Student Loans, Part 2: Figuring Out the Future

Welcome back, Smarty Mommies, Daddies, Friends, and Fellow Travelers!

Last week I wrote all about how close I came to financial ruin by thoughtlessly managing my higher education finances and was only saved by last-minute quick-thinking and a fortuitous marriage to a fiscally savvy man.*

But enough of the past! The past is dead! Now it's time to consider our present and plan our future. Before I begin, I want to make some startling assertions: I have no idea what I'm talking about here. And, honesly, when it comes to predicting our Smartlings' futures, neither do you. I'm planning for both of my daughters to go to 4 year colleges eventually, but there's no way I can know that this is going to happen. This is why this plan I'm about to write about comes with a lot of flexibility, other routes to consider, and alternative paths to investigate. "Life is what happens to you when you're busy making other plans," and my Smartner and I are leaving plenty of room for life in our plans. So should you. We are planning for hypotheticals here, so we can't get rigid in our thinking.

I have this banner on our office wall for a reason: It reminds me to question even firmly held beliefs and tackle problems like they're puzzles. Let's figure this out, friends. We may not know what we think we know.

We have to come at this process with a curious, questioning mind. We have to ask questions, and we have to seek answers. This is the primary error I made in all of my poor financial planning in the past: I was afraid to look the numbers in the face, so I acted on rigid assumptions of what was "normal" and what was "necessary." It was easier to go deeper into debt clinging to fast-held and erroneous beliefs than it was to ask the big questions "Can I be doing this smarter? Is all of this debt necessary? Am I really doing what I want to be doing?" So, yes, we're now planning for our Smartlings' higher education. This time, though, it's in a spirit of preparedness and flexibility, not of launching on a linear and unthinking trajectory.

Before I begin in earnest, let me fully acknowledge that the things we're doing, planning, and considering do not guarantee a complete lack of student loans in our or our children's future. And, should you take the following tactics on as your own, they might not save you and yours entirely from loans, either. And that's fine. The goal here is to plan strategically, hack fervently, and think critically to avoid saddling our children (or ourselves) with education debt we all could have avoided. We haven't failed if we need to take out parent loans or our kids take out student loans. But if we can find means of avoiding as much debt as possible, we'll all have won.

And, please, think of this as the "Need a penny? Take a penny. Have a penny? Leave a penny." tray at the gas station. These are the ideas I've found and taken an interest in. If you have some of your own to share, please do so in the comments section below. Let's hive-mind this, people. The more potential strategies we have to face this challenge, the more we are likely to overcome it.

What We Are Doing Now

1. Right now, both of our Smartlings have Utah 529 accounts that we opened after they were born. After Smartling-the-elder's birth, while I was loopy on pain meds and congratulating myself for such milestone achievements as washing my own feet**, my Smartner was researching 529 accounts and found that Utah was the best choice for us. We have a set amount of money directly deposited into the girls' accounts every month, so that we don't even miss it.

There they are, researching together, while I stood on my clean feet and took a picture.

And, back to that point about flexibility, 529 funds are good for all kinds of schools, from traditional 4 year universities to community colleges and trade schools. You can also change the beneficiaries of 529 plans, which means that members of the same family can withdraw funds from them without penalties. It's a move that still requires careful thought and planning, but it means that if, say, one of the girls scores enormous scholarships and doesn't need the money, or someone wants to join the Navy instead of going to college, that the money is available for other members of the family to use for tuition.

2. We are normalizing the idea of post-secondary education. One of the best things my father and stepmother did for me when I was growing up was to talk about when I was going to go to college, and not whether I was going to go. This is how we frame the discussion of higher education in our family, too. We talk about the girls going to college or learning a trade as a matter of course. We ask them what they want to be and then discuss how people in that profession get to that position. We have our diplomas hanging prominently in our office. We are a family that values education, and going to school of some kind after high school is an assumed given in our family. (The fact that a post-secondary diploma correlates to higher earnings across the lifetime of the recipient is just a great bonus.)

3. You already know all about how we're instilling good financial literacy habits in our family, which we continue with great results. We talk about money a lot. We talk about what we can afford vs. what we choose to spend a lot. We talk about making smart financial choices and the benefits of saving a lot. This will only continue as the girls get older and they have more money to manage for themselves, including real talk about the value of an education vs. the cost of specific programs and schools. Money is not a mystery in this household, nor is it a dirty word. The earlier you begin teaching kids about finances, the better, and so we've begun early and often.

What We are Planning on Doing Later

1. While still respecting who our Smartlings are as students, we are going to prioritize the financial costs and values of the universities we consider. One of the criteria we will require when considering colleges is that it be within our budget. This seems basic, but I think it gets forgotten in the frantic rush of applying for colleges and often held subordinate to a romanticization of an idealized "college experience." So, no, we won't require that our kids attend schools that don't teach their interests or are unsuitable for them (See #6 below.), but neither will we choose a school beyond our financial reach and thrust the girls or ourselves into debt. Instead, we'll strive to find a school that meets both needs. There will be compromise, people.***

2. To this end, we will encourage our girls to attend a public undergraduate institution or one that's comparably (or more!) inexpensive. This is one of those assumptions - that public, in-state schools are always less expensive - that I've had to reevaluate upon further research. According to Frank Palmasani, author of Right College, Right Price, private colleges (in-state or out-of-state) or public universities in other states can often be less expensive than in-state public schools. So, we're going to do our homework and figure out what the true cost of the colleges we consider are before the girls apply.

3. Scholarships, goddammit. Start young, find them, apply for them, scrounge for free money. It'll take work, but it will pay off in framing planning for paying tuition as a strategic and hackable practice. Again, it's something we can figure out by asking "How can we do this better? In what ways can we manage to make this bill cheaper? Where can we find money for school, and how can we get it?" And it'll possibly pay off monetarily. Win-win.

4. Before the Smartlings even begin their higher education, they will have created a sample schedule through which they can graduate from college in 4 years. In college, time is tuition money, and not wasting time on poor scheduling choices or mistakes in accruing credits is important.

One of the best assignments I ever had in high school was to, in the spring of my senior year, complete a 4 year schedule of courses that would earn me a Bachelor's degree at the school I was attending. It didn't have to perfect - it couldn't be, given that majors change, class times conflict with others, etc. - but this exercise required that I intimately understand my school's credit requirements for graduation and what it looked like to meet them. Because of this assignment, I knew before I even set foot on campus that I'd be taking summer classes to earn my degree. From searching the catalog, I knew in advance that I could earn some Quantitative and Symbolic Reasoning (fancy talk for "math and science") through Women's Studies and Psychology classes, so I didn't blindly sign up for math classes that I'd hate and barely pass. I was prepared to carefully and strategically plan my exit before I began, and this preparedness meant that, unlike most students, I graduated in 4 years.

5. My Smartner and I both earned college credit while in high school, and, if they're up for it, we'll encourage our Smartlings to do so, as well. He did Running Start at a local community college, and I passed the AP exam in English and took a college course at a local private university that was open to high school students. He wound up graduating early, which lessened his total tuition payments in college. I didn't graduate early, but I was able to take additional classes whose credits I didn't need to graduate during my 4 years of college without jeopardizing graduating on time. It's a good thing either way for students who are willing and able to participate.****

6. Throughout all of this, though, we have to consider the student for/with whom we're strategizing. For example, I received a small scholarship to an in-state university in a small town in eastern Washington. It would have been cheaper for me to attend there, but it would have been a miserable experience. I love the theater and wanted to study drama - the town had one theater and the school barely had a drama department. I love city life and couldn't wait to flee my small hometown - this school was even more isolated than the one I grew up in, and I would have hated it. I thrived in my university's Departmental Honors Program, which has no corollary in the school that had awarded me the tuition.

It wouldn't have worked, which means I wouldn't have worked. Had I accepted that scholarship and attended the rural university, I very likely would have wound up unhappy, doing poorly, and ultimately transferring to the big-city school I attended anyway. And the costs - in lost time as well as money - of transferring to a new school mid-degree can be high. Thank goodness I considered who I was and what I needed from a school before following the lowest predicted cost totals to a school at which I likely would have failed. This is one decision from my own college-planning past that I'll proudly carry forward into my daughters' college-planning futures.

I did. And so can they. (Image source)

Things We Would Consider

1. If used well, a gap year could be fantastic for the Smartlings. Having just hosted two traveling au pairs in our home and heard of their fantastic year of travel, work, and independence abroad, I can see how sending the Smartlings abroad to work and travel for a year could be great. If they're not ready for school yet, or they need a break before launching headlong into university, we would consider a year of interning, volunteering, or working a possibility for the girls.

2. Speaking of travel, sending the girls to foreign universities is also on the table. It can be far less expensive than attending universities stateside, so if they wind up being independent and travel-minded, this could be a good option. (But I'd miss them. And I'd have an excuse to visit them. And I'd miss them. Mostly I'd miss them.)

3. I don't actually like the idea of the girls living at home and commuting to school, but I'd allow it if it were the best choice for them. It would save money on room and board, yes. True. But it would also mean a delayed launch into the world. We'd have to really sit down and consider the pros and cons of this plan before committing to it.

4. Similarly, if it's what's best for the girls we'd consider them attending community college and then transferring to a four-year university. It can be a great way to save money and maintain a good school-life balance, but it requires serious planning and attention to detail to make sure that the community college credits transfer to the university the girls want to attend.

So there's a lot to chew on, a lot to examine, and a lot to consider. Please, please, please, readers, share your strategies for affording your kids' educations in the comments below. Fill in whatever gaps this piece leaves and give us other food for thought. These are big, complicated decisions, and we need as many possible answers to consider as we can get.

Further Reading/Listening

"Having the College Money Talk" by Donna Rosalto

"Student Debt: Lives on Hold," a condensed version of James B. Steele and Lance Williams's report "Who Got Rich Off the Student Debt Crisis?"

Right College, Right Price by Frank Palmasani

"How Student Debt Affects Personal Choices of Young People," an NPR segment from Morning Edition by Shankar Vedantam

*Which officially makes me a modern Bennet sister, doesn't it? Ooooh, I call dibs on writing a modern Pride and Prejudice starring ME as Elizabeth Miller-Larsen-Bennet and Smartner as Mr. Darcy! Get rich quick scheme through writing fiction: ENGAGE!

**Not as easy as you'd think post-brutal-labor and -c-section. I called my mom and made her celebrate my clean feet with me. It was a beautiful moment.

***This rule applies to undergraduate education only. For graduate school, when the proper pedigree of having attended the best school possible can lead directly to better career prospects, we will re-evaluate the benefits of spending out on tuition, even to the point of the girls taking on loans. Undergraduate education = no loans, or as few as possible. Graduate school = loans if necessary.

****Herein lies the big caveat: colleges admit students who have done well in their classes. If the kids are going to do poorly taking college classes in high school, then they should not take them. And by "do poorly" I mean both in terms of grades and in terms of quality of life. If this is too much for your kid, my kid, ANY kid, then it is not the right answer.