Paying for College


If the cost of higher education is an expense you’re facing in the next few years, there’s no time like the present to get prepared. We spoke to Mark Kantrowitz, the publisher of and, about the best ways to save for school before you get there. Here’s what he told us about being prepared.

Channel One News: What’s your best college savings advice for a teen who wants to go to school and will be paying on their own?

Mark Kantowitz: Every dollar you save is a dollar less you will have to borrow. Every dollar you borrow will cost you about two dollars by the time you’ve repaid the loans. So, it is literally cheaper to save than to borrow. Also, time is your greatest asset. You will accumulate more money by starting to save sooner.

C1: What would you tell a sophomore about saving for college?

MK: If your state offers a state income tax deduction for contributions to the state’s 529 plan, save in your state’s plan instead of another state’s plan. The tax deduction outweighs the benefit of lower fees when college is just around the corner.

C1: How would you advise a senior to prepare to pay for school?

MK: It isn’t too late to start saving. Seniors can also apply for scholarships (as can students in earlier grades, even in elementary school).

C1: How can a young person make the most of the money they earn at an after school or summer job to pay for tuition?

MK: Save the money instead of spending it. Don’t work too much. Working more than 12 hours a week will interfere with academic performance.

C1: What can parents do to help their teen prepare to pay tuition?

MK: College is the start of a transition from a sheltered existence to the real world. Be open with your children about the family finances and what you can afford. Teach them about financial literacy and about smart borrowing. Teach them about investing. Help them understand the complicated world of financial aid.

Paying for college is a partnership between student and parent. Neither should do all the work. Few students can afford to pay for college on their own without help from their parents. But they can chip in by applying for scholarships, working a part-time job in college, borrowing from federal student loan programs and by getting good grades.

C1: Based on expectations for finding a job after college, is there a reasonable proportion of debt to expected income that a student should consider taking on?

MK: Total education debt at graduation should be less than the student’s expected starting salary, and ideally a lot less. If the total debt is less than the annual income, the student should be able to repay the loans in ten years. If the debt exceeds the income, the student will need alternate repayment plans to afford the monthly loan payments.

These repayment plans reduce the loan payments by stretching out the term of the loan. Not only does this mean that the student will still be paying back his or her loans when his or her children enroll in college, but he or she will pay much more interest over the life of the loan. Students who borrow more than twice their starting salary are at very high risk of default.

C1: Any other suggestions that could help students graduate without student loan debt?

MK: Enroll at a lower cost college, such as an in-state public college. Buy used textbooks and/or sell your textbooks back to the bookstore at the end of the semester. Minimize trips home from school to save on travel costs.

Live like a student while you are in school so you don’t have to live like a student after you graduate. Eating a pizza a week costs $2,000 over a 4-year college career. If you use student loan money to pay for the pizza, it will cost you about $4,000 by the time you’ve paid back the loans. Before spending student loan money on anything, ask yourself if you’d still buy it at twice the price, since that’s realistically what it will cost you.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>