Early Planning Is Crucial in the Battle to Avoid Student Debt
Higher Education It's estimated that the cost to attend an institute of higher learning will double by 2030. Getting a head start on savings can ease the financial blow.
Putting money aside for college isn't easy. According to the State of Student Debt Report by Wakefield Research, nearly 1 in 3 parents surveyed didn't save anything for their child's education. However, Thrivent Student Resources financial expert Adam Carroll says there are numerous ways to help pay for tuition, and the sooner you begin, the better.
“Early saving for college is a must for families today to reduce the overall loan burden at graduation. Students should be a part of that savings discussion, understand how much is being put away for school, as well as how much they need to be saving on their own,” Carroll advises.
Easing debt with a family-based solution
“There are currently around 44 million borrowers in the United States,” explains Carroll, “and around 11 percent of those borrowers are in default, meaning they’ve not made a payment in over nine months.”
“Early saving for college is a must for families today to reduce the overall loan burden at graduation.”
He adds, “Recent research by the Brookings Institute finds that roughly 29 percent of all borrowers ultimately default on their loans at some point.”
Because of these staggering numbers, Carroll believes saving for college should be a priority for the entire family, and proposes a different kind of baby shower gift. “Ideally, when a child is born, relatives scale back on the numbers of onesies and stuffed animals and instead help to fund the child’s future education expenses by contributing to a 529 plan,” he says. “These are well-managed funds with age-bracket investment classes and lower than average management fees.”
Start exploring your options early
Carroll also suggests earning college credit while in high school and saving half the money earned during these years. Also, there are now scholarship opportunities for children as young as third grade.
“It’s incredibly important to start planning well before senior year, as the college enrollment process has changed significantly in the past few years,” he cautions. “At one point, the Free Application for Federal Student Aid (FAFSA) was available on January 1, a challenge for people who didn’t have their taxes done right after the first of the year. The filing of the FAFSA now allows families to use prior-prior year tax returns.”
Living at home can also cut college costs, as can transferring to a state school from a community college. Acquiring textbooks through used book exchanges or Amazon is another savings option, along with participating in work-study programs.
Concludes Carroll, “The earlier a family begins planning on how to pay for a college education for their kids, the less indebted those students and families are upon graduation."