College Savings Tips For Your Family

College, Debt, Loans, Saving, Saving Money, Student Loans, Students

May 25, 2023

Going to college does not put someone on the path to a more secure financial future. Only completing college can do that. And yet around 40% of students attending public or private nonprofit colleges have not completed a degree within six years. It’s worse at for-profit schools, with around seven in ten students not graduating within six years.

And that can be such a heartbreaking financial burden. By one estimate, nearly four in ten people with student loans have no degree within six years. It’s likely hard to build financial security if you’ve got student loan debt and not the degree that is typically the ticket to a higher salary.

A recent survey by the Consumer Financial Protection Bureau suggests that’s indeed a problem. Nearly half of people who reported they attended college but don’t have a degree said they have trouble paying their bills. That’s more than double the 23% of college graduates who said they struggle to pay their bills.

Here’s how to set your family up for college success:

Don’t force college on a child.

They need to want it. Especially if they will be borrowing. Starting at a community college can be a great option to explore fields of study without breaking the budget, and programs are set up for people who are also working. Online courses can be another great way to explore fields and see if college-level learning is something they want and are committed to.

Pick the four-year college that won’t require you or your kid to borrow.

If your child does want to attend a four-year school, focus on finding the school that won’t require anyone in the family to borrow. Maybe that’s a private school so eager for your kid to attend that it offers a generous aid package. Or maybe it’s the in-state school where the all-in price is something you and your kid (with some part-time work) can handle.

Those should be your dream schools. Ideally your kid graduates, but in the event they don’t, your kid isn’t paying off debt on a lower salary than they would likely be able to have if they earned the diploma.

Be smart if you are considering going back to school.

I applaud the effort to advance your career. And if your employer offers to pay some of the cost, that’s even better. But this only makes sense if you get the degree, and you don’t need to borrow.

Also, think through what would happen if you lost this job. If you have no loan debt, you might just pause school if you need to. But if you have debt, you now have no income and debt without a degree.

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