How to Pay for Expensive Colleges When You Are Broke

Don’t fall for the myth that you have to send your children to expensive colleges. Last week Jerry sent me an e-mail asking for help. As you’ll see, there is plenty he could do beyond looking into college tuition tax credits and filling out financial aid forms.

As a reminder, he is 57 years old and is expecting a pink slip any day at work. He expects difficulties ahead finding new work, and to make matters worse he’s facing college expenses for his children soon. Oh…and did I mention…he hasn’t saved anything for retirement or college. Sounds like a job for Super Wealth Pilgrim!

We already talked about the steps Jerry can take to replace his job and make more money. Now let’s look at the college funding issue. I wish I could say that Jerry was the only person facing this predicament, but he’s not. In fact, I received another e-mail the same day from Catherine with a similar issue:

My biggest financial challenge right now that I am facing is my son’s college tuition.

I have been saving for this since he was 4. The issue (as many people have) is that #1 – the savings has dropped dramatically. It was my intention to be able to pay for his college (all if not at least most) with this money…….

I do have enough to send him to a community college for a couple of years – it’s just with the rising cost of tuition, and coupled with the fact that obviously the markets are down – I am no longer able to do what I had hoped for.

I know that many people say that I should not worry about things like that, and go ahead and have him take out the student loans……that’s just not what I wanted to do.

I am working UNBELIEVABLY hard to get completely and totally out of debt and would hate for him to get out of school with an additional $40k in student loans. Needless to say, I am just going day by day trying to wade through this mess. I will be continuing to find his college account just as I had in the beginning (although it will be a bit more now) but when the year of community college is over –

I see no choice but to get the loans. I am at least grateful that I will not be taking loans for the ENTIRE amount. That I did at least do a little bit right.

What both Jerry and Catherine share with me and lots of other folks (maybe you) is that they are unable to pay to send their kids to expensive colleges. Catherine did a great job of saving and investing, but the market served up some heavy investment losses. I’m sure that Jerry also did his very best over the years.

Of course, all that doesn’t matter. What matters most right now is what to do.

First, Catherine, you sound like you are beating yourself up, and Wealth Pilgrims aren’t allowed to do that. I’m the only one who is allowed to beat up on Wealth Pilgrims and you are the last person I’d do that to. (That goes for you too, Jerry.) You saved since your boy was four, you are continuing to save now and you are doing your best. That’s all really great work. Come on! Who shares my sentiments out there? How can someone do better than their best?

Next, as far as your friends telling you to take loans…my advice is to get new friends. Please don’t start borrowing money…even if you can do it inexpensively. What kind of lesson would we teach our kids about life if we spend lots of money we don’t have for something that we could get much cheaper? Talk is cheap. It’s easy for your friends to tell your son to take loans…they aren’t going to spend the next 15 years paying them back.

A few months ago I wrote a post on why we send our kids to expensive colleges. It rarely has anything to do with giving our kids a better education. Read that post to see why.

Your child’s success in life is going to be a function of what kind of effort he or she puts in.

Catherine, if your son is anything like his mother, he’s going to do just fine.

You are doing the right thing by working hard to get out of debt and by not saddling him with tuition debt. A community college is great. Give your son the opportunity to participate in his education. Encourage him to get a job so he can save for the cost of post-community college education.

If, after all is said and done, he needs to take loans, so be it. If that is what it takes to finish his degree, fine. But make sure you do all you can to reduce the need for loans.

1. Send them to the school you can afford.

Never mortgage your retirement in order to pay for your kids’ fancy schools. Also, encourage then to work as hard as you are and tell them to graduate college early. That should save you quite a bit.

2. Encourage them to enroll in the College of Life.

Let them work to pay for as much college as they can. The tuition is perfect and they’ll learn more about how to get along in the world than any college could teach them.

3. Continue to set a good example.

Live within your means. Do the best you can. Nobody can ask more of you than that.

What say you? Are you facing the challenges that Jerry, Catherine and I face? How have you handled this issue? Have I forgotten or overlooked an opportunity? Let me know what it is, please.

photo by neys, flikr