying a portion of their education -- and often it's a necessity; experience in the work world is a good thing, but I don't at all agree with the "skin in the game to make them appreciate" concept. The average high school senior knows that $50,000 is more than $20,000 but doesn't have an idea of just how difficult either one is to pay back. He or she doesn't understand whether a $30,000 starting salary would be enough to live in an apartment with a roommate or buy a nice house. So how does promising to pay back a vague number in the distant future help a student appreciate anything today?

Furthermore, the 18-year old you send away to college is the same one who's been living in your house for 18 years. You already know whether he's emotionally ready for college or whether he's still mentally in middle school. You already know whether he is appreciative of what he's given /makes the most of opportunities. Just don't lie to yourself about your own student's readiness.

Instead, I suggest you put your kids "on the semester plan". That is, you choose an educational path together, and you pay whatever portion you've agreed for the first semester. Once you see good grades /progression towards graduation in the first semester, then you pay for the second semester. If you don't see what you expected to see, it's time to circle the wagons and make a new plan. That might mean leaving dorm life and coming home to commute to community college or a nearby university. But make this crystal clear up front. Natural consequences: if you couldn't handle the classes in your first choice, it's time to make another choice. Using this concept, your student cannot waste more than a single semester's costs.

 

[clutter]

Thanks so much for the detailed advice crisi! Great stuff. I have a question for those of you who have recently gone through the college admissions process. For anyone who has a student that earned merit aid, how much did class rank play into the awarding of any particular reward? I ask because DS16 is debating the IB program which he has been invited to join. We have been learning as much about it as we can and know that earning the IB diploma ‘looks good’ on a college application. But in speaking with parents whose students have graduated IB and gone on to college I have heard from some that their child, in their opinion, lost out on potential merit money because their class ranking was not as high as it could have been due to the rigor of the IB program. (That word is used a lot to describe IB – rigorous! I’m already sick of hearing it.) I know this can play into weighted and unweighted GPAs, how the HS determines these, and how any particular college’s admissions office views them as well. I just thought that was an interesting take on viewing IB and whether the entire program was worth it or not.

Technically this question does relate to how to pay for college!

The only one of my dd's friends that did the full IB went on academic probation her first semester in an engineering program. While I suspect it had more to do with the dizzying amount of freedom rotfl, I have heard that the IB tends to be a better fir for kids going on to a Liberal Arts college.

As for paying for college, I had always tried to live below my means, but during high school, I really cut back. I increased my deposit to my outside savings account each year. Although I allowed myself to spend some of it on things that I would not be spending during the college years (such as vacation among other things), it made me look at prioritizing my expenditures. I eventually increased savings enough to be able to pay for undergrad without even hitting an account I'd put aside for that purpose. Once she moved off campus, she was able to save even more money - living off campus for a year cost less (she has simple tastes) than living on campus for two semesters!

Dd ended up going out of state to one of the schools that has a generous out of state merit scholarship, which put her at about the same cost as state schools. Like Crisi mentioned, you look at major and cost with anticipated (automatic) merit. It just didn't make sense to fall in love with a school that was not going to work without a significant amount of merit money. Along those lines, since dd applied all over the country, we ended up not touring schools until after acceptances came in. She did a summer camp at one and loved it. Toured one other, fell in love with it and she was done. While it cost a couple hundred dollars in applications, applying before seeing a school saved thousands in travel costs.

Funny, this will all start again soon, as dd is looking at graduate programs. Thankfully, that's all on her - her schooling will be funded by research, so I should be done!

 

[sk!mom]

As for paying for college, I had always tried to live below my means, but during high school, I really cut back. I increased my deposit to my outside savings account each year. Although I allowed myself to spend some of it on things that I would not be spending during the college years (such as vacation among other things), it made me look at prioritizing my expenditures. I eventually increased savings enough to be able to pay for undergrad without even hitting an account I'd put aside for that purpose. Once she moved off campus, she was able to save even more money - living off campus for a year cost less (she has simple tastes) than living on campus for two semesters!

This is very similar to what we did. We had saved aggressively but found that with belt tightening and the mortgage being gone, we were able to cash flow college.

DD's college choice was driven by major being available and then looking at merit available. Our state has auto admit rules for state public universities for those in the top 7-10% of their high school class. DD met that requirement so she knew she would be admitted wherever she applied but the top tier gives little to no merit aid. She chose a tier down but still well respected school where her stats made her someone the university wanted.

 

[CAQDaddy]

Not up on current NCAA scholarship rules. This was in 2004.

The scholarship limits haven't had significant changes in decades.

 

[tvguy]

The scholarship limits haven't had significant changes in decades.

Just know what they said, right or wrong.

 

[CAQDaddy]

Just know what they said, right or wrong.

I believe you. I'm just astonished that coaches would promote such misinformation and I'm equally astonished that parents whose children are
athletes wouldn't do a bit of research on scholarship limits and such.
The point I was making is that athletics aren't typically a good "plan" for paying for college. Concentration on studies as well as financial planning always play a part. That being said, two of my children were NCAA scholarship athletes We didn't plan it, they just happened to be gifted.

 

[floridafam]

Class rank really didn’t factor in for DS when it came to merit aid. He was second in his class and he received more merit aid than the valedictorian.

His merit aid was mostly a result of being a National Merit finalist. He did AP and IB and received credit for both at his particular university. He took the PSAT for practice in 9th and 10th grade and then the official PSAT in his junior year.

His friends at a different high school in the same district didn't do IB and they still went to Harvard, Duke, MIT, etc. There's no one magic formula. Try not to worry about class rank. We told our kids to work hard and be true to themselves and not do anything just for the sake of putting it on a college resume.

Most kids end up where they are really happy. Neither DS or DD got into their dream schools but they couldn't be happier. I also would never suggest they go to a particular school just because it's the least amount of money. That's just one factor that should be considered.

 

[tvguy]

I believe you. I'm just astonished that coaches would promote such misinformation and I'm equally astonished that parents whose children are
athletes wouldn't do a bit of research on scholarship limits and such.
The point I was making is that athletics aren't typically a good "plan" for paying for college. Concentration on studies as well as financial planning always play a part. That being said, two of my children were NCAA scholarship athletes We didn't plan it, they just happened to be gifted.

Did you children feel like they were college students or working athletes with those scholarships? My son thought about trying out as a walk on for his college baseball team. Then he looked at the schedule. There were literally weeks where you would only be on campus 2 days a week when the team was on the road. The other 5 days were entirely taken up by baseball. More like a job than a college education.

 

[CAQDaddy]

Did you children feel like they were college students or working athletes with those scholarships? My son thought about trying out as a walk on for his college baseball team. Then he looked at the schedule. There were literally weeks where you would only be on campus 2 days a week when the team was on the road. The other 5 days were entirely taken up by baseball. More like a job than a college education.

Both were very active in high school and college. One of my daughters was student body president in high school and played four varsity sports. She flourished in college. She was the president of her college's Student Union Board by the time she was a sophomore. She ran track in college. Since she was a runner she was used to daily training. Most of their travel was on Friday or Monday for Saturday meets. She enjoyed it and had plenty of time to remain on the Dean's list and have an active social life. Many of her teammates will remain lifetime friends.

My other daughter played golf and yes, it became a job. She was lucky enough to receive a full tuition academic scholarship and ended up finishing her college that way.

I think a lot of times parents end up giving advice based on their own egos. For some reason many of them get stuck on the idea that their kid can get an athletic scholarship and if not that, they want to prove their kid is "good enough." I think if a kid wants to play a sport in college and the family can figure out a way to pay for it then, by all means, go for it. It's just not a viable financial option in most cases. My daughter that ran track didn't even consider track in college until her senior year in high school. She could have possibly played other sports, but she received a really good offer for track and decided to go for it.

 

[crisi]

I believe you. I'm just astonished that coaches would promote such misinformation and I'm equally astonished that parents whose children are
athletes wouldn't do a bit of research on scholarship limits and such.
The point I was making is that athletics aren't typically a good "plan" for paying for college. Concentration on studies as well as financial planning always play a part. That being said, two of my children were NCAA scholarship athletes We didn't plan it, they just happened to be gifted.

When we were touring the college my daughter ended up choosing, there was a parent and son there who were being recruited for some sport or another. But the college is a Div III school. It was during the preview tour that they learned that Div III schools do not give out scholarship money for athletics. This was a Senior being recruited - and neither he nor his Dad had ever been told that the schools that were recruiting him weren't offering him athletic scholarships - they were assuming they were getting full rides since they were being recruited.

 

[AlohaNow]

Thanks to everyone who has replied with info on IB, class rank, merit aid, etc. It’s all very interesting to hear of everyone’s different experiences. It is so helpful to have current information for when DS has to start navigating all of this.

The following was so funny and timely to me. On Christmas Day we had a great video chat with DS16 who is spending a year in Argentina. He happened to mention that he could go to college tuition free in Argentina; he said that this was recently discussed at a luncheon with some of the host parents. I didn’t waste precious video chat time saying, “That is so funny that you said that because I’ve just been on the DIS talking with some others about how to afford college!” But afterwards I looked up a bit about it and he is right. I know that Germany is popular for Americans to go tuition free as well. Of course then the issue becomes the fact that these students would be there on a student visa and would be unable to work to support themselves in any way. Plus the fact that international students flock TO the U.S. to attend college, so why would he do the opposite? He currently plans to study engineering and I’m sure he’ll find a way to do a summer/semester/year abroad during college, whether in Argentina or elsewhere. Anyway, I just thought it was amusing that he mentioned that unprompted.

DH swam at the Div III level and the school gave him a little bit of swimming money to entice him to enroll there, but it went away after freshman year just as the school had explained that it might. That is unbelievable that the people in your tour group did not realize how Div III works. DS plays soccer and lacrosse, but has no intention of relying on those skills to get into or pay for college! Plus, college athletic recruitment is absolutely nuts!

 

[barkley]

Thanks to everyone who has replied with info on IB, class rank, merit aid, etc. It’s all very interesting to hear of everyone’s different experiences. It is so helpful to have current information for when DS has to start navigating all of this.

The following was so funny and timely to me. On Christmas Day we had a great video chat with DS16 who is spending a year in Argentina. He happened to mention that he could go to college tuition free in Argentina; he said that this was recently discussed at a luncheon with some of the host parents. I didn’t waste precious video chat time saying, “That is so funny that you said that because I’ve just been on the DIS talking with some others about how to afford college!” But afterwards I looked up a bit about it and he is right. I know that Germany is popular for Americans to go tuition free as well. Of course then the issue becomes the fact that these students would be there on a student visa and would be unable to work to support themselves in any way. Plus the fact that international students flock TO the U.S. to attend college, so why would he do the opposite? He currently plans to study engineering and I’m sure he’ll find a way to do a summer/semester/year abroad during college, whether in Argentina or elsewhere. Anyway, I just thought it was amusing that he mentioned that unprompted.

DH swam at the Div III level and the school gave him a little bit of swimming money to entice him to enroll there, but it went away after freshman year just as the school had explained that it might. That is unbelievable that the people in your tour group did not realize how Div III works. DS plays soccer and lacrosse, but has no intention of relying on those skills to get into or pay for college! Plus, college athletic recruitment is absolutely nuts!

i don't know the details except that the university dd attended near us (and our state colleges in general) get TONS of international students for certain programs (primarily that the students hope to ultimately pursue professionally in the u.s.) so i suspect it may have something to do with certain professions that require certain degrees wherein one earned outside the u.s. not meeting industry/professional standards. i would advise your son to be cautious with any programs outside the u.s. to make sure any abroad classes are acceptable to whatever university he ultimately goes to (a high school friend of dd's didn't do all her classes through the study abroad department at her university-found out after the fact some she took were not transferable so she had to spend more $$$$ to retake them here, another friend's dd was attending abroad and found out midway through the 1 year program that the agreement w/the u.s. affiliated schools had been terminated so she had to scramble to get into a u.s. based school mid program-not easy with a highly competitive major).

 

[CGB]

We’re on the other side of college, for the most part. We have two debt-free kids who took different approaches. Both attended the same college.

Child 1: Lived at home and attended the local community college before transferring to a nearby state university. Worked part-time and banked all of it. We agreed to pay tuition if she lived at home. No scholarships.

Child 2: Received a full-ride scholarship to the same university. Included tuition, fees, room and board. Worked internships and banked money. One year after graduating, he went back for his masters and was offered a graduate assistantship which pays his tuition. Works temp and part-time jobs and two internships in his field to build experience. He’s currently living at home and banking his income for after graduation.

I can’t express how glad I am both kids have degrees with no debt and money in the bank. Our oldest child has been working full-time and saving up for a down payment for a house. I suspect she’ll buy within 1-2 years.

I also teach a class for 8th graders that includes college (and ways to pay for it), military and trade skills options. Former students constantly come back and ask advice. It’s such a personal issue that differs with so many variables for each student and their family. My best advice is keep asking questions as soon as posssible. The future will arrive faster than you think.

 

[barkley]

I also teach a class for 8th graders that includes college (and ways to pay for it), military and trade skills options.

this should be taught at all schools. we have 2 programs in our state that will pay for 2 years of either college or trade school FREE if the kids opt into them for their jr/sr years. it's a spectacular bargain-either get all those pesky general ed classes done or get 2 years in a trade you can walk out the door to a high paying job in-but few know about it.

 

[crisi]

I do know that its very difficult as a German to get into a tuition free German university - they are tuition free because they don't admit everyone - just the top students. Which will include some foreign students - but they are highly selective. Which might include a DisBoarder's kid - mine were never that exceptional - but for those parents whose kids are merely "really bright and dedicated" and not "exceptionally bright and dedicated" it isn't a great option.

 

[mmfox316]

I have two in college at Virginia state schools now, a sophomore and a senior. Both kids will graduate with no loans. This is what we did:

1) Opened 529 Prepaid Tuition accounts for each child when they were little (elementary school). We bought 2 years of tuition & fees outright for each child with tax returns, gift money and savings, The other two years we paid for monthly through their senior years in high school. This has been a lifesaver! Their tuition and mandatory fees are 100% paid for. We only have to worry about room, board and books.

2) Limited our kids' college searches to in state universities. We have some top rated schools in Virginia!

3) Saved all our tax returns while the kids were in high school to cover room, board and books.

4) I went from part time to 3/4 time at work when the first one started college and then to full time when the second one started college. The extra monthly income goes toward room, board and books.

5) Both kids applied for every scholarship they could through their universities. DS received $20,000 over the last 2 years, which really helped when the two were in college at the same time.

6) Kids both have summer jobs and sometimes a campus job (no more than 10 hours a week) to cover all their personal expenses beyond room, board, books, phone and car insurance. DS (senior) played guitar in a band and had paying gigs for some of his college years. DD (sophomore) works with rec sports at the university gym.

Some other tips that may work to reduce or eliminate the need for debt:
1) Go to a local university and live at home
2) Dual enrollment in high school (DD did this. She entered college with an associates degree - 60 credits. She's changed her major a couple of times though, so she will not be graduating early although some of her high school classmates are able to finish in 2 years.)
3) Apply to schools that are academically beneath you. These lower tier schools want to raise their profile and attract high quality, smart kids. They offer lots of scholarship money to get them to attend. (Neither of my kids chose to attend the schools that gave them lots of money unfortunately. They had worked really hard in HS to get into the best college they could. Since we had the 529 accounts, we let them chose. If we didn't have that money set aside, we'd have pushed them to attend the schools that gave them the most money.)

1st of all, everything this person said. This should be everyone's plan A. If you have small kids $25 a paycheck directly into a 529 is a great thing. Most 529s have a routing and acct nbr so any employer that can split a paycheck to deposit into 2 checking accounts should be able to send some money to a 529 and the rest to your checking\savings acct. It isn't pretax usually but if you don't see it you might be able to get away with not having that money each paycheck.

Second, I actually work for one of the major holders of student loans in the US. I have for 25+ years. Rule #1 is never use a home ec. loan to pay for college. You are just risking too much. Before you do that tell your child it is a 2 yr school or nothing. It may seem mean but there are good 2 yr schools that allow your child to take those core classes like "calc" or Bio 1 that everyone in their major must take. Then transfer to a 4 yr school. Before this job I worked in a Fin Aide office at a big college. Transfer students got scholarships at that private college if they had good grades.

Third, try not to use private loans. If you follow the quoted tips above you shouldn't need too. But do use them before borrowing against a home.

Forth, NEVER borrow against your 401K to pay for education.

Last, don't take out a private consolidation loan to pay off your Federal loans. Those Fed loans have so may benefits like deferments and income based repay that you just shouldn't give up.