How to Pay for College? Make Avoiding Debt a Top Priority!

I know that this statement is going to seem a little strange to many of you….. but I do not think that the most important thing that my child can do upon graduation from high school, is to attend the very best university that he or she can get into. Do I think that a college education is important? Absolutely. But do I think that paying absolutely any price and using whatever means necessary to obtain the funds to cover the tuition, just because a “great” school accepts you…. is the way to go? Not in any way. I think colleges should be evaluated on a cost vs future benefit basis. And the answer for every college and every student is not going to be the same.

How it all starts…

We ask our high school aged-kids to great excellent grades, play sports, do community service, and find a “hook” that makes them unique and appealing to colleges because we think that this is their first-class ticket to their future. We then help them to apply to perhaps a dozen colleges- drive them all over the country on tours of the campuses, all in an effort-to help them make the “right choice”. But when we start to approach the issue of funding this pursuit of higher education…. we are met with assurances of potential scholarships and the certainty that college loans will be available to cover the unmet costs. And we as parents feel so assured that our kids will be better off with that college degree- that their future earnings potential is so much greater with that diploma, that we enter into these debt agreements with our children as a means to that end. Without consideration of how the debt may be a burden to us and our children for a very long time to come.

But what else do we buy that way?

When we are shopping for cars- do we say- “I want the best possible car that I can buy…. and the price doesn’t matter because I will borrow money and find a way to pay for it?” Or do we say that we want to find a great car at a great price? How about even small stuff like groceries? Do we say that we want only the very best we can find ,and not worry about the cost? I sure don’t.

So why is it that we approach a college education that way, and think about price as something that we just need to “work out”? Why are we so willing to allow our kids to take on mountains of debt? From the May 13th article in the NY Times titled, “Student Loans Weighing Down a Generation with Heavy Debt“…

About two-thirds of bachelor’s degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates; the total number of borrowers is most likely higher since the survey does not track borrowing from family members. 

By contrast, 45 percent of 1992-93 graduates borrowed money; that survey included family borrowing as well as government and private loans. 

For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports.

This equates to a hefty monthly payment for the graduate, which easily becomes that 21 year-old’s single biggest expense. One that they wil be paying for- for a very long time. Suddenly the idea of getting married and buying a house becomes less of a possibility. It literally changes the American dream.

The real end-game

And don’t even get me started on the fact that half of college kids graduate and can’t find jobs (CBS News May 14, 2012) and end up having to move in with their parents after graduation. We tell kids to work hard and get into a good college and work even harder there, and then their futures will “take care of themselves”. And 20-30 years ago, that used to be true. But I am just not so sure that this is true anymore.

Yesterday one of my fellows iVoices Liz Henry, shared her story on iVillage. Liz was the first of her family to graduate college but after graduation was only making $8 an hour working at a cafe. Saddled with debt, Liz sounds off on her student loans and why she feels her American dream is dead.

So will I still encourage my kids to work hard in school and go to college?

Yes, I will. But when it comes time for us to look at colleges, there will be multiple criteria under consideration- and one of the biggest ones will be to work to achieve that college education without going into debt.

Want to hear some real ideas of going to college without debt?

A while back I read a fantastic book, written by Zac Bissonette called “Debt Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching Off My Parents.”

It is full of practical advice such as considering alternatives such as attending local community college for 2 years while living at home and earning money to pay for the next 2 years of school. (Of course this assumes that credits will transfer and you will be accepted at another institution when the time comes…). And if you are like me, you might be keeping your fingers crossed that other opportunities will emerge in the next 5 years such as online university credit and decreases in the rate of tuition increases.

But as parents, we need to become armed with the financial facts of college. Because they are not what they once were.

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*photo credit: graduation cap and diploma by David Castillo Dominici courtesy of freedigitalphotos.net