Beating Broke

Personal Finance from the Broke Perspective

How We’re Helping Our Teen Save for College

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College is getting more expensive every year, and with the student loan crisis, more and more students and parents are trying to forego student loans.  Avoiding student loans, if possible, is a smart way to go.  We should know; my husband and I are still paying off his student loans from graduate school, which he finished eight years ago.  So, we want to do everything we can to help our own children go to college without accruing any debt.  How we’re helping our teen save for college involves a multi-pronged approach.

How We're Helping Our Teen Save for College

How We’re Helping Our Teen Save for College

There are four ways we’re helping our teen save for college:

Using an Employee Discount

My husband is employed at our local university, so our children will get 75% off the price of tuition.  While this school currently costs approximately $12,000 for in-state tuition for a year, our children, thanks to the discount, will only need to pay $3,000 a year.

Matching Our Teen’s Savings

From the time our children were young, we set up a savings account for college.  We match each dollar that our child saves in this account.  Our three children all have varying balances, and one of our children is a much more prolific saver than the other two.  While this account won’t cover their $3,000 a year that they will have to pay for college, it will likely cover their textbooks for several semesters.

Paying for AP Tests

 

How We're Helping Our Teen Save for College
Photo by Ben Mullins on Unsplash

Our teen is bright and this year decided to challenge himself with an AP history course.  We paid for the AP test that he will take in May.  If he scores a 4 or a 5 on this test, he will be able to earn college credit for the course.

Next year, he plans to take several AP classes and tests, and we’ll pay for those, too, in the hopes that he can score high enough and reduce the amount of time he needs to be in college.

Finding Scholarships

Our teen took a practice PSAT at school, and while his score was okay, it wasn’t stellar.  Since he has a 4.0 in school, if he can raise his SAT score by at least 100, he will qualify for a $6,000 scholarship from our university.  (The higher the scores, the higher the scholarship amount he qualifies for.  If he could get his score even more than 100 points higher, he would qualify for an even larger scholarship.)

We don’t have money to pay for SAT tutoring, but having it would be valuable, especially if it helps our child raise his score and qualify for the scholarship.  I found a scholarship offered through a private foundation that could be used for SAT prep.  We applied, received the scholarship, and he’s begun tutoring this semester.

Final Thoughts

Money has been tight throughout our marriage, so we’ve never had much money to set aside for our children’s college education.  (Our priority has been paying off our student loans and saving for retirement.)

However, helping a child in other ways rather than just paying tuition outright can also be valuable.  This is how we’re helping our teen save for college.

 

The Higher Education Path Not Taken

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I’m not sure about you, but I have a hard time with keeping myself from constantly over-analyzing everything.  You name it, and I’ve analyzed it.  Even things that I cannot change, like my choice in Colleges.  Should I have gone to a different college?  Perhaps.

If I look at it from a strictly financial perspective, the answer is a definitive yes.  I went to Jamestown College, which is a private school.  While it isn’t the most expensive private school you can choose, it’s not nearly as affordable as a state school would have been.  Instead of the student loan debt that I am paying on now, I would have only about half of it had I gone to a state school.  Maybe less.

If I had gone to a school closer to home, I could have saved money over the summers by moving back in with my parents.  Traveling home would have been a far cheaper endeavor, and certainly would have been a shorter endeavor.  It’s over 950 miles from Jamestown to Hamilton, MT, where my parents live.  Even with the best car I had, mileage wise, it cost at least $200 to drive home and back.  And that’s without stopping along the way at a hotel.   And don’t even get me started on the money I could have saved on laundry by bringing it home and using the washer and dryer at home!

Of course, not every decision in life can be judged solely by it’s financial merits.  (Not that I was all that adept at anything financial back then anyways.)  Something as important as college has many factors that go into it’s choosing.  For me, the money did come into play simply because my family didn’t have much of it, and I needed to be able to get enough financial assistance to go to the college I chose.  I also wanted to play football, so the college had to have a team.  I’m not a big fan of lots and lots of people, so the school needed to be smaller.

Having had pretty good grades in high school, I was able to get scholarships and financial assistance to go to all of the schools that I applied to.  I had ruled out the main state schools as being too big.  They also got ruled out because I wouldn’t be able to play football.  In the end, the choice came down to a smaller state school, a private school closer to home, and Jamestown College.  All offered everything that I was looking for.  All were good schools.  What it finally came down to was friendliness.  Of the three schools I had narrowed it down to, only JC took the time have a enrollment counselor call me.  The football coach at JC was the only one to call me and personally invite me.

Sorry, I’ve gotten off on a tangent, and it’s turned into a bit of a love fest.  But, there’s a reason for that too.  It’s the funny thing about college.  No matter where a person goes to college, the college they went to was the awesomest college ever!  It’s not about the money.  It’s not about the education.  It’s not about the faculty, or even the sports teams.  Those all play a part in the choosing of the school, but, really, play very little part, if any, in how you feel about the school.  No, the college you attend is the best school because of the people you meet, the adventures you have, and the growing up (hopefully) that you do while you’re there.

When I think back on my higher education, I can say that I got a good education, but I can also say that I could have just as easily gone anywhere and gotten a good education.  I was able to play a couple of years of football, and that was cool.  I could have played at several other schools too.  I certainly could have gone to a cheaper school and had less student loan debt when I was done.  But, what really made college, college was the people I met.  Either directly, or indirectly, through college, I met my wife, and made so many friends.  We had so many shenanigans!  And that is what made college worth every penny.

Let’s do something fun.  Tell us all what college you attended in the comments below.  Maybe we’ll find some fellow alumni!  (Also, I’m curious how many of you are Ivy League-ers. 🙂 )
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How Higher Education is Ruining the Economy

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The last thing you probably expected, today, was a post about how higher education is ruining the economy. After all, aren’t personal-finance bloggers supposed to be all about advancing yourself, spending wisely, and earning all that you can? Perhaps, but I’m of the personal belief that one can still advance yourself, spend wisely, and earn all that your worth without having to go to college. Before I get off on a tangent let me explain just what it is that I mean. Higher education has its place. If you want to be an engineer, a doctor, social worker, or even a teacher, you’ll likely need to have a college degree. For those professions that require a college degree there simply isn’t any other way around it. But, that doesn’t mean you need to go to a college whose tuition costs exceed several years worth of the expected salary for the profession that you wish to have. After all, the idea is to learn a profession so that we can earn more money, not learn a profession so that we can spend more money.

Higher Student Loan Debt is Burdensome.

How does all that relate to the economy? The effects of the high cost of tuition are far-reaching. The added debt of college loans can create a cyclical debt treadmill. A recently graduated student may have a small window of time to get his or her affairs in order, but is quickly saddled with a student loan payment. Newly minted professional usually work extra hours to make extra money to pay off the large student loans they’ve accumulated. The combination of less free time with higher debt repayment figures creates a vacuum whereby the money earned never gets a chance to enter into the economy. And everyone knows that the quickest way for money to enter into the economy is through consumer spending.

Exaggerated Educational Requirements are Exaggerated.

But, the added debt isn’t the only reason that higher education is ruining the economy.  Heck, it isn’t even the student loan interest rates.  Our economy has always had an informal hierarchical system.  When I say that, I don’t mean that the people with the degrees got the better jobs, either.  Not so very long ago, the people who got the better jobs were the people who were best suited to it.  For many positions, that meant that the people getting the better jobs were the people with the most experience, and the most aptitude for the position.  Somewhere along the way, the people in charge of hiring decided that a higher education degree could replace some level of experience.  More and more companies decided that this was a good thing.  And now, many job openings require that you have a degree of some sort.  Real world experience in a position has been surpassed by classroom experience.  Entry level jobs that could just as easily be done excellently by a person with a high-school diploma are suddenly closed off to anyone without a degree.  Anyone that aspires to hold such a position is thereby required to attend college for a minimum of two years rather than spend those two years gaining experience and job skills for the position.  Worse, for the economy anyways, is that that person is then effectively taken out of the economy for at least two more years.  Instead of earning money, paying taxes, and contributing to the economy, that person is racking up the debt while taking so many credits that they can’t even afford the time to take on a part-time job.

How do we fix higher education?

College Fund © by Tax Credits

I think, first and foremost, we need to stop pretending that a degree is a “requirement”.  Stop pushing our children to attain a degree, and instead push them to get the minimal required training to attain the job/position that they desire.  Kids will be kids and they’ll do what they please, but they shouldn’t feel like their being pushed into a college education because their parents want them to get one.

We need to stop requiring degrees for positions that clearly don’t really need one.  In my particular field (IT for those curious among you), very little of what I learned in college has been applied in my work experience.  And yet, each of the positions I’ve had (with the exception of my most recent part-time job) has required a four year degree in the field.  Let me tell you, anyone with an aptitude for IT, and a willingness to learn on the job could have easily fulfilled all of the duties that I performed.  It’s a fact. How many other positions are there that are the same way?  Lots and lots, I’d wager.

From a strictly financial perspective, we have to do a better job of educating our children about how to go about getting a degree if that’s what they choose to do.  There are numerous tools that can help us out, in this internet age.  Our own government has a plethora of information to help, and there are plenty of other resources, like Big Future, that have lots of information too.

We also have to properly express what a fiscally responsible adult should do.  I can’t count the number of my fellow students (myself included) who took the maximum allowable student loans out, despite not needing that amount, so that they would have the extra funds available to do what they pleased with.  Yes, it’s some of the cheapest money you will ever borrow, but unless you’re planning on investing in a guaranteed rate account while you attend college, it’s still debt.  And every penny of it will make your financial life harder once you graduate.

Finally, we have to stop this idea that we are all entitled to a college education.  We aren’t.   It’s a privilege that we pay grandly for.  Just because you can spend $50,000 a year to get your library sciences degree, doesn’t mean you are entitled to, or should.

Do you have a degree?  Was it required for your position?  Should it have been?  How would you fix higher education?