Borrowing for College: Advice about Loans for Students and ParentsSuzanne Shaffer
The high cost of tuition can be discouraging for high school students considering college, especially if they are “first generation” (meaning their parents did not attend college in the U.S.).
Affording college is possible, even for low-income and first-gen students and their families.
Here are six helpful financial tips for you and your student!
Mike Evans, the director of TRIO at Chemeketa Community College, has observed that first-gen families often assume they can't afford a private college. The opposite may be true. "Private colleges have tons of money that they can give you, so you have to go through the process to figure out if that college is a good place for you.”
As you help your student with their college search, encourage them to explore all their options (including school size, location, academic programs, support programs, extracurricular activities and more) in order to discover their best fit. Resist the temptation to make cost your top (or only) factor.
If your student finds that a private college or university is a great fit, they should apply for admission and also for financial aid. If they qualify for financial aid, your family’s contribution to the cost of college may be quite a bit less than the school’s “sticker price.”
A higher price tag doesn't guarantee a better education, but students should not settle for a less challenging academic environment just because the school seems more affordable. It's okay for your student to apply to one or two "reach" schools (schools where admissions are more competitive) as long as their grades and test scores put them in the ballpark.
The First Generation Foundation encourages first-gen and low-income students to pursue academically rigorous higher education and shares tips and resources to help students achieve that goal. Their website also includes an online community that celebrates the stories of first-gen students.
A Pell Grant is money the federal government awards to undergraduate students who need help paying for college. Unlike a loan, it does not have to be repaid.
The federal government may also provide subsidized or unsubsidized student loans, which do need to be paid back. It is important to know the difference. While a student is in college, the government pays the interest on subsidized loans. For unsubsidized loans, interest starts accruing as soon as a student takes out the loan and will be added on to the total amount they will have to pay back. Interest rates for student loans can be high and can also fluctuate, so help your student pay attention and factor interest into their budget calculations.
As Mike Evans pointed out, “there is a practical reality of not wanting to take on more debt than you will be reasonably able to pay off when you’re done.” Your student should have at least a rough idea of some of the careers they might want to pursue after graduation and research typical starting salaries for those positions. If possible, they should avoid taking out more in loans than their expected first year salary.
Some service-focused professions offer income-based repayment as well, and national service programs such as AmeriCorps provide education awards that can be used for tuition or loan repayment and a loan deferral option during service.
Mike Evans found that many first-generation students assume they won’t qualify for scholarships, but this is not true. However, it does take work to find the right scholarships to apply for because there are so many out there. High school counselors and college support staff can help your student narrow their scholarship search to the ones they have a good chance of winning.
Many colleges maintain searchable scholarship databases. There are also free online websites, and several have sections dedicated to students who are the first in their family to attend college or of Hispanic heritage. Check out this Financial Aid Toolkit for more information.
Mint is an excellent (and secure) free app for beginning budgeters. When your student syncs their bank accounts, credit cards and bills, Mint will help them see where their money goes and where they can spend less, in order to determine a reasonable budget and help build savings.
Help your student be smart about money before, during and after college.
Special thanks to Mike Evans, Director of TRIO (a Federal outreach and student services program designed to identify and provide educational services for individuals from disadvantaged backgrounds), as well as the many wonderful first-generation students at Chemeketa Community College in Salem, Oregon who provided insight and expertise for this article.