Q: Help! My spouse and I are the parents of a college-bound high school junior who's starting to look at schools. We couldn't be prouder of our young scholar, but we haven't saved a dime to help with the costs. What can we do?
A: It may sound like a cliché, but now is a time to focus on the positive. Your child is college-bound! She has the ambition, intelligence, and drive to do something with her life! Take a moment and celebrate that little victory.
Sending your child to college without having any savings isn't going to be easy. It's going to take more research, more writing and more debt. This disadvantage isn't insurmountable though: you and your child are both going to have to work a little harder to make this happen.
Before you begin planning your course of action, get a realistic estimate of costs. The College Board maintains a utility called the Estimated Family Contribution (EFC) calculator. Using this tool, enter your income, savings, and the number of people in your household. At the end of this, you'll get a dollar amount showing how much the federal government expects you to pay.
At some point, your student will have to read and sign the FAFSA (Free Application for Federal Student Aid), which require your income and savings information. This will also help your child make an informed decision about which school to attend.
Once you have a good understanding of realistic costs, it's time to start planning.
1.) Choose flexible schools
Encourage your child to apply to and visit a few schools where he or she would likely be among the best students. What makes your student most comfortable: a small community college or a big state school? There are many in both categories at all points on the cost continuum.
Many schools in both categories struggle to attract quality applicants. They will be eager to accept a bright and promising young person who can make their school a better place. These schools may offer extensive grants, scholarships, work-study offers, and other tuition breaks.
If your child is reluctant to consider schools that don't have an elite price tag, you might want to frame the concern as future debt. Use current examples of people who just graduated and can't find work in their fields. Encourage them to think about the next five or six years of their life, rather than just the next four.
2.) Take a look at loans
If you have nothing saved for college, the unfortunate reality is that you'll likely have to borrow at least something. The federal government sets a cap on how much they will lend to students, based on EFC, or estimated family contribution. These loans have quite favorable rates and good repayment terms that will help young people stay out of trouble.
Outside of a mortgage, though, a student loan is the safest investment you can make. The earning potential of college graduates is significantly higher than a high school graduate. There's no need to be ashamed about borrowing to pay for school. Just use it responsibly.
Catholic Federal offers a Student Choice private loan solution designed to fill the funding gaps that may exist after all lower-cost sources of aid (including Federal Stafford loans) have been exhausted. And since these loans are being offered through your credit union, you know you are getting a great deal from a not for profit lender you can trust.
Msgr. Forbes Scholarship applications are also available. The college scholarship are available to members of the credit union who are planning to attend or are currently attending a college, university, community college, or a trade or technical school. The award is based on the student’s personal achievements, scholastic accomplishment, financial need, community service and grade point average.
Having no college savings does set you behind in the education race, but there are many alternative options. Have a frank, honest conversation with your student, and then do what's best for you and your family. And don't forget to celebrate the positive - you raised one smart kid!