If you or someone you know is on the path toward college, consider this: “College is Expensive. What’s your plan?”
This is the time of year when we hear snippets of graduation speeches by notable people and think about the glories of higher education. It’s great to be inspired by speeches but how will you make sure that you can fund a college education? And how can you prevent you or a loved one from being crippled with student loan debt after the graduation speech is over and reality sets in?
In the article, financial expert Dave Ramsey recommends using an Educational Savings Account or a 529 plan. He is not, however, in favor or using savings bonds or pre-paying tuition. And he gives the advice you probably hear everywhere: look for applicable scholarships. The time and energy you invest in researching and applying for scholarships can really be worthwhile. Ask anyone who received even the smallest scholarship how that money compares to loans that must be paid back.
The New York Times article “Student Loan Facts They Wish They Had Known” included anecdotes from student borrowers who have the benefit of hindsight.
One important thing to remember is that “…it is much too easy to lose track of your running total.” Students don’t always get scholarship money to see them through to graduation or a change in their family situation alters their federal loan eligibility. With students taking out a mix of different loans (federal, private, subsidized, unsubsidized) each year or even each semester, it is easy to keeping piling on the debt. It may seem like a hassle but keeping up with your loan amounts can be an important reality check and prevent unwelcome shock after graduation day.
Another bit of shock can also sneak up on parents who sacrifice their retirement funds to pay for a child’s college education.
A financial planner can school you on some of the best ways to prepare to pay for college.