Okay, so now that our daughter is all settled into her dorm room as a freshman at U.C. Berkeley… or “Cal,” as the in-crowd calls it… and we’ve returned home to our recently emptied nest, I thought it would be appropriate and helpful for me to share a few things I’ve learned about saving and paying for the costs of college today. Because I’m here to tell you that chances are, no matter how much you’re saving… it’s not enough. And if you have time to change your savings strategy, now would be a good time to do so.
Saving for anything these days, by the way, isn’t easy. It’s not like you can expect to earn interest on money you deposit in the bank, and if you’re anything like me, whatever you’ve made investing in the stock market over the last 20 years… you’ve given back during the down years. And counting on home equity like so many of us used to… is hardly worth even talking about anymore.
What people are turning to as an answer is the worst possible answer to any problem… easy money at terrible terms… or as everyone calls them today: student loans. In fact, the skyrocketing costs for higher education are perhaps easiest to understand by thinking of the situation as the mortgage bubble meeting the third-party payer problem from our health care system… it’s truly the worst of both worlds.
In point of fact, depending on student loans to pay for college is like putting the your mortgage on a credit card whose balance can’t be discharged in bankruptcy. And I’d like to offer a few suggestions as to how you might consider avoiding them as much as possible.
It’s also worth acknowledging that saving isn’t easy for most people no matter what. Even if the environment for investing were better, with just about everyone’s incomes down or flat for much of the last decade, saving is just generally, pardon the language, a real bitch. And I have a few ideas that might help in that regard as well.
Okay, I’ll come right out and admit it…
I do have to admit that there are no easy answers for this topic as a whole. Fact is, having a kid go off to college has had a tendency to make me wish, if only for a fleeting moment, that I …read more