If you have a college-bound high school student that you plan on sending to college, please read this article carefully. It contains mindful details about the best way to pay for college without going in debt — and how you to do it even if you’re on a shoestring budget.
Please let me explain. My name is Trevor Ramos and I’ve been helping families send their kids to the best, most expensive colleges in America for pennies on the dollar, for the past 10 years.
During that time one of the things I’ve consistently noticed is that most parents want to help their child pay for college, but there are a few important things they don’t know. For example:
- Exactly how much it will cost
- What school they will be attending, and
- What kind of budget they’ll need to pay for all four years
In fact, to this day if I ask a parent how much they can comfortably spend per year or per month on their kid’s college, their answer is typically, “I have no idea” or “as little as possible.”
I always find this answer a little strange because, next to buying a house, college is one of the most expensive things you will ever purchase as a parent.
Buying a House vs. Paying for College
But the difference between buying a house and paying for college is dramatically different. When you buy a house, you’re usually pre-approved for a certain amount of money via a mortgage.
For example, the bank or mortgage broker might tell you the maximum house you can buy is $350,000 or $700,000 given your income and credit.
You probably have an idea of what mortgage payment you can afford based on what you’ve paid for other houses, or what you’ve paid in rent.
But when you’re paying for your kids to go to college, THERE IS NO LIMIT to how much money you can borrow or your monthly loan payment.
Borrow As Much As You Like!
If you haven’t had any bankruptcies or short sales in the past 2 years, you can borrow as much money as you like, REGARDLESS of how expensive the college is or even your ability to pay the loan back.
Expect to Pay $100,000 to $320,000
Today, the average cost for a four year college degree is from $100,000 to $320,000. It could be lower —$50,000 to $160,000 — if your child attends a community college the first two years, and then transfers to a top college or university.
This means that you, and/or your child, are pre-approved to borrow $50,000 – $320,000 to pay for college.
This may sound like great news at first, but the real question is, “Can you (or your child) pay all that money back?”
In other words, can you fit the payments for these loans into your monthly budget? With loan amounts running up to $320,000, it could take you 10-15-20 years to pay for college.
You can, of course, remove yourself from the picture and put all the responsibility and burden to pay for college on your child. If you do this, it could easily take 15-25 years to pay for that esteemed college degree. If it takes that long, you can easily add another $100,000+ on to the balance to cover all the interest you’ll pay over the years.
This is the main reason your child needs help from you to pay for college. Without your support, your child will be paying for college until they’re in their early 40’s. Nobody wants that!
The way the lending system is setup right now, you (the parent) are the only person who can answer that question. The government or student loan lenders will not look into this for you.
Many parents say they will pay the money back; whatever it takes! But that is an emotional decision and usually made with zero logic when it comes time to sign these promissory loan notes.
I hear many parents say, “I’ll take a bullet for my kid!” or “If my daughter got into Harvard, Yale or Stanford, I’d find a way.”
This is a parent thinking emotionally.
As a parent your job is to provide for your son or daughter.
- You want to give them the best opportunities in life.
- You want to give them more than you’ve ever had.
- You don’t want to disappoint your child.
You’ve told them all their life that if they do well in school, they can go to any college they want.
The colleges know this.
They also know these emotions can make you — price insensitive.
And, as long as you can borrow all the money you need to pay for their school, you will. And if you refuse to pay or borrow, that’s your problem and your child’s problem, not theirs.
But, you have to be price sensitive about something that cost $50,000 to $320,000.
If you’re not, you will borrow more money for college than you can mathematically pay back in the short run and/or the long run.
By short run, I mean “Can you and your child consistently make payments of $606.88 to $3,886.84 in educational loan payments every month for 10 years without defaulting?”
By the long-run, I mean “if instead of saving that cash-flow for your retirement, you used that money to pay back educational loans for your children, what impact will this make on the financial shape you’re in when you reach your 60s, 70s and 80s?”
As the saying goes, “you can borrow for college, but you cannot borrow for retirement.” After age 62, you can always qualify for a reverse mortgage; but that’s more of a “last-resort” way to pay for retirement.
If you’ve got more than one child, your costs increase beyond belief.
The right way to figure out how much money you can spend per year or per month on college is to take a look at what money is coming in … and coming out. You need to know exactly where you stand in terms of your liquidity in case of an emergency. You need to know if you’re on-track or way behind on providing for your own retirement.
It is only when you know this that you can decide what your budget is for college, and more importantly what your plan should be to tackle these massive costs.
If you approach paying for college this way, you and your child can make a sound, financial decision that you will NOT regret years later.
If you’ve managed to save money into a college savings plan for your child and you’re currently doing so, that’s excellent! All you have to do now is see what you can buy with that college fund, find out whether you have enough money to pay the entire cost, and if you’re short you can figure out how to make up for the gap in resources.
If you’re currently paying for your child to go to a private high school and you can maintain those monthly tuition payments throughout their college years, that’s also a good start.
If you don’t have any of these things going for you, there are other options in your favor.
I recommend doing some research or talking to someone who can help you figure out what kind of financial aid you can qualify for. It is important for you to fully understand what the best approach is for you — and your family — when paying for all your kids to go to college.
You can find an excellent college for your child that matches their preferences and your budget!
Your Child May Qualify for $10,000 to $70,000 per Year in Free Money Grants & Scholarships
I also may be able to help you personally figure out how to get your child a scholarship or grant worth $10,000 to $70,000 per year. By doing this, your child can consider colleges that you never thought you could afford.
To find out more, register for my 1 hour and 8 minute webinar (68 minutes total!). If you have questions or want to know more, simply call me at 626-657-7887 after you’ve finished watching: www.collegeprepwebinar.com Simply click on the link and you’ll be connected to the webinar.