Ask Chuck: Help, I Don't Have Enough Saved for My Kid's College!

Hi Chuck,

I have a friend that is stressing out concerning not having the funds in place for his son who is about to graduate from high school. Can you put his mind at ease? I told him that if his son wants to go bad enough, he will find a way.

~ Archie

Cookeville, TN

Hey Archie,
I can really relate to how your friend is feeling right now.  It's like how you feel on your wedding day when you realized you should have started a year ago loosing that 30 pounds.  You're still going to get married -- but you have that "woulda, coulda, shoulda" feeling.

Or maybe even closer to home is how your kid feels when you tell them on the day they get their driver's license that they'd better begin saving for their car.  Ouch!  What to do, what to do ....?

If I woke up in your friend's shoes, here are the main things I'd do right off the bat.

Start by dropping debt like a hot potato. Your friend is likely hampered in his ability to pay for college because of all his payments.  Guide him to begin dumping them as fast as possible by either selling whatever it is on which he has payments or accelerating the payoff.  For example, if he has a vehicle with a $15,000 payoff and $350 / month payments, he could sell it and either pay for a replacement with cash or a payment he'd complete by the time Junior goes to college.  Net freed up for college: $4,200 per year.

Now imagine what he could do if he could get super aggressive and drop $800 or $900 -- or more -- a month in debt payments.  Sounds like college could be paid for!

Get your child moving to help himself ... Now!  His son should be doing four key things right now to help himself financially:

1. Apply for financial aid.  Hurry, depending on your state, your deadline to complete the FASFA (Free Application for Student Financial Aid) may be past or fast approaching!   Click here to learn the details.
2. Apply for local and national scholarships.  My online search this morning for "San Antonio scholarship" returned over 1,700 results.  You can narrow your search as much as you like.  A really great online portal for finding thousands of college funding sources is www.FastWeb.com.  
   
3. Get realistic about his college affordability.  Your friend should sit down with his son and lay out exactly what they can comfortably afford at this stage in the game.  It's so much better to deal with this now, than the stress everyone will feel at the moment of truth -- the day Junior's friends leave for their school.  It won't be easy, but they should think of how much farther they'll be down the road in September than if they hadn't.
4. No student loans!  Or any other kinds of loans for that matter.  The most positive thing he can do for himself is to ensure he doesn't begin his work life in the hole.  If I could only tell you how many folks I've worked with who are still dragging around student loan debt decades later ...
   

What if Junior lived at home and first attended a local college ...?  In-state tuition is not only much less than out-of-state, but they'll also find it's mucho cheaper to live at home rather than on campus or in an apartment (even if he's bunking up with his five friends).  They can further reduce expenses by going his first two years at a junior or community college vs. a four year university.  Some studies even suggest that junior college transfers go on to more successful college careers.

What if Junior had a reasonable work schedule while attending college ...?  While I attended Georgia Tech, I worked most of time while in school.  I worked as a full-time Co-Operative student (at a power company in Savannah, GA) every other quarter to earn income, but also to gain experience in my major field (electrical engineering).  I also supplemented that money by working at an on-campus sandwich shop, putting up gutters, ushering at the Fox theater, as well as small gigs here and there the quarters I was back at Tech taking classes.  The funny thing is that my grades improved when I was working, a phenomena verified by various studies -- but often poo-pooed by lazy college students or parents concerned about their kid's grades suffering.  Remember, I said a reasonable work schedule ... no more than 15 hours a week or so.

Share this with your friend.  Hope they listen to your wisdom!