Financing College: A Parent’s Guide to Being Comprehensive and Creative
Past articles in this space have discussed augmenting your search for an affordable education for your children…or yourself. In this installment, you’ll find helpful college financing resources from the BCU website—such as webinar recordings—and from outside sources, too. Based on my own experiences with four children going to college (three complete, one with two years to go) I’ve got several personal tips I think you’ll find useful.
Assuming you’ll have a need for at least some financing, it’s important to identify the source of that borrowing. If you’ve read my past articles, you won’t be surprised that I recommend credit union educational financing for the following reasons:
- Credit unions are not-for-profit organizations that exist to serve their members rather than maximize corporate profits
- They operate in the best interest of their members and promote thrift while offering great financial services
- You’ll find very competitive rates for both borrowing and savings transactions
- The level of service generally exceeds that of commercial banking institutions
Before proceeding with your borrowing approach, I suggest checking out the BCU Scholarship Program. High school seniors who are Credit Union members can get a nice reduction in their college expenses through this BCU giving initiative.
Now on to the business of borrowing. Remember, all successful personal financial plans begin with a solid discipline for saving, and the Credit Union has plentiful avenues for achieving your goals. However, even with aggressive saving, it’s likely that with today’s college costs you’ll need some borrowing help along the way. To get started, take a look at the educational borrowing options from BCU.
When it comes to loans, remember to keep an eye toward the duration, since it helps to be able to see the light at the end of the tunnel. Many students graduate with very large debt burdens and this leaves a cloud hanging over their job searches, career choice, and personal happiness. Having a strategy for repayment timeframes is as important as securing the financing in the first place.
If you’ve already taken out some college loans through other venues, examine and compare the rates and repayment schedules to determine if it is worthwhile to consolidate all borrowing into one debt instrument with one lender—like the consolidation loans BCU offers. Frequently, a great deal can be saved on total borrowing costs this way. Also, it’s much easier to track the debt and make prepayments as time and finances allow. Keep in mind that if a student is very successful in terms of grades and graduating status, there are some employers who offer a portion of college loan repayment as a signing bonus.
One obvious way to ease the burden of college debt of course is to borrow the minimum amount necessary to complete the education. Over the years, I have heard from parents whose children required five years or six years to complete an undergraduate degree program. In my experience, this is usually unnecessary. While I’ve stressed relentlessly the need for long-term planning, the specific degree program and the college advisor’s role are also important to keeping costs contained. My children all finished their college degree programs on time or a semester early. Each planned ahead with our help, looking at the course schedules one or two semesters ahead, determining the likelihood of their getting the schedules they needed to stay on time and on budget. All of our kids who have graduated thus far have taken courses at community colleges during their college careers. These classes cost a fraction of what a university costs, and all of these courses can be vetted in advance with the college or university advisor to insure they will be accepted for specific course requirements.
In a previous article, I briefly touched on state university systems, as these costs vary widely between resident and nonresident students. If there’s an out-of-state university offering a specific degree program of interest to your student, strongly consider the possibility of establishing residence in that state. This is not to suggest the whole family pull up stakes and move to Florida because Florida State University has a great marine biology program. The student could move to Florida, possibly gain part-time employment at the very university in question, and within 9–12 months (depending upon the state) qualify for resident tuition rates. One of my children did this and the difference between resident and nonresident tuition was enormous, dropping from $20,000 annually to $6,000. While it does take some effort to establish residency, you can see the value of doing so, especially if there is a specific program that would benefit the student for a lifetime.
Once you follow the links to the BCU website within this article, there is a sub link to the list of schools participating in the credit union student loan program. There are hundreds of schools across the country included in this state-by-state list. My experience managing people for more than 30 years has shown me that the focus of a good employer is normally on the candidate, not the college or university from which they earned their degrees. For the majority of our children, a good quality, fully accredited institution will completely serve their needs, and with a smaller cost burden hanging over them upon graduation.
Article written by Patrick Catania