Spring is in the air and with it many high school seniors are waiting anxiously to be accepted into the college of their choice. Our son will be entering college this fall and like many parents we have been saving for his education since he was young. But some families are not in the financial position to pay for college without accumulating debt. There are many options these days to finance college. The key is to graduate with no debt or as little debt as possible.

Communicate with your student

If you are unable to pay for college, communicate with your student about your situation. Help them to explore schools that have a lower tuition cost such as state schools or online distance learning. Another lower cost option is the local Community College, which can provide the basic undergraduate credits for a fraction of the cost of four-year universities, with transfer privileges to state schools. Help your student weigh the options and decide the best route. Many incoming freshman do not know what they want to major in and can take general educations credits at less expensive institutions. Scholarships are often a good way to defray some of the costs of tuition. There are many small scholarships that go unclaimed each year because students don’t apply for them. Ten scholarships for $500 will add up to $5,000 per year toward tuition costs.

Get a job

Working through college is always an option as well. It might take more time to complete a degree, but at the end of the term, you will not be burdened with student loans without a job to pay them off with. Many colleges have work-study programs and some employers will help with tuition costs, if you agree to work for them after and possibly during college. Nursing students, for example, can find hospitals to help with tuition on the stipulation that they work there for two years after graduation.

Loans

While we discourage student loans, we realize that many students will opt to borrow for their education. If you get a federally insured student loan, these can follow you until you are retired, if you can’t pay them off. Then the government can take payments out of your social security check. Federally insured student loans are not entitled to bankruptcy either.

Private student loans usually require a co-signer, such as a parent. In these cases, if the student can not pay the loan the consignee is liable for the payments.

Buyer Beware

The place where the most people get into trouble is after college. Student loan payments begin 6 months after graduation or upon leaving college. There are many students who do not finish college, cannot get a job, and have student loan debt to pay for years to come. Research the salary levels for the degree that you are earning. If the salary is low or moderate, the student will want to keep college costs including tuition as low as possible. Borrowing $100,000 for a degree as a social worker is crazy when the income levels for that position are traditionally low. Remember that your income will be your most powerful wealth building tool. Keeping student loan debt until you are 40, will severely limit your wealth building opportunities.

Plan ahead, communicate with your parents/students about financial management and costs for college. Know the risks of borrowing and you will be able to get pointed in the right direction to graduate college with minimal to no debt and begin your life with financial security.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community by teaching classes, speaking and coaching individuals and families. To learn more, please contact us.