For parents with a high school or college student, the costs of college or university education can be overwhelming – how can you help your child avoid student loans for college?
If you’re debt free, actively working to pay down your debt, or even just trying to contribute to your retirement funds so you don’t end up eating cat food in your old age, it may seem hopeless to think that you’d be able to help your child avoid student loans. The cost of tuition and room and board is steep, and rising every year. You need a college money plan.
But even if you can’t foot the entire bill for your child’s education, there are things you can do as a parent to facilitate and help your child avoid student loans upon graduation. There are ways to pay for college without student loans. Even if your child does need to rely on some student loans to get the bills paid, these strategies will minimize the overall debt load your child carries for a college education.
Start the College Planning Process Early
Is it your dream for your child to attend college and be afforded the educational opportunities of a university education? Planning and hard work is a critical component of college planning, starting from as early as preschool.
A lot of parents find some help with the planning process of college with CollegeBound Plans. This program helps families craft an academic plan for their college bound kids, helps with access to scholarships and tuition discounts, and even helps kids find tutoring resources. CollegeBound Plans is a one-stop shopping resource for families who know they want their kids to go to college, but don’t feel like they have enough experience to navigate today’s tough college market on their own.
You can find out more about CollegeBound Plans here.
File Your Taxes Early to Avoid Student Loans for College
One of the key ways you can help your child avoid student loans is to be organized and on top of filing your own personal income taxes. In order to file the Free Application for Federal Student Aid (FAFSA) in the fall of your child’s senior year, you’ll have to have your previous year’s tax information in hand to complete the form.
If you are disorganized and have to file an extension for your previous year’s taxes, you may not be able to apply early when FAFSA filing opens October 1 of your child’s senior year. Early filing is important in avoiding student loans. Some grants and work-study opportunities may exist on a first-come, first-serve process. If you wait too long, your child may miss out on money for his or her college education.
Get an FSA ID and Fill Out the FAFSA As Early as Possible
Your child’s college choice may require FAFSA application for consideration for merit or institutional scholarships. If you don’t have your financial and tax information organized in time, your child may miss this important source of funding for school.
This is one of the MOST IMPORTANT things you can do for your child, especially if you are a single parent, have a larger family, or are lower income. No one wants to fill out extra paperwork every year (you need to fill out the FAFSA every year your child is enrolled). But if you don’t do this step, you will be leaving money on the table and may be increasing the risk of extra student loans for your college student.
Here’s a list of the information you should have ready to go by August/September before your child applies to college to help your child avoid student loans for college:
- Your Social Security Number and drivers’ license number
- A FSA ID (You can get this from FAFSA.gov – it may take up to 3 days)
- Bank statements and records of your investments
- Bank statements and records of any investments your child has
- Federal income tax returns, W-2s, and other statements of income
- Other income records
- List of schools your child wants to attend
Estimate What You Can Contribute
Once your child is a junior or senior, you should begin estimating what, if anything, you can contribute on a monthly basis to your child’s education and living expenses. The amount you can contribute depends on your income, how much you want to contribute, your retirement portfolio and readiness, and the projected cost of your child’s education.
Using your monthly budget, identify realistically what you’d be able to put toward your child’s education every month, taking your other obligations into account. Doing this earlier in the college application process rather than later is helpful, so you and your child have clear expectations about how much money there is available to avoid student loans for college. It’s all too easy to feel starry-eyed about the educational possibilities, only to realize that you can’t come up with the cash flow needed to give to your child on a monthly basis.
You can also forecast what your child will be able to contribute to the financial need from work during school or personal savings. All of these sources can add up to cover the cost of college application without student loans.
Keep in mind that the financial aid office of your child’s school will provide a different estimate of what you can contribute to your child’s expenses called the Expected Family Contribution (EFC). This is a formula based on your income, savings, and other factors. You can find your EFC by using the Expected Family Contribution Calculator.
Encourage Organization During Testing and Application Times
The complexity of the college application process can be completely overwhelming for both parents and high school students. Although your child will be making his or her first steps toward independence by applying to and selecting a college, as a parent, there are ways you can help make the transition easier.
- Encourage your child to keep track of SAT/ACT testing deadlines and set up schedule for daily and weekly practice.
- Sign up for campus visits in last half of junior year, summer between junior and senior year, or early in senior years.
- Remind your child to obtain letters of recommendations from teachers in advance.
- Keep a master calendar up to date with all application due dates and schedules.
Staying organized will help your family optimize the chances that your child will be able to get as much financial aid and scholarships as possible to avoid student loans for college.
Discuss the Financial Implications of Your Child’s College Choice
High school students typically have little job experience or experience handling a salary or bills. So they may not take into account the long-term financial implications of their college choice and the student loans they may incur – and have to pay back after graduation. Students – and their parents – may be swept up in the emotions and excitement about the college experience and forget to analyze the money matters.
If you have a job, a home, and bills to pay, you as a parent have more experience than your kid in taking money matters into account. Once your child has been accepted and received financial aid offers, talking about the finances of attending a certain school can be incredibly helpful to avoid student loans for college. Here are a few college finance student loan topics to discuss with your student:
- How much will it cost to attend this school?
- How much in loans will you have to take each year? What will your debt be upon graduation?
- What will you need to do to keep your scholarship every year?
- What are the job prospects for this major/school after graduation?
- What is the typical salary you might receive as a new graduate?
- What is the interest rate on the student’s loans?
- What is the payment you’d have to make every month to pay them back?
FinAid has a helpful student loan calculator you and your student can use to figure out the cost of future student loan repayment.
Be Realistic about Your Own Expectations – and Whether They’re Self-Serving
Just like students, parents can easily get emotionally caught up in the admissions process.
Maybe your secret desire is to have your child attend the huge party school you went to – even though your child is more introverted and prefers to hang out in small groups.
Or maybe you secretly dream of the prestige of having your child attend an Ivy League school – even though your student would prefer a school closer to home.
Whatever your expectations are, it’s not easy to let them go but this is just a gentle reminder: This is your child’s journey. You’re there to help, to facilitate, to encourage, but your child has to make the choice that’s right for them, financially and emotionally. Forcing them into your dream is a sure route to student loans – that your child will resent having to pay – and will only serve to put up barriers to your relationship with your college student.
Do Your Own Research on the College Process
If you’ve never attended college or even if you did but it was 20 years ago, there’s a lot to know about the process of college applications, financial aid, scholarships, and avoiding student loans for college. Fortunately, there are a lot of resources available now – thank you, Internet – so you don’t even have to leave home to do your own research. The following are the most informative books available on avoiding student loans and finding money to fund your child’s education.
Never Pay Retail for College: How Smart Parents Find the Right School for the Right Price
Written by a former admissions counselor, this book is a must-read for prospective college students and their parents. Did you know that the financial aid offer from a school isn’t necessarily the final price you must pay? I didn’t realize you could negotiate financial aid, just like with a car purchase. There’s a lot to learn from this college finance book.
Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents
College parents and students can gain a lot from a read through this book. Bissonnette, a college student himself, details exactly how he paid for his college education debt free without loans or scholarships.
Confessions of a College Scholarship Winner: The Secrets That Helped Me Win $500,000 in Free Money for College- How You Can Too
This book, written by a student who won tons of scholarships to completely cover the cost of her education, offers amazing insight in the scholarship process and resources for funding your child’s higher education without student loans.
Let Your Child Live at Home
One of the key ways to help your child avoid student loans is to help defray living costs by allowing your student to live at home rent free. You might be looking forward to an empty nest – but if your child has to find funding for year-round or summer rent, it can add a lot to the total he or she borrows for education.
Allowing your child to live at home while in school or for a few years after while he or she pays back student loan debt as quickly as possible is another strategy that can drastically reduce the amount of student loans.
What strategies is your family using to avoid student loans for college? Leave your advice in the comments!