Alternatives To Going Broke In The College Savings Game

By: Arman Rousta

Not every family needs to go for broke, literally, when it comes to saving for college. The fact that 80% of our nation's kids attend public colleges tells us that we're not the first ones to have this bright idea. Although the cost of state schools is also on a rampant rise, pound for pound, the economics of public school education may outweighs that of private colleges for families that just cannot afford the bill. While educational loans are a possibility, families should seriously weigh whether they want to put a young student's future in an $80,000 hole for the sake of sending them to a more "prestigious" institution. This dilemma is best handled on a case-by-case basis.

Each family must size up what it can realistically save for college, regardless of what type of schools the children end up being accepted to and attending. For example, if a family with one five year old child has not started saving for college, the parents would evaluate their discretionary monthly income and determine how much they could comfortably set aside in 529 plans and other education savings vehicles, depending on whether they want to and/or can afford private k-12 schooling. Let's say this projects out 12 years to $120,000. That can be the benchmark for which the family will shoot to contribute, regardless of whether their child attends Harvard at $300,000 or the University of Albany at $110,000. The student would ultimately have the choice to take on loans and grants to attend the private school, or have $10,000 cash in his or her pocket and no debts to worry about. Surely, a Harvard degree may be worth the extra financial burden - that is a decision that student and parents must collectively make.

There are so many other creative alternatives to financing college education. Here is a short list:

  1. For starters, most bright and ambitious student can go to a public community college for a year or two, achieve high marks, and then transfer into more expensive public or private colleges thereafter, knocking out some high expenses.

  2. Joining the Armed Forces may be an excellent solution for certain students. Major support for educational expenses is available, not to mention the education that is offered while in service.

  3. Ambitious and organized teenagers may benefit from taking a couple of years off from school to pursue employment and/or vocational training of some kind. This is often a good opportunity to learn the value and challenge of earning a living, while stashing some funds away for college in the coming years. Such an approach often prepares kids to be able to handle the dual load of employment and college simultaneously, a challenging but invaluable lesson in life management.

  4. Hit up the 401(k) or take out a (second) mortgage on the house. Please speak with your personal financial advisor before considering this strategy, which does present a financial risk and cash flow challenge. However, if you and your child truly value that Ivy League degree and believe in the cultural, personal and economic benefits that may be reaped by having such a degree, then this is always an option, granted that you have any equity available in these assets and that you are not too close (5-7 years) to retirement.

These are just some of the alternatives to going broke while saving and paying for college. Mind you that, depending on your financial status and merits of your children, there may be significant financial aid or scholarship dollars available as well. Visit for more information.

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