Parents are finding new ways to get their kids started off as a young adult without the burden of debt on their shoulders.
The Problem With College Costs
Simply put, college tuition has soared twice as fast as general inflation; in some instances, even higher. Coupled with the recession, the fact is that most families are simply trying to make ends meet, so saving for college has been put on the back burner.
When it's time for our kids to enter school, there's no money. So, the student applies for financial aid with FAFSA. Financial aid comes in two forms: loans and grants. For the past several years, 60% of aid has been in the form of loans. Grants are an outright gift, whereas a loan has to be repaid.
That means a student is graduating with an undergraduate degree in Weather Forcasting and a mortgage of $100,000 or more. Soberingly, student loans cannot be discharged in bankruptcy. The graduate better get a job fast.
Community College Alternative
Ever considered a community college for the first couple of years? Or how about a four-year public college? I know several successful people whose college life took that form. A study at Princeton University shattered a myth that it takes a degree from an ivy-league school to have a high-paying career.
By going to a community college, you'll save on residence costs. As far as board is concerned, you gotta eat no matter what, so you won't save there.
Gift Card Solution to Student Loans
Here's a great solution to the student loan problem: make a deal with your child. When thye graduate, you'll give them a $1,000 gift certificate to a store like Neiman-Marcus, Apple, or a store of their choice. The trick is, they stay away from student loan debt and go to a college that's affordable.
Without this, you or your child could be paying a lot more just in interest alone on those loans for years if the loans amount to a five-figure amount. So now you know the way to keep the debt away and all it takes is a little incentive.
What colleges are you considering and what are the annual costs? I'd love to hear from you in the comments below.