College Readiness Includes Planning Student Debt

Just as a college education teaches students a lot more than academic content, so too learning how to strategically save, budget, and borrow for college can be a holistic experience in achieving complex goals.

True college readiness includes mastering the life skills that help students tackle campus life and beyond. Financial literacy — which should include, rather than be defined by, college savings — posits students to take meaningful responsibility for their opportunities and choices.

Sticker prices for the 2013–2014 school year ranged from $3,264 for public two-year, in-state colleges, to $30,094 for private four-year colleges, according to the College Board.

With those prices, some student debt is reality for most alumni. Some 40 million people have open student loans, with an average $29,000 of debt, for a national total of more than $1 trillion, according to a September 2014 analysis by Experian.

College readiness includes debt planning

Reyna Gobel
Reyna Gobel

With those high costs, Reyna Gobel, MBA, and author of “CliffsNotes Graduation Debt”and “How Smart Students Pay for School,” says it’s neither advisable nor realistic for most students to aim for zero debt. Avoiding loans altogether can create its own problems, such as overdoing part-time jobs, or taking too long to graduate. Instead, she suggests minimizing and managing the debt load.

One strategy is to apply to a variety of schools — state and private, with varying degrees of competitiveness. A student with the same grades and financial situation could graduate with more debt from a state school than a private one with a big endowment and more generous offer.

Preparing for the economics of college tuition can’t start too early — even before the future valedictorians are born. “In-utero babies are getting donations at baby showers,” Gobel says.

Planning for tuition, fees, and well-being

Parents who don’t explicitly teach their children about financial literacy and planning still model behaviors, attitudes, and skills — be they positive and pro-active or negative and defeatist.

“Remember your own financial situation first,” Gobel says as a caution to parents.

She recalls a father who emailed her after being laid off. He wanted to pay for his kids’ education, and was considering cashing out his 401(k) to make tuition payments.

“It doesn’t make sense,” Gobe saysl. This well-intentioned approach might ease his children’s burden for a few semesters, but without a job or retirement funds, he could wind up a financial burden to his kids down the road.

Rather than parents taking on a lot of debt, Gobel suggests looking at scholarships, choosing paths based on clear decisions, and not sending kids to dream schools. “You have to earn your dream,” she says.

It’s important for parents to remember the big picture, and not to oversave at the expense of enjoying life or making good choices about their own careers.

Teach your children well

Most kids “don’t know what the amount of student loans mean,” Gobel says. The numbers themselves are abstract: $X for tuition, $Y for loans, $Z for future salary when it’s time to start paying back $Y. It’s all far more than they earn at a part-time or summer job.

Bridge the theoretical and practical aspects of saving for big-ticket tuition by having them save for things they want now. “If you save for a bike, you can understand saving for college,” Gobel says.

Some kids contribute to their own college savings over the years, putting aside, say, 10 percent of all money received — from allowances, birthdays, jobs — in a college savings fund.

Do you know what you want to be when you grow up?

Not everybody knows what they want to be when they grow up — plenty of us are still figuring it out as adults.

Gobel recounts one well-off family whose child was accepted to an elite private school. But the liberal arts college was in a rural area, and the student was unsure about career goals. In this case, it made more sense to attend a community college in New York City with a strong internship program — the sort of real-world exposure that is an education in and of itself, and helped clarify what to study after transferring to a four-year institution.

Changing majors midway can be expensive. Students who are clear about their talents, interests, and career path can focus on their major from freshman year and dig deeper into their subject matter without having to add on additional credits.

“The last thing you want is to graduate with a degree, and find out you don’t like the job,” Gobel says.

To avoid this, expose kids to different career paths from a young age. Asking kids what they want to do is a great starting point — but their options should not be limited to the jobs in their circle of awareness.

“Give them an idea, ambition, a reason to pursue their education, to pursue scholarships, to work at improving their own lives,” Gobel says. “That’s something really important to instill at an early age.”

Rebecca L. Weber is a journalist who covers education, the arts, the environment, and more for the New York Times, CNN, USA Today, and other publications. Visit her online at or on Twitter @rebeccalweber.