I have
worked in the area of college financial aid for almost 30 years, the last 17 as
a Student Success Advisor at ICAN. In those
30 years, I have had many personal experiences and I have had the opportunity
to work with a lot of students and families and see many different
situations. I would like to share some
of what I learned as a student, a parent, and as a professional in education as
it pertains to paying for college.
On a
personal level, in the last 30 years I have borrowed student loans (much more
than I should have) while earning my undergraduate and graduate degrees. I married my wife, who I met while in
graduate school and who also works in education, and at the same time, I gained
2 young step-daughters. I watched them
grow up and offered them the opportunity to attend college. And, more recently, I paid off my student
loans…
Given the
careers both my wife and I chose, we were both fully aware of the rising cost
of education. After talking about it for
several months (or was it years) we finally started a 529 college savings plan
for each of my daughters when they were about 8 and 9 years old. We put a small amount aside each month at
first and then, as it became more and more apparent that college was right
around the corner, we increased our monthly contributions.
From a
parent perspective, both my wife and I are so glad that we started to save for
college when the girls were younger.
Looking back, we wished we would have started saving sooner. The college savings plans gave us a “cushion”
that we could rely on when bills were due so that it did not cause a financial
hardship for us. It also kept us from
borrowing educational loans. Putting
aside some money each month for several years is so much easier than coming up
with a large amount all at once. Any
amount saved puts you that much closer to meeting educational costs and keeping
loan debt down, for both parents and students.
As parents,
we always stressed to the girls the importance of education. However, we also told them that they did not
have to go to college just because we wanted them to, it was their choice. Eventually, our oldest daughter went on to
college and is currently a senior at the University of Northern Iowa and her
younger sister has chosen to enter the work force.
When it came
time to pay for college, we had many discussions in our household as to what
the expectations were. We were not going
to pay for everything; however, we would help out. It was understood that our daughters would be
responsible for 1/3 of their total costs.
As we tried to have our daughters apply for scholarships (a difficult
task by the way), we stressed the importance of completing college debt
free. We also talked about how working
while in college can help pay for educational costs.
My daughter
ended up receiving some scholarship money that, along with her part-time
income, has enabled her to fund her portion of her educational costs
debt-free. As a college senior, she is
understanding more and more the importance of working part time while school is
in session and working more hours during the summer to help pay for education
the following year (after her freshman year, she said, “If I work full time in
the summer, it will ruin my summer!!”).
She has also more recently stated, “I wish I would have applied for more
scholarships in high school.”
I think it
is so important that parents and students have discussions early on about what
the expectations are when it comes to paying for college so there are no
surprises. I have had families in my
office applying for financial aid where the father turns to the student, for
example, and tells her that he is no longer going to help pay for college and
then turn to me to ask how much can the student borrow. The student was already in her sophomore year
at a 4 year university, was about $10,000 in debt, and needed to come up with
$20,000 just for the next year on her own, and then for another year after
that. A little planning and discussion
might have alleviated a lot of tears.
Some of the
families I meet with have not planned for or saved for college. They might have good incomes, a nice home,
nice cars, etc., but no money for college.
Maybe the parents think that the student will get a lot scholarships
based on grades or athletic ability, for example, while the student thinks that
the parent will pay for everything like they have in the past. Again, that’s why I think it is so important
to have these discussions as a family early in the process.
The Free
Application for Federal Student (FAFSA) can help a family obtain financial
aid. Financial aid is not there to pay
for all of a student’s education, it’s there to supplement what the family has
in the form of income and assets to help offset the cost of education. Families should also consider savings
(college savings plans, etc.), scholarships, and income from work (student and
parent) to help them cover educational costs.
Loans are
easy to borrow, but not so easy to pay back.
The average Iowa student earning a bachelor’s degree and taking out a
student loan, graduates with around $29,000 of student loan debt. That means their monthly payment, beginning 6
months after they graduate, will be just under $300 per month and the payments
will continue for 10 years. That’s $300
per month for 10 years. Keep in mind
that at that time in a student’s life, the student might want to purchase a new
car, buy a home, and start a family. All
of those things cost money. Can the
student really afford to borrow almost $30,000 (and pay back about $42,000
depending on interest rates)?
Any
scholarships a student receives, any money set aside in a savings plan, any
money that a student can earn and save from working, is money that does not
have to be paid back with interest. Something to think about.
Please
remember that the team of ICAN advisors can help students and families as they
go through this process of being aware of the cost of education and how to plan
to cover those costs.
John Holland
ICAN Waterloo Center
John Holland
ICAN Waterloo Center
