How Kids Can Eliminate Student Loan Debt BEFORE Starting College

The national student debt load has reached a crisis point. For this year’s graduating class, more than 70% of graduates borrowed money to finance their tuition, at an average rate $35,000 per borrower. To put that into perspective, that consumes a whopping 97% of the expected entry-level salary for Liberal Arts and Humanities Majors ($36,000).

And lest you think that $35,000 is a manageable debt load for high earners, it’s fair to point out that over one-third of all law school graduates and half of all medical school graduates exit school with more than six figures of debt.

With that in mind, it’s easy to understand why so many recent graduates question whether their degrees are worth the debt.

Given the dubious return on investment, it’s worthwhile for parents to consider how they can help their kids eliminate student loan debt by not taking it on in the first place. Here are a few suggestions:

Explain the difference between luxuries and investments

The best investment you can ever make is to invest in yourself, unless you’re throwing money into a money pit. There’s no doubt that college is a lot of fun, and that people with philosophy degrees had a lot of great conversations about Stoicism and the Post-Modern Nietzschean Feminist theory, but those beer-fueled ponderings are unlikely to get anybody’s foot in the door of their dream job. Some degrees are simply more financially valuable than others, so if your kid wants to study the humanities or fine arts, help them understand that their desired degree is a luxury rather than an investment.

Don’t accept college as a barrier to entry

Many jobs require a college (or post graduate) degree, but most career fields offer internship opportunities without the need for a bachelors degree — and sometimes even without a high school diploma.

Of course, you can’t be a doctor without seven years of post-secondary education (plus residency), but many responsible 16 year-olds can get a job at a nursing home or hospital where they can get a feel for whether or not they like the medical profession. Likewise, Goldman Sachs won’t hire an 18 year-old to be a quantitative analyst, but your math-whiz kid can probably convince someone to let them help out with the books before they get a degree in corporate finance.

If you encourage your kids to dabble in their career field of interest, they will have a much better idea of how careers in that field work, if college degrees are really required, and whether or not they have what it takes to succeed in that field. It’s much better for kids to discover they’ve chosen a poor career path andquita jobas a 16 year-old, than find they hate their job at 22 years-old with $35,000 in debt.

Encourage your kids to consider a gap year

Many high school seniors are unable to evaluate the financial impacts of spending $100,000 over four years of college. They rarely have a context for how much money that is, and what they are getting for their money.

Instead of pushing kids into college straight out of high school,encourage them to take a gap yearbetween high school and college. At the end of the year, your young adult child will be more mature and better able to decide whether or not college will be worthwhile. Hopefully, they’ll also have saved additional funds to help them through the next few years.

Get your general ed classes out of the way cheaply

Most high school students can get college credit by taking advanced-placement (AP) courses or choosing an International Baccalaureate (IB) diploma program. Take the time to educate yourself and your kids about free- or low-cost options for high-school/college dual enrollment options. Oftentimes dual enrollment fees are covered entirely by your state, which offers the perfect opportunity for teenagers to try out college for free.

By the end of high school, many students will have between one and two years’ worth of credits out of the way, but if your student doesn’t, encourage them to enroll in a local community college. Most students can obtain all their general requirements as well as a few major specific classes at a fraction of the cost of a traditional four year school. Due to the low costs, many low-income students will find that they can attend a community college with very low out of pocket fees.

Don’t forget these traditional methods to avoid debt

With 54% of college students dropping out before they obtain a degree, it’s important for kids to understand that college is a difficult challenge, and that their life and career success don’t depend on a college degree.After all, college isn’t the only option for career success, and your kid should know there are high paying jobs that don’t require a degree.

However, for those who do want to go to college, there arethree additional simple, but often overlooked, methodsfor avoiding debt:

Apply for scholarships. Even high school freshmen can qualify for college scholarships, so push your kids to apply early and often. Athletes, musicians and civically minded students have the best chances to win scholarships from their chosen institutions, but community scholarships are open to anyone.

Invest in ESAs or 529 plans. Even if you can’t cover four years’ worth of tuition and living expenses, a little money can go a long way, especially if you encourage your teenagers to save and invest their own money too; but unless they know that they are expected to save for college they’re unlikely to use their dollars wisely.

Pick a reasonably-priced college.Liberal arts schools often offer generous scholarship packages, but they tend to be expensive. It’s important to help your kids understand that large, in-state, public institutions typically offer a good mix of prestige and price.Don’t let your kids choose a school that they — or you — can’t afford.

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About the Author: Hannah Rounds is a wife and mom who is working towards her version of the American Dream. This dream involves shifting her focus from career to family while creating opportunities for an encore career later in life. Her goal is to help other parents forage similar paths. She writes about this journey at Unplanned Finance.

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