What To Do If You Can’t Afford to Pay for Your Child’s College Expenses

Many of our clients have the goal of paying for their kids’ college expenses.  In meetings with those clients—and in a prior post—we have discussed strategies for how to save for this major expense.  However, accomplishing this goal requires a significant investment of time, income, and planning, which is not feasible for all parents.  Or sometimes even if a parent has been able to afford and has been faithfully pursuing a savings strategy, unexpected events (e.g. a job loss or major health event) interfere with those plans.  What should parents do when they’re unable to pay for a child’s college expenses?  We discuss below options for minimizing expenses and maximizing available cash in order to make it through the college years.

Minimize College Expenses:

• Keep college expenses low by focusing on in-state public colleges and/or a combination of 2-year and 4-year degree programs.  Expenses for private colleges and universities are often more than double those for in-state public colleges. Encourage your child to focus on state schools and to possibly begin their college years at a community college to further minimize costs. Tuition for most community colleges is a fraction of the cost of even public colleges, and there can be additional benefits to starting one’s college career there as well. In Virginia, for example, the community colleges have a Guaranteed Admissions Agreement with a number of private and public colleges. If students complete an Associate degree at a community college, maintaining a certain GPA and fulfilling any other requirements, they receive guaranteed admission to the relevant college.
• Apply for scholarships and financial aid to lower the bill for college tuition.  Have your child research whether scholarships are available through their prospective colleges or through community groups.  Especially if your child has a unique cultural, socioeconomic, or religious background or has unique hobbies or talents, there might be groups looking to provide assistance.  Also, do your research on financial aid options.  There were changes to the FAFSA a few years ago, which we discussed in a prior blog post, and you should investigate whether your child’s prospective colleges require the CSS Profile as well.  The CSS Profile delves more deeply into certain aspects of your family finances and could lead to a lesser financial aid package if you have assets not covered by the FAFSA—e.g., significant equity in your home, ownership of a small business, or 529 accounts for your child that are owned by grandparents.
• Strongly encourage your child to finish college in 4 years—or less!  Especially if your child can receive college credit for Advanced Placement or International Baccalaureate courses taken in high school, he or she may be able to finish college in less than 4 years.  Finishing even a semester early could save $10k or more on tuition and other expenses.  Your child could even find a temporary job near college for the last semester to avoid missing out activities with friends and classmates and just use his or her earnings to pay for rent.

Maximize Available Cash:

• Encourage your child to work in the summer and during the schoolyear to pay for a portion of college expenses.  Part-time work during college can actually benefit students by helping them build professional skills, giving them insights into career fields, and fostering discipline and organization as they juggle academic and work responsibilities.  Research by the American Association of University Professors suggests that students working 10-15 hours per week are more likely to complete their degree, though their grades may suffer if they work more than 15 hours each week.  Similarly, your child could take a gap year after high school and work to raise savings for college expenses.  However, this is only a good strategy if your child is highly motivated to attend college.  Otherwise, the gap year could extend indefinitely, and your child may miss the benefits of higher education down the road.
• Don’t be afraid of your child taking out a modest amount of student loans.  Don’t be afraid of your child taking out a modest amount of student loans.  Having some “skin in the game” may help them stay motivated and engaged throughout their college years. In addition, some student loan debt may help teach fiscal responsibility in the years after graduation. It forces your child to live on less than 100% of their income. Once the student loans are paid off, graduates can redirect those monthly payments toward savings, since they are not accustomed to living on that portion of their income anyway.  Research suggests that if student loan payments amount to less than 8% of a child’s income after graduation, the payments will not be excessively burdensome.

Whether your child is 18 months old or 18 years old, we would be happy to help you consider your options for how to pay for his or her college expenses. Even if it’s not feasible for your family to pay for all expenses and have your children graduate debt-free, there are many ways to try to manage the costs and ensure that their student loan debt is not overly burdensome after graduation.