Off Topic: What I’ve Learned about Paying for College and Minimizing Student Debt

This blog is about travel with miles and points, saving money on travel, finding the best credit cards to earn miles and points, trip reports, etc. However, today’s post is not directly about any of those things. Because, in addition to travel, I’m also passionate about minimizing debt and being financially responsible. And, when it comes to paying for college, I see a lot of misinformation out there on social media.

I admit that I am not a college counselor or a financial expert. But, since I have 3 kids I plan to help get through college with one currently attending a university, I’ve done a fair amount of research on paying for college and minimizing debt.

Common Misconceptions About Paying for College

I’ve been part of the Facebook group “Paying for College 101” for almost 5 years. The folks who run it, from road2college.com, have taught me a lot over the years. Common misconceptions I see from newbies:

“My son/daughter is a straight-A student and will probably get a full ride to college”. Full ride scholarships are not as common as you might think. Sure, they do exist. But, the reality is that there are thousands of straight-A students with top test scores and a boatload of extracurricular activities competing for those spots. Getting a partial scholarship based on merit is more realistic, but most students still need to pay part of tuition plus room and board.

“We’re not rich, so my student should get some free financial aid/grants to help pay for college.” Spoiler alert: Most of us do not feel rich. But, getting need-based grants is not as easy as you may think.The majority of Pell Grant (federal grant that does not need to be repaid) recipients are in families that make less than $50k annual income (see this website for more data).

“I paid my own way through college, and my son/daughter can do the same.” Many parents and grandparents don’t realize that the cost of college has skyrocketed compared to when we were in school. In many cases, it’s not possible to work a part-time job and pay for college on your own. In the past 40 years, the cost of attending a 4-year college has increased by 153%, and that’s even adjusting for inflation.

“My kid will just have to take out loans to pay for college on his own.” Dependent students have limits on Federal Stafford Loans. For freshman year, the maximum loan students can take out on their own is $5500. If your student requires more loans than that, parents must apply for Parent PLUS loans or private loans that usually require an adult co-signer with decent credit. See this article for more information on student loan limits. Every year, as the new school year gets closer, I see posts from folks who didn’t realize that their kid couldn’t take out large loans on their own and they have to back out on attending their “dream” school.

“FAFSA says we will only need to pay $10,000.” Your end number from the FAFSA website (also known as the Student Aid Index or SAI) is not what you will pay each year for college. Most colleges do not meet financial need 100%. The final FAFSA number is used as an index to compare your need to others. You won’t know your out-of-pocket cost of attending a specific college until you receive a financial aid offer from the university that details scholarships, grants and loans.

Tips for Saving Money and Minimizing Student Debt

While the cost of attending a 4-year college can be steep, there are many ways to reduce the cost and minimize student loans and parent loans.

Use the Net Price Calculator (NPC) before applying or visiting. Every college has a Net Price Calculator somewhere on their website. You can input your students grades, test scores and family financial information for an estimate of how much the school will cost based on your specific situation. Usually, these NPCs are fairly accurate, although not exact. Before your student applies to a school (and especially before you visit), make sure you can afford the cost based on the NPC. I mean, you wouldn’t take your kid to a test drive a Lamborghini and allow them to fall in love with it if you knew you couldn’t afford it, right? With my oldest son, we didn’t even tour some really great schools close to us (for example, Texas Christian University and Southern Methodist University) because the likely cost was over our budget.

Utilize Dual Credit/AP/CLEP. While in high school, earning college credit through dual credit classes, AP classes and passing CLEP exams can save you a lot of money on college tuition. We steered our son in the direction of the dual credit classes because they don’t require you to pass a test in order to get college credit.

Consider taking community college classes during summer. Some universities allow you to take classes from community college while you are at University, which can save you tuition money. However, be careful, because sometimes taking a cc class after you graduate high school but before you start university will make you a transfer student instead of a freshman and can alter your scholarship qualification. My son’s university accepts community college courses taken concurrently, but there is a limit on the number of hours and the level of courses. My son plans to take some community college classes over the next two summers.

Keep applying for scholarships all 4 years. Most universities have additional scholarships for current and upperclass students that are not available for first-time freshmen students. Look for those and apply.

Consider distance from home and cost of living. A less expensive college 10 hours away may end up costing you more than a costlier college that is closer to home because of the cost of travel. (Unless, of course, you’re a miles and points traveler! See this post). Also, pay attention to the cost of living in the college town. The cost of rent in my son’s college town is significantly lower than the cost of rent at our in-state’s flagship university.

Overall Thoughts

Paying for college is a controversial, sticky subject. Certainly, a 4-year-college is not the only path after high school, and there are many less expensive options to develop skills to enter the job market. Still, I hate to see people get in over their heads when it comes to paying for college. Knowledge is power. Explore options and have those difficult discussions with your family.