Did you know there are things you can start doing when your kids are toddlers that could help them avoid student loans in college? I’m not just talking about saving money, either. Planning ahead is crucial to avoiding student loans and it’s never too early to start.
The sooner you start with these key elements, the better.
1. Teach the Value of Education
Show your children learning and going to school is important. They aren’t going to learn this by you lecturing them though. Instead, model it by taking attendance seriously. Read to them every day and later encourage them to read. Show interest in what they do every day in school, not just when grades come out. Let them see you continue to learn by reading, teaching yourself how to do new things or taking a class yourself on anything. It doesn’t have to be a college class.
Support them in school. Communicate with their teachers. Create an environment at home that encourages learning and doing homework. Help them with their homework if they need it or find someone who can. Attend school activities for parents. Support them in their activities.
How are all of these things going to help them avoid student loans though?
It will help them do their best in school. Which means better grades. If the grades are really good it could get them a scholarship or two. But even if they’re not that great, they’ll still do better than if you hadn’t done all those things when they were growing up.
2. Start a 529 Savings Plan & Contribute Regularly
Saving even just a small amount every month and putting it into a 529 Savings Plan for college can mean being one step closer to avoiding student debt later. Take advantage of the time you have until college by letting your money grow tax free, earning around 8% interest.
If you invested $100 a month from the time your child was born until they were 18 you’d have approximately $48,935. You would have made over $9,000 in interest tax free. That’s basically money you’re losing out on if you don’t do this. For more about 529s see How to Save for College as a Single Parent.
3. Teach the Value of Money
Start teaching your kids how money works from an early age so they develop a good understanding by the time they’re choosing a college. Help them understand things cost money and how to budget and save their own money. If you always provide every single thing your child wants growing up, what happens when they want to go to a college neither one of you can afford? Huge student loans, that’s what.
Have conversations about whether the more expensive shoes are worth the extra money in terms of value. Do they want to spend their money on a brand new book or a used book and save the money they save for something else? You want them to learn how to evaluate cost versus value so later they can decide whether going to the more expensive school that cost twice as much as the inexpensive school is worth it.
I think credit cards have created a disconnect for a lot of people between money and how much things cost. Help your child understand how credit cards work if you use them. Be sure to check out 10 things Your Kids Need to See You Do with Money.
4. Set Boundaries
When your child starts high school, or possibly even in middle school, start having occasional conversations about what limits you may have when it comes time for them to choose a college. You don’t want to remain quiet for years and let your child dream of going to an expensive out of state school if you know you can’t afford it. Be honest.
This way there won’t be any surprises or shattered dreams later.
Talk about how you will be able to help them and how you won’t. Discuss your thoughts on in state versus out of state schools and their tuition. Encourage them to take advantage of in state tuition or go to a community college. This will make avoiding student loans more feasible. Let them know your expectations for how much they will contribute to the costs.
Hopefully these conversations will help them choose a college they can both afford and love, avoiding a lot of debt.
How I’m handling this with my kids
I’ve been clear with my kids they need to choose an in state school. I just can’t justify out of state tuition. I’ve also strongly encouraged public versus private schools. However, I have said if a private college is comparable in cost to public with scholarships they’ll provide, that’s fine if they want to go there.
Students who pay for at least part of college tend to take it more seriously than those whose parents pay for everything. Therefore, I expect part time jobs for my kids when it works with their schedules. I don’t want them working too much though as they need to keep their grades up. This part is important, as I see part of their “job” as maintaining grades for renewable scholarships.
I will also expect 50% repayment of the money I’m contributing after they graduate and get a job. I’ve sacrificed some things over the years to build their 529 Savings Plans for them. It’ll be good for them to sacrifice some to pay it back. It’s like an interest free loan from the Bank of Mom, which is far better than Sallie Mae.
5. Encourage Scholarship Applications
After all these years, when your child is in their final year of high school encourage them to fill out lots of scholarship applications. Talk with your high school counselor for help and ideas of places to look online for scholarships and information about local scholarships available.
Now Get Started!
Hopefully, all your planning and hard work over the years will pay off and you’ll be able to help your children avoid or at least minimize student loans. Planning ahead is so crucial. If you haven’t always been the best at handling money, now is the time to learn to improve so you can change the course for your children. They will learn from you. The key is to get started now.
If you need help, leave me a comment. Let me know how I can help! I’d love to hear from you! And don’t forget to check out some of my other posts for helpful suggestions.