Everywhere I go, people are talking about paying for college. This includes kids, parents, grandparents. It is a hot topic.
Last spring after one of my retirement readiness workshops I had lunch with the group. They started talking about how to pay for college. I hared stories and they were so appreciative. Later I received emails from several of them, thanking me for saving them from the throws of never ending debt.
I have lots of stories about paying for college. Here are a couple of them:
Last August I was in the checkout line at a local grocery store. The cashier was a young woman and a young man was bagging. It appeared they knew each other a little but not very well.
To make conversation, the young man said to the cashier, ‘So, where are you going to college?’ She responded in a very sad way, ‘Well, I went to NE last year but my parents just told me they couldn’t afford to send me back this year.’ The young man was horrified. He stopped dead in his tracks. He said to her ‘And they couldn’t have had that conversation before getting into debt your freshman year. It is August – they waited until now to tell you about September. That is terrible!’ She agreed and you could tell she was devastated.
The moral of the story: Be sure you understand the financial implications of paying for college before you lead yourself and kids down a path you will later regret.
Years ago, I worked with Mary, who had 2 kids in high school. The kids wanted to look at colleges, each one more expensive than the next. One day at lunch Mary talked about the colleges her kids wanted to go to and she said, ‘If we can’t afford a particular college, we are not going there to visit. Why go and tempt. It is just torture – for everybody.’ She held fast and her kids received excellent educations at state schools and now have very successful careers.
I’ve never forgotten that conversation and I share it with everybody. Mary made a very smart move. For both herself and her kids. If you can’t afford to pay for a college, don’t go look at it.
How much debt is affordable?
I have a friend who is the director of admissions at a major university. She sees student loan problems every day. She offers the following advice:
- Kids do not suddenly hatch at 17. As soon as the child is born, start saving.
- Do not take your kids to visit colleges you cannot afford.
- There is a rule of thumb for the maximum amount of debt the student can afford: no more than the salary the student could make the first year after graduation. For instance, if the student could make $60,000/year as a starting salary, they can be debt free in about 10 years if they contribute 10% of their gross income.
A $60,000 salary would depend on the major selected. Make a good choice.
Thank you my friend!
On a Final Note:
Last summer there was an article in the Washington Post, August 11, 2016 entitled, ‘How one family is sending 13 kids to college, living debt free — and still plans to retire early’ by Erica Johnston.
Here’s the link.