How My Daughter Plans to Graduate College With Minimal Debt
According to a 2017 College Board report, over the last decade, the cost of attending four-year, public colleges has increased at an average rate of 3 percent per year beyond inflation.
Students are taking on massive student loan debt to fund their education. The New York Federal Reserve reported that student loans totaled $1.38 trillion dollars at the end of 2017. That makes the average student loan debt $28,446 per graduate, with 58 percent of students having college debt.
Though student loan debt hits every grad hard, some have it harder than others. Depending on the circumstances of the state in which a student lives, it might take longer to pay off debt.
Money-savvy creator of The Frugal Toad, Paul Vachon, shared how his family is dealing with the student loan debt crisis.
As a middle-school science teacher, I am passionate about teaching and the value of an education. Like every parent, I want my children to get a good education and find a career that they will enjoy. And, just like every parent, I was concerned about how we’d afford to pay for our children’s college expenses.
A recent GOBankingRates study looked at the average student loan debt in each state and the estimated average monthly loan payments based on 10 percent of each state’s median household income. The conclusion was that the length of time it takes to pay off student loan debt varies greatly from state to state. A college graduate living in Alabama, for instance, will have the longest debt payoff period at 12 years on average, while those living in Utah pay back their student loans in less than five years on average.
Read More: Ideal Salary Needed to Afford College in Your State — Without Loans
The average cost of tuition and fees at a four-year college in Arizona, where we live, is $11,218. When you add in room and board, books and other fees, that number climbs far higher. Student loan debt in Arizona is $22,609 on average and takes a little over seven years to pay off.
With numbers like these, we knew we had to come up with a plan to put our children through college without sacrificing our retirement funds or saddling them with an unmanageable amount of student loan debt. Here is how we plan to put my daughter, in particular, through college with as little debt as possible.
Attend Community College for 2 Years
By far, the best strategy for reducing the overall cost of a four-year college degree is to attend community college for the first two years. My daughter is currently in her first year of community college and has plans to transfer to Arizona State University. Many community colleges offer gateway programs, such as the one my daughter is enrolled in, that guarantee courses will transfer to four-year programs at local universities. We estimate for each year that she lives at home and attends community college, we will save approximately $21,000.
More on Going This Route: 25 Rich and Successful People Who Went to Community College
Take Full Advantage of 529 Savings Accounts
Going to college was always an expectation my parents had for me growing up, and it was no different for my children. Soon after they were born, we set up a 529 college savings account for each of them and started contributing. The plan was that, as parents, we would cover half the cost of their college education and our children would be responsible for the remaining half. Over the years, the contributions and earnings have added up to a decent amount of money that will make a substantial dent in the cost of college.
As fate would have it, my oldest chose not to attend college the traditional route and instead, has decided to work full-time and take advantage of his employer’s tuition reimbursement plan to fund his higher education. Since he will not need all of the funds from his 529 account, we plan on submitting a change of beneficiary form to Vanguard so that we can use these funds for my daughter’s college expenses. The IRS allows 529 account owners to roll over all or part of the balance once every 12 months or change the beneficiary named on the account to another family member.
Look at Housing Options
Tuition is just one of the many expenses families face when a child moves away to attend college. A great way to reduce these costs is to have your child share an apartment with other roommates. In some cases, buying a rental property can be a cheaper option to campus housing. My daughter has a friend she plans on sharing an apartment with — so, by living off campus and eating meals at home, she should be able to save approximately $3,000 per year over living on campus and paying for a meal plan.
Transportation Expenses
One often-overlooked expense of attending college is parking. The cost of a parking permit at ASU runs $780 a year. My daughter plans on riding her bike to classes to avoid the cost of parking permits. Another way to save money is to leave the car at home and take public transportation to classes.
Check Out: 5 College Transportation Costs You Forgot to Budget For
Working While Attending School
Working part-time while attending college can be an important source of spending money for a college student. Research also shows that college students who work up to 20 hours per week in addition to attending classes have higher GPAs and learn to manage their time more effectively. My daughter currently works 15-20 hours per week and plans to continue working part-time while attending college so she can have some spending money.
My daughter will still need to take out a student loan to help pay for her college degree, but we feel confident that by following our plan, she won’t be burdened with an unmanageable amount of debt.
Read More: Paying for College — How to Include Your Child in the Process
More From Our Smart Money Squad:
3 Family Members, 3 Degrees, Each in 3 Years — How We Did It
I Hounded My Kids to Apply for Scholarships — Why You Should Too
This article originally appeared on GOBankingRates.com: How My Daughter Plans to Graduate College With Minimal Debt
