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
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
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.
Graduate school loans have an equally minor effect on homeownership. Obtaining a masters, medical, law or doctorate degree actually insulates you from the adverse effect of student debt when you buy. The probability of homeownership is highest for individuals with a doctorate and no student debt; they have an 87 percent chance of owning homes. That likelihood only drops to 84 percent if the individual incurred $50,000 of student loans obtaining the doctorate. At the master’s degree level the probability falls from 80 percent if you have no debt, versus 75 percent with $50,000 in student loan debt. Getting an advanced degree increases your overall likelihood of owning a home, despite the small negative impact student loans have on your probability of homeownership.