How our family is navigating the college finance scene in a time of seemingly unavoidable student debt.
by Hollie McAfee, Assistant Marketing Director, F.A. Peabody

Our son will graduate from college next year with less than $1,000 debt, and we didn’t pay for any of his college costs.

My husband and I did not save money for our kids’ college educations. Our oldest child was anti-school from a very early age, so we were wise to not push her to attend college right after high school. Instead, we encouraged her to work and use her money wisely. Today she is grown, independent from us financially, a homeowner, and is advancing in a new career.

Our second child decided at an early age that he did want to attend college.  As a high school student he became very interested in the social work field. It was clear that he would need at least a bachelor’s degree to make a solid career.  We told him that we would be unable to contribute to his education financially, but we would guide him the best we could. Next year, he will be graduating with that bachelor’s degree with less than $1,000 in student loan debt. Here is how he did it, and how we helped.

During High School

What he did:

  • Took advantage of early college credits. Most high schools today have early college credit options through no- or little-cost Advanced Placement classes and dual-enrollment with local colleges. Our son took several college classes through his junior and senior years and graduated with 45 transferable credits. Because he focused on taking general education classes, he was able to go into college with a whole year under his belt and will graduate 3 years after entering. This saved him about $8,000 in tuition.
  • Applied for dozens of scholarships during his senior year. By spring of that year, he was an expert at writing essays. He did not get straight As in school. Although he was a good basketball player, he was not scholarship-good. He did have excellent leadership skills and a solid list of volunteer activities. So, he focused on those strengths in his applications. By graduation, he earned $7,500 in scholarships. Almost another year paid.
  • Made some really tough decisions. The college he is graduating from next year is not his first choice.  It is a school within driving distance of our home so he can live at home and commute. I know this is a deal breaker for some families and students, but it made the most sense for him. He saved a whopping bundle of money to the tune of $10,000 a year.

What we did:

  • Helped him efficiently select classes. I spent some time looking at college graduation requirements online and finding classes that would apply toward his core requirements at most schools.  There were a few classes he took that ultimately did not transfer perfectly toward his degree. But because we were mostly efficient with this process, he was able to save a year of tuition.
  • Took him to financial aid meetings and organized his application process. I did NOT fill out applications for him. But, I did make a list of available scholarships, made a calendar of due dates, and gave him links to 3 applications a week. I kept him on task (nagged) him all year. I took a lot of notes at meetings. We completed the FAFSA (Free Application for Federal Student Aid). A note about the FAFSA – Do it! Even if you don’t think you will qualify for aid because of your income.  We did not qualify for any needs-based aid. That really stinks, I know. But colleges won’t offer a financial aid package at all, including merit-based scholarships and loans, without the FAFSA.
  • Made some really tough decisions. We all want to give our kids the best, and we would certainly be called mean parents for this, but we decided to refuse to co-sign on a loan that would pay room and board. To us, it did not make financial sense, especially for a career like social work that might not provide the kind of income that could support the debt. Because the federally guaranteed student loans were limited to about $7,500 per year, and his financial aid packages were limited, we knew he would need a private loan to pay the difference. Instead, we have helped him by providing him a place to live and have helped him finance a reliable car for commuting. There are various living options for college students that might not include borrowing to pay for a dorm room and cafeteria food, if you think outside the box.

A bonus thing that we did:

Opened a college savings account. One of the most important things I learned from our first financial aid meeting during his senior year was that it wasn’t too late to open a college savings account and that we could, in fact, take advantage of $1,200 in grants over his college career. We took his tax refund and invested it in the NextGen 529 account and received an initial grant of $200, a $100 grant for automatic deposits (we set up just $25 a month,) and a $300 matching grant each year.

A note about NextGen for Maine: Babies born in Maine after 2008 are eligible to receive the $500 Alfond Grant in their 529 account. It is up to parents to open this account. Our youngest son was born in 2010 and the original $500 deposited in his account is now worth more than double that amount, even without any additional deposits.

During College

What he did:

  • Took on adult responsibilities. When he turned 18 in September of his first year of college, our son got a job working with kids as a Direct Care Provider for a social services agency. With the flexible hours and clients in both our home town and the college town, he was able to average over 20 hours a week and made enough money to cover his daily expenses and his car loan, along with renting books (another savings option) and pay for miscellaneous college fees.  This job also provides him with valuable experience and connections in his industry, which will give him more job options when he graduates.
  • Followed through on scholarship obligations and applied for new scholarships. Some of the scholarships awarded to him in high school required some action on his part, like getting decent grades the first semester, sending documentation, and even serving volunteer hours. There were also new scholarships offered through his school that were awarded to returning students. An easy application is made with the school and enters him into the running for multiple scholarships at once. He has earned about $1,000 this way.

What we did:

  • Stepped back a little and let life lessons happen. When you send your kid away to school, they have to become independent quickly. When your adult son is still in your home each day, it’s easy to still be the Mom. I had to really fight that urge the first year and sometimes found myself still nagging or wanting to “help.” Sometimes I knew he only had ninety-six cents in his checking account and 3 days until pay day. Sometimes I knew he was several weeks behind on his school work. Knowing it was best to let these circumstances teach the lessons, I mostly let them happen. Mostly. That first year was rough, but he learned a lot and has been ten times more responsible during his second year.
  • Reminded him to apply for scholarships! That’s really all we had to do here. I think I printed off the application and gave it to him.

A bonus thing that we did:

Utilized education tax credits. The IRS allows parents to claim college expenses (even if the child pays them) on their tax returns and get up to $2,500 back for the American Opportunity Credit or $2,000 for the Lifetime Learning Credit, depending on which one your child qualifies for. Ask your accountant about how to make best use of these credits. We took the credit and immediately deposited it in his 529 account to get the matching grant funds.

Every family situation is different and we are well aware that these steps will not work for all, or even most, families. Not all fields of study are available at local schools. Some are more rigorous and don’t allow time for side jobs. Many students really benefit from living at school and having the typical “college experience.” There are a lot of parents who prioritize education and save up enough money to pay their kids’ way all the way through. However, with any route that you take, there are ways to be creative and save valuable funds and reduce debt. Our hope is that someone can learn from what we have learned and apply it to their situation in their own, unique way.