Get 6 tips on the best ways to pay for college.
Money Girl
233 MG Should Students or Parents Pay for College?
In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Boebert, he'd ban abortion without exceptions for rape or incest, and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org, not authorized by any candidate or candidate's committee. We wear our work day-by-day, stitch-by-stitch. At Dickies, we believe work is what we're made of. So whether you're gearing up for a new project or looking to add some tried-and-true workware to your collection, remember that Dickies has been standing the test of time for a reason. Their workware isn't just about looking good. It's about performing under pressure and lasting through the toughest jobs. Head over to Dickies.com and use the promo code Workware20 at checkout to save 20% on your purchase. It's the perfect time to experience the quality and reliability that has made Dickies a trusted name for over a century. (upbeat music) - Hi everyone. Thanks for downloading the Money Girl podcast. I'm Laura Adams. (phone ringing) - Hi, my name is Kristin and I'm from Sparta, Michigan. My question regards paying for college education. We have quite a divide in our family. I would love for my daughter to go wherever she would like. And I will do whatever it takes to pay for it. My husband on the other hand believes that she should have to work for it and should go to community college and do whatever she can to do at the cheapest way possible. My daughter, of course, is struggling to work within those parameters of the tool of us. Just wondering what your thoughts would be. How does a child get a good college education? We make a good living, but we haven't saved a huge amount. And college is so expensive. Anything you could offer would be fabulous. Thank you for all you do. - When it comes to paying for college, people have very different ideas about who should foot the bill. Some parents simply can't afford the cost of college. So the student must tap every possible financial resource they can find. Some parents fork over college tuition for their kids, even if it puts their future retirement in jeopardy. And some parents expect children to step up and take responsibility for the cost of college, regardless of how much the parents have in the bank. So the dilemma that Kristen and her family are facing is not uncommon. I interviewed Zach Bissonette, the author of Debt Free You, how I paid for an outstanding college education without loans, scholarships, or mooching off my parents to get his take. I'll give you six tips for how to handle college expenses so you keep peace in your family and never jeopardize your financial security. You can get even more tips by listening to my full interview with Zach at smartmoves2growrich.com. Okay, back to paying for college. I recommend that you never save for a child's education until you've accomplished the following two important financial milestones. Number one, you've built up your family's emergency fund to a minimum of three months worth of living expenses. And two, you've created and are consistently funding an adequate retirement savings plan. Why are these two financial prerequisites non-negotiable? Because if you sacrifice your own financial security for your kid's college, you may find yourself relying on them to support you in your old age. Using money earmarked for retirement means it won't be there when you need it. You must provide for your own financial wellbeing first, even if that means contributing less than you'd like to your kid's education. Zach completely agrees and told me, "I call it the airplane rule. "You've got to make sure that your own oxygen mask "is secure and tight before you assist your child." Let's assume that you want to pay for all or a portion of your child's education. The best strategy is to make this goal a part of your spending plan as early as possible. Additionally, you may need to work longer than you originally planned, find a second source of income, or downsize your lifestyle. But what if you're not sure if you should pay for a child's education or what if you have a divided house like Kristen? Here are six tips and solutions for finding a middle ground. Tip number one, apply for education awards. There are thousands of scholarships, grants and fellowships available that don't have to be paid back. Educational awards are also tax-free income when used for qualified expenses, like tuition and required fees. Though Zach emphasizes that getting award money was not part of his strategy to pay for school, and I'll admit that they probably won't make a huge dent in your tuition bill, financial awards can be worth the time and effort. Help your child seek out and apply for awards no later than his or her junior year in high school. To find the best ones, schedule a meeting with your high school guidance counselor or college financial aid offices and search websites. I'll put a link to seven sites where you can find education awards, plus several more helpful resources on the Money Girl section at quickanddirtytips.com. Just look for episode number 233. And while you're there, don't forget to sign up for the free Money Girl newsletter and connect with me on social media. Tip number two, apply to a variety of schools. Make sure your child applies to a variety of schools, including a few that are relatively inexpensive. That way, there will still be options if there isn't enough money or financial aid to pay for a pricey school, spending two years at a community college and then transferring to an in-state university is typically the least expensive way to get a college education. However, some schools actively recruit out-of-state students and can offer them an affordable tuition package, so don't completely rule them out. Tip number three, put restrictions on college money. If you can afford to pay for a child's education but are worried that they won't take their studies seriously if you do, put limits on your generosity, you could require that they maintain a certain grade point average, hold down a job, live at home, or graduate in less than four years in order to keep the college gravy train flowing. - In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Boebert, he'd ban abortion without exceptions for rape or incest and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org, not authorized by any candidate or candidate's committee. - AI might be the most important new computer technology ever. It's storming every industry and literally billions of dollars are being invested. So buckle up. The problem is that AI needs lots of speed and processing power. So how do you compete without cost by rolling out of control? It's time to upgrade to the next generation of the cloud. Oracle Cloud Infrastructure, or OCI. OCI is a single platform for your infrastructure, database, application development, and AI needs. OCI has four to eight times the bandwidth of other clouds, offers one consistent price instead of variable regional pricing. And of course, nobody does data better than Oracle. So now you can train your AI models at twice the speed and less than half the cost of other clouds. If you wanna do more and spend less like Uber, 8x8, and Databricks Mosaic, take a free test drive of OCI at oracle.com/advanced. That's oracle.com/advanced, oracle.com/advanced. - Tip number four, use a plan of thirds. In my book, I discuss a plan of thirds where you or the student divide up the cost of college into three phases. Number one, save a third of the cost before school starts. Number two, earn a third of the cost by working during school. And three, pay off the final third of the cost as loan payments after graduation. Both students and parents can take out separate education loans if needed. You must apply for a student loan before or during school, and most loans have built-in deferment of payments until six months after graduation. That means you can get a loan at the beginning of your education and then pay it off over the long-term after you graduate. If the loan is subsidized, you won't even rack up interest charges for the duration of your studies. Tip number five, get familiar with FAFSA. To qualify for student financial aid, you must submit a lengthy form called the free application for federal student aid or FAFSA. It's important to note that students younger than age 24 are generally considered dependents and must include their parents' income and financial assets on the FAFSA. Being a dependent could help the student qualify for more financial aid if the parents have little money to report. But if the family has significant assets and are unwilling to help out with college expenses, their financial situation could work against the student by making him or her ineligible for a student loan or other aid. Tip number six, set expectations. It's a good idea to set expectations about how much a family can and will pay for college as soon as the student is in high school. If a child knows that they need to carry the burden of paying for some or all of college, they might get a job, save more money, keep their eye on scholarships, and study harder during high school. If they qualify for advanced placement or AP courses, that achievement looks impressive on college applications and can also increase your child's financial aid package or decrease the number of college classes you have to pay for. Since Kristen and her husband are at odds about paying for college and haven't saved much yet, I recommend that they meet with a certified financial planner. A financial professional can analyze the big picture of their finances and help them set realistic goals for funding both retirement and perhaps an agreed upon amount of their daughter's college education. To find out what Zach Bissonette thinks Kristen should do and the strategy he used to pay for a great college education on his own without taking a dime in awards or loans, be sure to listen to our conversation over at smartmoves2growrich.com. If you like the tips you get in the Money Girl podcast, you'll love my book, Money Girl Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don't. It's available at your favorite bookstore in print or as an e-book for your Kindle, Nook, iPad, PC, Mac, or smartphone. I'm glad you're listening to Qing. That's all for now, courtesy of Money Girl, your guide to a richer life. (upbeat music) (upbeat music) - In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Bobert, he'd ban abortion without exceptions for rape or incest and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org. Not authorized by any candidate or candidate's committee.