The Solution

Last week we talked about my friend, whose daughter is graduating from high school next month and wants to go to the college of her choice.  My friend and her husband haven’t saved the money needed to send her there and she isn’t getting any scholarships or financial aid.  The cost for the school is around $35,000 per year.  My friend doesn’t know what to do other than let her daughter take out student loans to pay for school.  As I’ve mentioned before, I’m all for getting a college education.  But I hate the idea of borrowing that kind of money for it.  So what should they (or any of us) do?  I have two suggestions:

1.   Reality Check
2.  Tennessee Hope (and Tennessee Promise to go with it)

The first suggestion is to do a reality check – and this is the tough one.  Our kids are growing up in an “entitlement” environment, where they think they are owed certain privileges.  I’m not blaming them – the truth is that our generation is probably to blame for this.  But somewhere along the way, and it is best that this conversation is had prior to the kid’s senior year in high school, expectations need to be delivered to them what to expect as it relates to continuing their education.  I suggest:

·       Encourage them from as early of an age as possible that they are expected to continue their education after high school.  Statistics clearly show that those with a college education have a much better likelihood of higher earning potential throughout their working years than those that do not.
·       Teach them that education is a privilege, not a right.  While college can and should be fun, it is really just a means to an end.  As a parent, I want my child to have a great experience in college – but not at the expense of sabotaging their future with unnecessary debt to make that happen.
·       Borrowing for school is not an option – start teaching them at as early of an age as possible that debt is not a solution.
·       Let them know what your plan is to help them financially (this will vary depending on each situation).  This can range from paying for their education, providing them housing (at your home or elsewhere), paying for books, fraternity memberships, etc…
·       Let them know what their responsibilities are going to be – paying for the things you are not going to pay for.  They are now adults and for the rest of their lives they are going to be faced with the reality that they are responsible for their own well-being (and a critical part of that is how they handle their finances).

Part 2 of my suggestion comes into play when we as parents don’t have the financial capacity to help with the higher education costs.  If part 1 has been done successfully, then part 2 is much easier.  The state of Tennessee offers a program called the Tennessee Hope Scholarship.  I’ve included a link below if you are interested in learning more.  But basically, it pretty much pays for 2 years of tuition at a state endorsed community college.  As long as the classes line up with the intended degree, those classes will transfer to a 4 year state university.  Also, the Tennessee Promise can be added to the Tennessee Hope.  It is an additional scholarship that will cover the difference between the actual cost and what the Tennessee Hope provides (can come in especially handy when the student is taking more than 12 hours in a given semester the first 2 years).  It also requires the student to perform 8 hours of community service per semester which is a nice lesson.  The informational link to that program is also provided below.  This leaves only 2 years of “college expenses” to conquer.  And assuming grades are where they need to be, students are eligible for an additional $4,500 per year for the remaining two years of schooling at the 4 year university via the Hope scholarship fund.

So back to my friend.  Is the best option really to have their daughter borrow $140,000 to go to the “school of choice”?  By having her live at home for two extra years, while attending a local community college, then finish out at a state school (and let’s assume the cost for that is $20,000 per year), they have reduced their cost from $140,000 to $31,000.  Even if they decide to borrow to help pay for it (and I’m not excusing their daughter from getting a job to help), the $31,000 they’ll have to pay back puts their daughter in a position of starting life without a titanic “debt anchor” around her neck.  Sure, she’ll miss out on going to the school she really wanted to attend.  But life is often times about making tough choices and sacrificing things today to provide a better future.  Tough lesson to learn at 18, but a lesson that will serve her well in her future.
https://www.tn.gov/collegepays/article/tennessee-hope-scholarship
 http://www.tnpromise.gov/about.shtml