Earlier this week I received an email from a couple who was concerned that they would not be able to continue to fund their daughter’s college education.
Their situation looks like this:
- Daughter attends a large public school
- Both parents have masters degrees
- Their home is paid off
- They need to come up with about 10k per year
- The were not able to get a student loan or a home equity loan
Concerned that funding an education was becoming unattainable for the middle class they sent an email asking for advice. As I wrote out my response to them, it occurred to me that many families likely find themselves in similar situations, and the suggestions that I made for the Smith will likely apply to many other families.
The following text is what I emailed to the “Smith” family, published with their permission and edited for privacy.
My first suggestion is to get in contact with your daughter’s financial aid office. Some schools can usually put together a combination of grants and scholarships if finances get tight for a student and it could lead to a withdrawal. With the large public schools, this is less of a factor. On the plus side, the school will have a very large financial aid office. I’d suggest sitting down for a meeting and asking for advice. The aid counselors are especially good at helping students find money to pay for their education. (They are not nearly as good at helping them pay it back, but that is for another discussion). If one aid officer isn’t helpful, reach out to another one. Eventually you will find someone helpful.
Your financial aid office will likely suggest a parent plus loan. These are loans through the federal government that parents can get. (I’m assuming your daughter has already maxed out her federal loans… that should definitely be step number one). The plus loan is the easiest loan to get for parents because the government has much lower requirements than the private sector. This is because the private sector requires good credit while the government merely requires no negative credit history. Remember, plus loans are in your name and not your daughters, but it is one approach.
You are definitely right that it has gotten tougher to get student loans, but they are still big business for many companies. The fact that you were denied a loan could indicate something negative on your credit history. Have you gotten your credit report recently? Sometimes there can be a single error that hurts a credit score, other times a missed bill that ends up in collection can damage your credit score. If you look at your report and try to correct any errors, you could make yourselves much better candidates.
Finally, I realize you are worried about just getting through the next semester, but I think it is important to formulate a long term plan. One option might be a leave of absence from school and a semester or two at home while getting core credits at the local community college. It can be done without delaying graduation and can save a ton of money. I’d also suggest at looking into ways to lower the cost of college. When I was in school, I worked as a Resident Advisor my last two years. This job paid for my food and housing leaving me with only a tuition bill.
In the worst case scenario, your daughter could work for a year or two while you all work together as a family to put together a plan to fund her education. I know it is not what anybody wants, but this situation could give your daughter a real appreciation for the opportunity once it comes, and it could bring you closer together as a family.
I’d also regret it if I didn’t encourage you to exercise great care when it comes to picking out any student loans. I know your situation seems dire now, but having a huge student loan debt and no way to pay it back would be especially devastating. If you or your daughter take out student loans, please make sure you have a plan to pay them back. Huge student loan payments for the next 30 years could be a nightmare you really want to avoid.
How did this help the Smith family?
Less than 24 hours after I sent my response, I received an excited email from Mrs. Smith. She and her husband were working with a firm to repair their credit score, and had gotten some positive results. She said they were going to attempt many of the suggestions and seemed optimistic about getting things in order.
An Interesting Lesson
One of the things that Mrs. Smith mentioned to me was how difficult it was for her and her husband to get ahead. They are both educators who made seemingly wise financial decisions every step of the way. But the little road blocks that life throws us, such as needing braces and other costs of raising children made saving for school difficult.
From where I sit, the lesson here is that you can’t plan for every expense, so when you do make plans, be conservative. If you stretch yourself too thin, when the unexpected things come up you won’t be able to cover them.
A Special Thanks
I’d also like to thank the Smith family for being willing to share their story in order to help others out. Being able to add my two cents and lend a hand is a privilege. In fact, it is the reason this site exists.
Readers: Any additional advice to add? These days paying for college and paying off student loans requires more creativity than ever, so if you have some ideas, please share!