College Financial aid

Asked August 3, 2016, 6:28 PM EDT

I am wondering, how do kids go to school if they don't have a parents, family member, or friend who can cosign a personal loan? Now this is considering the fact that you have exhausted all federal funds like FASFA and still need an outside source. I ask this question because it must be impossible for ALL parents in America to be able to afford the risk of cosigning for there child and in the case that they cant, how do they go to school? Thanks!

Olmsted County Minnesota personal finance family and consumer sciences

1 Response

Greetings,
This is a very important and broad question. There are different levels of college affordability. Your questions does not specify, so I am guessing you are talking about attending a four-year college to earn a Bachelors degree. The first step toward affordability is to attend an in-state school. Students attending college in a state other than their home state will pay an out-of-state tuition rate that is substantially more than the in-state rate. Another approach is to consider attending Community College for the first two years to complete the General Education requirements. Community College tuition rates are more affordable than four year college tuition rates. It is important to check for a matriculation agreement between the community college and the four-year college to which you will want to transfer. Another cost saving approach can be for the student to continue to live with the parents while attending the community college. Not having to pay for room and board can be a tremendous savings. Students may want to consider their ability to work part-time while attending community college to save money to help with the tuition, books, and fees at the more expensive four- year college. If the four-year college is close to home, students can consider continuing to live in their parent's home while attending the four-year college. Choosing a public four-year college instead of a private four-year college helps control the cost of an education. The same degree will cost substantially more if earned at a private college. It is important to keep student load debt in line with the salary a new graduate can expect to earn. Visit www.bls.gov and search on National Occupational Employment and Wage Estimates. This site will show estimates of hourly and annual earnings by profession. This site shows that Library occupations earn about $31,000 per year. A new graduate in their first position may earn somewhat less, perhaps somewhere between $26,000 and $28,000. So, someone seeking a career in Library Science would not want to accumulate large sums of student loan debt. For this student, paying $40,000 a year for tuition would be very unwise. I also want to caution about using private student loans. Private lenders may be willing to give a loan without a co-signer but the interest rate will be higher than a government loan.

Lastly, another approach is to delay college attendance for a period of time while working to earn and save money to pay for the education. Again, if it is possible, living with the parents for lower rent costs can help meet the goal faster. It will be important during this time to avoid amassing consumer debt and to avoid becoming used to a very high lifestyle. Debt or high living expectations can act as barriers to your ability to quit work and return to school. I hope this information is helpful to you in making decisions about how to finance a college education.

Best,
Carolyn Bird