Affording College

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Some facts to consider:

  • The average total cost of putting a child through a year of private college in the US in 2013 was $44,750
  • To be ready to put a child born in 2013 through an average private college on a moderate budget in the US (assuming a continuation of current academic inflation rates and a historical market rate of return), you will need to put aside over $1,300 every single month for the next eighteen years.
  • Only about 13% of high school students with SAT scores between 1300 and 1400 will get any scholarship money at all.
  • Only 0.3% of students will get a “full ride” scholarship.
  • Despite the myths, minority students are 40% less likely to receive private scholarship money than their white counterparts.
  • Outstanding student loan debt in the United States today is over $1,000,000,000,000 (one trillion dollars), which is greater than total outstanding credit card debt and second only to mortgage debt.
  • Over 40 million Americans owe money on student loans, that’s greater than the entire population of Canada.
  • The debt level of the average graduating college student recently rocketed to almost $30,000 in 2013.
  • Private student loan debt survives the death or disability of the student, passing on directly to the co-signer(s).
  • Aside from for those who commit to public service employment for 10 years, student loan forgiveness can be a taxable event and this amount can become very significant as the principal piles up under some of the “pay-as-you-earn” repayment schemes that are out there.
  • While debts from gambling, for instance, can be discharged through bankruptcy, student loans are almost impossible to erase.
  • Over 7 million Americans have had to default on their student loans, destroying their credit at a time when over 60% of employers run credit checks as part of their hiring process. For example, anyone who has defaulted on a student loan is automatically ineligible for many government jobs and many colleges will even withhold making transcripts available to potential employers of former students who are behind on payments.
  • Certain private loan providers can now garnish social security payments to enforce repayment.
  • The cost of servicing student loan debt is having a devastating ripple effect throughout the whole economy as it prevents millions of Americans from saving adequately for retirement or buying homes, cars and other goods.

(Sources include CollegeBoard, US Department of Labor, One Wisconsin Institute, Student Aid Policy Analysis, Washington Post, The Chronicle of Higher Education)

Clearly, a plan is needed not just to prepare for paying for the cost of a college education for the future, but also to help manage the debt situation of those who have already graduated. Being armed with the facts is the first step. At TA Planners, we can sit down with parents and explore their philosophical approach to the further education of their children, compare in detail the current and liable future costs of all individual private colleges and state schools and lay out the most effective strategy,  both for saving for college and for navigating financial aid.

We will also talk to graduates about the optimal ways to manage existing student loan debt and suggest ways to maintain the servicing of this debt while at the same time continuing to responsibly save for other things in life including, but not limited to, retirement.