wealth management, college planning

How to Plan For College and Keep Expenses Down in the Age of the Student Debt Crisis

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By Shayla Kriha

Do you remember the first cry of your newborn child? Do you remember looking into their eyes and saying, “I will protect you and provide for you always!” It’s never too early, and it’s never too late to start saving for college – every little bit will help. 

Doing your research and due diligence can help keep college expenses down. Planning is extremely important, and ideally, the strategy process starts the day your child is born. Never underestimate the power of a plan!

For most students, experts say it remains financially worth it to go to college, despite rising tuition and opportunity costs in relation to increasing wages for workers holding only a high school diploma. The average rate of return (net gain or loss on college investment across a career) is 14%. 

Let’s look at some of the issues around financial planning for college expenses, and some tips to start your plan today. 

Not-so-fun Facts

Despite the upside, there are difficult realities that college-bound and college-hopeful students will face in the near future. 

  • Outstanding student loan debt in the U.S. is between $90 billion and $1.6 trillion. Roughly 44 million Americans collectively owe $1.56 trillion in student loans. 
  • Research shows the average bachelor’s degree graduate takes 21 years to pay off their student loans.
  • The Federal Reserve found that more than half of young adults in college in 2018 took on debt. Roughly 69% of students from the 2018 class graduated with an average outstanding balance of $29,800.
  • A reported 41% of first-time full-time college students earn their bachelor’s degree in four years, and 59% earn a bachelor’s in six years. 
  • The annual cost of attending college in 1989 was $17,010 (private) and $3,360 (public). Today those prices are approximately $35,830 (private) and $10,230 (public). 

Tips and Tricks 

Gone are the days of having a summer or weekend job to pay tuition; today’s students will have to be more creative. Consider these tips. 

  1. Use 529 College Savings Plans for qualified education expenses.
  2. Borrow only what you need.
  3. Apply for scholarships and grants during the entire college process.
  4. Work with the college’s financial aid office to negotiate lower tuition costs. Yes, you can negotiate.
  5. Work a part-time job or apply for work-study through college.
  6. Pay student loan interest payments.
  7. Consider more affordable, transferable community college classes during the summer or the evening.
  8. Take dual enrollment classes in high school so you can take fewer – and pay for fewer – college classes.
  9. Live at home if possible.

FAFSA – Free Application for Federal Student Aid 

The FAFSA is a form completed by students and students-to-be to determine eligibility for student financial aid.

The form is used by the federal government, states, colleges and other organizations to award financial aid – it’s a central tool everyone uses, so completing it correctly and on time is vital. Grants, scholarships, work-study programs and federal student loans all use it as a starting point when determining aid. 

Never Too Late to Plan 

Make sure you’re working with the high school guidance counselor to map out your college plan and implement it. Are there more rigorous and unique classes your teenagers can take to make their transcript more competitive? Is their GPA in good shape, or do they need to play catch-up to bring it up? 

Volunteering in the community, school, church and other places will help round out your students’ profiles and make them more attractive to quality schools. These organizations often have a need for good leaders, which can give even more dimension to a college application. 

Talk through the future with your students as well. What are they passionate about? Can that inform their choice of school and therefore inform the process of getting there? 

Taking the appropriate tests – PSAT, SAT, ACT, SAT II – and scoring well is, of course, important. A small industry surrounds prep for these tests, with groups like the Princeton Review offering online tools and books. 

Scholarships will look further than grades: volunteering, leadership experience, test scores and financial need are all important. Again, make use of your guidance counselors and other experts to optimize your chances. Online resources like FastWeb can be helpful, and local scholarships might have fewer applicants and less competition. 

Eyes on the Prize 

Have a plan early on, stay on track and keep expenses down. Never lose sight of the end goal: earning a degree with minimal or no debt. It’s never too early to start financial planning for college expenses. This is your student’s future, and their future is bright. 

How can we help you? Our financial planning team has walked with thousands of families like yours through their financial journey. Balancing the expenses of kids with a retirement plan and your own savings is no small task, and we want to help you live your life by design, not default. 

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wealth management, college planning

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