College tuition in the United States, one of the most expensive in the world, has increased an average of 50% in the past ten years, significantly affecting the budgets of families of Millennials across the country. And today 40 million graduates themselves are saddled with at least one loan – at an average of about $30,000. Total student debt has risen to over $1.2 trillion, affecting the ability of Millennials to move forward with other major purchases and causing many to return home as boomerang kids.
Although a college education has traditionally led to higher paying jobs after graduation, some pundits are cautioning against that assumption in today’s economy. They suggest that families consider the full pros and cons of higher education vs. more specific job training for a child’s particular interests and situation.
You may still decide that college is the right place but that you need to control the costs. While you may not be able to convince colleges and universities to roll back their inflated tuitions in time for your student, there are some steps you can take as parents to cope with these expenses:
Plan ahead. Begin talking about the realities of covering college costs early in your child’s high school years. You may have started a college fund when she was first born but now it’s time for a teachable moment to involve her in the process too. While you want to keep her focused on maintaining good grades to gain acceptance into the college of her choice, it’s realistic to let her know that your budget and the school’s fees will also play a role.
Research options. Discuss with your teen different choices for undergraduate education: 2-year community colleges, 4-year public universities, 4-year private colleges. Depending on his interest in one career over another, a less expensive school may prove to be appropriate. He may decide to begin in a community college and then transfer to an in-state school for higher-level courses and finally attend a university for an advanced degree.
Everyone participates. Parents with kids in college generally reduce the funds they allocate to other budget categories like vacations or entertainment. Helping with tuition may even necessitate them working years longer before retirement. High school students may take part-time jobs over the summer to generate extra money and also get hands-on training that can pay off in a better part-time job in college. Students can also participate by creating an exemplary high school record, making student aid more likely.
Balance scholarships, loans, family savings and work. Specialized scholarships and fellowships may be available from private sources for qualified students and colleges themselves may offer financial assistance. Federal funding is available through Pell grants, Stafford loans, GI benefits and work-study programs. But family savings often contribute the most to college expenses.
Design payback strategy. There are rules for how soon student loan payments need to begin and the amounts that are due. Within those guidelines, families can help their children set up a realistic approach for repaying that debt.
With large student loans having a negative effect on the growth of the country’s over-all economy as well as parents’ and Millennials’ individual finances, controlling this debt as best you can will be a win-win for everyone. And it just might limit the amount of time your boomerang kid will spend on your couch.
