William Elliott III, Ph.D., a professor at the University of Kansas recently published findings that "kids with a savings account in their own name are six times more likely to attend college than those without an account."
Dr. Elliott continued, "It's helping them to be thinking of college, to have it on their mind in a more concrete way than simply saying, 'I expect to go to college. They've taken some actions, they've got a savings account, they're saving some money. Positive expectations aren't quite enough."
Would these conclusions have been true for you or your children??
Showing posts with label college funding. Show all posts
Showing posts with label college funding. Show all posts
Jul 26, 2011
Sep 27, 2010
What Would You Tell a Teenager About Money? (Carole)
A few weeks ago, I was asked to speak about money to the teenaged girls in our church congregation. Thanks to all of you and your many good comments on this blog since January, I felt like I knew what kind of information would be most interesting and helpful to these girls who are just on the cusp of adulthood.
Here's what we discussed:
1. Getting a job and saving 50% of what you earn while in your teens. I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.
2. The cost of tuition at local and out-of-state colleges and universities. We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.
3. Typical salaries of standard jobs: surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . . and what the monthly take-home pay (after federal taxes) would be for each of these jobs. So. . .is a college education really worth the time and money invested for your particular profession?
4. How much adult life costs: housing, groceries, transportation, utilities and insurance. True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills. Together we paid the bills of a typical family in southern Nevada. Much to their surprise, we ran out of money, long before we ran out of bills. This was very eye-opening to this lovely group of girls.
5. How compound interest works. We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill. We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).
It was a fun night, and I felt like the girls were right with me. But I'd love to know what YOU would have said to them? What do you wish someone had told you at their age?
Here's what we discussed:
1. Getting a job and saving 50% of what you earn while in your teens. I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.
2. The cost of tuition at local and out-of-state colleges and universities. We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.
3. Typical salaries of standard jobs: surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . . and what the monthly take-home pay (after federal taxes) would be for each of these jobs. So. . .is a college education really worth the time and money invested for your particular profession?
4. How much adult life costs: housing, groceries, transportation, utilities and insurance. True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills. Together we paid the bills of a typical family in southern Nevada. Much to their surprise, we ran out of money, long before we ran out of bills. This was very eye-opening to this lovely group of girls.
5. How compound interest works. We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill. We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).
It was a fun night, and I felt like the girls were right with me. But I'd love to know what YOU would have said to them? What do you wish someone had told you at their age?
Share To:
Jul 5, 2010
The Burden of Student Loans (Carole)
I ran across this video a few weeks ago on CNN. Go ahead and watch it, and then I'll comment.
I've mentioned before on this blog, that my husband (and I, although the debts were not for my schooling) came out of graduate school with $60,000 in student loans. This was back in 1986. We lived extremely cheaply and only paid for tuition out of our student loans. We were able to earn enough money during the summers and through my job (as a lowly secretary at the university -- so nothing amazing) to pay for our actual living expenses. And, I might add, we never went on food stamps. I'm troubled by this growing trend. But that is another subject for another post.
It is easy to forget while buried in school and taking out student loans, that the day will come when all that money (with interest) has to be paid back. Typically your re-payment begins 6 months after graduation. This date arrives faster than you can imagine. Most loan repayment amounts are several hundred dollars per month, but if you've got debt for graduate school they are often well over $1,000 per month. That is a hefty portion of your brand new salary. Can you really make enough money to live on after your student loan payments?? And most student loans stretch over at least 15 years. That is a long time to be paying back this money.
Repaying student loans is no different than any other debt repayment. Set up a debt snowball and pay it off as fast as possible! But it is best to have a plan before getting into the student loan quagmire. Here are a few ideas to contemplate:
* Go to a local college or university. As a state resident, your tuition is usually about half of what it would be if you are from out-of-state.
* Become a state resident before you attend the school of your choice. A friend of ours who was planning to attend the dental school in Las Vegas moved here a year early, got a job and established residency. He saved himself $15,000/year or $60,000 total.
* Get a bachelor's degree at a college that will not require you to live away from home or pay high tuition. Save student loans for graduate degrees, not a basic college education.
* Apply for any and all scholarships possible. Keep on top of these year to year so you don't lose them. Many students lose these only because they didn't renew them on time.
* Are any grants available for your program? You never have to pay back grant or scholarship money.
* Do everything necessary to be at the top of your class. Top students are often given research or teaching jobs that pay most or all of your tuition.
* Choose your school wisely. Do you really have to have your degree from Harvard?? Think about the debt you will incur (as this fellow in the CNN video didn't). Ask a mature adult who is good with money if this seems like too much money for your educatiaon.
* Determine if your chosen career path is worth the tuition money you will spend. Last fall I heard a caller on the Dave Ramsey Show tell how she and her husband had over $200,000 in student loans for chiropractic school, and now he hadn't been able to find a decent job and they were getting very very frightened for their future. Dave Ramsey informed her that (despite claims from chiropractic schools) these types of doctors do not make the same amount of money typically that an MD does. He felt this couple had way too much debt for the earning potential of a chiropractor. Do your research and make sure it is accurate. Talk to people who are in your field to find out accurate salaries.
*Consider the location of your school. Is it an expensive place to live? Will your school debt be much, much greater because you have to live in New York City or Boston? The mid-west is typically pretty inexpensive as are parts of the south.
I'm certainly not against education in any way! In fact we tell our children that a bachelor's degree is a minimum and that a masters degree (at least) in their field will probably be necessary to compete in today's job market. But don't fool yourself or "blue sky" these kinds of important decisions. Student loans can add a significant financial burden that will follow you for half of your working life if you're not careful.
Like always, plan ahead and live frugally. You'll always be glad you did.
I've mentioned before on this blog, that my husband (and I, although the debts were not for my schooling) came out of graduate school with $60,000 in student loans. This was back in 1986. We lived extremely cheaply and only paid for tuition out of our student loans. We were able to earn enough money during the summers and through my job (as a lowly secretary at the university -- so nothing amazing) to pay for our actual living expenses. And, I might add, we never went on food stamps. I'm troubled by this growing trend. But that is another subject for another post.
It is easy to forget while buried in school and taking out student loans, that the day will come when all that money (with interest) has to be paid back. Typically your re-payment begins 6 months after graduation. This date arrives faster than you can imagine. Most loan repayment amounts are several hundred dollars per month, but if you've got debt for graduate school they are often well over $1,000 per month. That is a hefty portion of your brand new salary. Can you really make enough money to live on after your student loan payments?? And most student loans stretch over at least 15 years. That is a long time to be paying back this money.
Repaying student loans is no different than any other debt repayment. Set up a debt snowball and pay it off as fast as possible! But it is best to have a plan before getting into the student loan quagmire. Here are a few ideas to contemplate:
* Go to a local college or university. As a state resident, your tuition is usually about half of what it would be if you are from out-of-state.
* Become a state resident before you attend the school of your choice. A friend of ours who was planning to attend the dental school in Las Vegas moved here a year early, got a job and established residency. He saved himself $15,000/year or $60,000 total.
* Get a bachelor's degree at a college that will not require you to live away from home or pay high tuition. Save student loans for graduate degrees, not a basic college education.
* Apply for any and all scholarships possible. Keep on top of these year to year so you don't lose them. Many students lose these only because they didn't renew them on time.
* Are any grants available for your program? You never have to pay back grant or scholarship money.
* Do everything necessary to be at the top of your class. Top students are often given research or teaching jobs that pay most or all of your tuition.
* Choose your school wisely. Do you really have to have your degree from Harvard?? Think about the debt you will incur (as this fellow in the CNN video didn't). Ask a mature adult who is good with money if this seems like too much money for your educatiaon.
* Determine if your chosen career path is worth the tuition money you will spend. Last fall I heard a caller on the Dave Ramsey Show tell how she and her husband had over $200,000 in student loans for chiropractic school, and now he hadn't been able to find a decent job and they were getting very very frightened for their future. Dave Ramsey informed her that (despite claims from chiropractic schools) these types of doctors do not make the same amount of money typically that an MD does. He felt this couple had way too much debt for the earning potential of a chiropractor. Do your research and make sure it is accurate. Talk to people who are in your field to find out accurate salaries.
*Consider the location of your school. Is it an expensive place to live? Will your school debt be much, much greater because you have to live in New York City or Boston? The mid-west is typically pretty inexpensive as are parts of the south.
I'm certainly not against education in any way! In fact we tell our children that a bachelor's degree is a minimum and that a masters degree (at least) in their field will probably be necessary to compete in today's job market. But don't fool yourself or "blue sky" these kinds of important decisions. Student loans can add a significant financial burden that will follow you for half of your working life if you're not careful.
Like always, plan ahead and live frugally. You'll always be glad you did.
Share To:
Apr 6, 2010
Paying for Your Children's College (Carole)
This family had 6 children. They were not wealthy by any means, but every one of their children received a bachelor's degree, without taking out student loans. The basic concepts were:
1. Children are expected to attend a university or community college that has a reasonable yearly tuition (meaning, your student can earn enough money during a summer to completely pay for the following year's tuition)
2. Children are expected to pay their own tuition and books for the full four years
3. Parents will pay for room and board (either dorm or off-campus housing) through all four years of school
This wonderful family did not broadcast this plan, but as we interacted with the parents and their children over a 10 year period of time, it became obvious that this was what they were doing. And it WORKED.
And so did those kids. :) From the time they were 15 or 16, these kids had jobs. They babysat, worked at local businesses, and even had their own family-run summer business. Most of this money was saved for their future college educations. When these kids left for college as freshmen, they had considerable amounts of money in their bank accounts, which meant that even before they moved into the dorms, they had earned some serious financial experience and education. It was amazing to chat with these young college students when they came home for a visit, because they knew EXACTLY how much each college credit was costing them and they knew how much they needed to save each summer to pay for the next year's tuition (to replenish their savings accounts and keep a comfortable money buffer a.k.a. Emergency Fund). In addition, they were highly motivated to get and keep scholarships since this could save them a whole ton of money each semester. And lastly, they kept on track. They didn't want to spend one more semester than was necessary to get that college diploma!
Talk about teaching your children some life skills!! Like I said, each of them are college graduates -- and at least a couple have graduate degrees.
College should be a FIRST STEP into adulthood for your children -- Controlled Freedom is what I like to call it. To have parents pay for everything (tuition and room and board), in my opinion, delays your children learning some valuable financial lessons of adult life and prolongs the free-ride high school mentality -- hardly preparing your children for real life after college. On the other hand, to expect your children to get a college education with no financial help (or very little) from you the parent, is just asking for them to drop out or take on oppressive student loans. This is too much financial responsibility to ask of a teenager who has just left high school. And, I personally think it is a bad idea to accrue student loans for just a bachelor's degree. Graduate degrees, however, are a different financial animal.
We followed this simple program with our children. Both Janssen and Merrick received their bachelor's degrees this way (I must mention here that when J and M each got married while still in undergraduate school, we no longer paid for their housing or food -- I'm very proud of them and their exceptional husbands that they still finished their degrees without any debt, completely independent of our financial help) and daughter #3 is a senior in college (unmarried) following the same plan. Child #4 knows already, at age 14, that this is what's ahead. He's already saving money!
What a relief to us as parents to not have to save $60,000+ for each child's college education. This simple plan allowed us to have a solid strategy for our children's educational futures, but to also take care of the other important family financial needs as they were growing up -- like paying off the house, saving for retirement and many great family vacations.
What a blessing to have inspiring and really smart friends to show you the way!
Share To: