This is the time of year when people get swept up in the joy of seeing graduation photos and buying graduating gifts. It is a fun time but for some the fun only lasts until the realities of paying back student loans hits. While there is no need to ignore the joys of graduation season, families can give thought on how to make the joy last longer by planning how to fund a college education.
At least one person running to be President of the United States is proposing ways to alleviate student debt as part of a platform. But until there is a comprehensive national plan or we change they way college is funded, students and their families will need.
But how did we get here? There was a time when taking out loans for college was not the norm. A Bloomberg opinion piece, America’s Student-Debt Crisis Was Born in the 1600ss, discusses how over time, student loans came to lose their stigma in the United States. In the country’s early days, only a few attended college and they were likely to get grants but when it seemed they took that opportunity for granted, it seemed that loans would help them take education more seriously. Later, after World War II, college became more accessible. While the GI Bill was available for veterans, people who were not in the military also wanted higher education and they were offered loans.
While there is no need to vilify anyone who decides to take out student loans, we are in a time when people are regarding student loans with more skepticism.
Just as you need to set financial planning goals, you can also form a college savings plan. If you expect your children to contribute, let them know, even before they are of an age to work, so that the expectations are clear.
Ideally, families would start to save when children are young in order to leave ample time for college savings to grow. If that is an option for you, start now, both with general savings and a 529 account.
If you do not have many years to save, you can still save something and look for grants and scholarships. And you can also talk with your child about the costs of higher education and what you are willing to give. If the sky is the limit, work with that. If you feel okay about covering tuition but want them to pay for books or room and board, make that clear. Perhaps, your child will need to start at a community college and transfer or go to a school with in-state tuition.
Overall, the idea is that once a young adult is finished with school, they are not shocked or overwhelmed with paying off the loans that financed that education. Remember: You Can Graduate College Without Crippling Debt.