I have a confession to make.
When my sons were little, I would steal their birthday checks from friends and relatives.
Instead of taking the boys to the toy store, I cashed the checks and put the money in their college accounts. They never knew what they missed.
When they got older and started baby-sitting and mowing lawns, I confiscated half that money and put it in their 529 accounts.
And when they got part-time jobs in high school, I required them to put half their earnings in their college accounts. It was not negotiable.
That money, combined with scholarships, tax credits and money my husband and I saved through monthly automatic deposit, allowed them to graduate from state universities debt-free.
My boys are in the minority. An estimated two-thirds of the millennial generation is graduating with student loan debt. The average debt of a newly minted grad: $26,000.
Future grads are at risk of even higher debt. On July 1, the rate on subsidized Stafford loans doubled to 6.8 percent. By Friday, Congress was still working on a deal to lower the rate before the fall semester begins.
No matter the outcome, cash-strapped parents need their own plan to avoid their own college debt crisis.
Whether you’re newly pregnant or have a teen, here are a dozen old-fashioned mom-approved ways to beef up the college savings account to keep student loan debt to a minimum.
With our youngest just three years away from college, we’ll be taking our own advice one more time.
• It’s never too early to start saving – even before your baby is born. With exceptions for the crib and car seat, buy secondhand, borrow from friends and welcome those hand-me-downs. Take the money you’ve saved and earmark it for college.
• As soon as the Social Security number arrives, open a 529 college savings account and sign up to make automatic monthly contributions. In North Carolina, you can open an account with as little as $25. The minimum monthly contribution is also $25.
• When birthdays and holidays roll around, ask your loved ones to skip the toy aisle and write a check to your child’s 529 account. Make it easy for them by printing out several contribution forms to keep on hand. Write in the account number. If you get a luke-warm reception, ask for practical gifts such as clothes in specific sizes and a few well-chosen toys and books. Once again, the money you save on necessities can be directed to the college account.
• Once your children are old enough to realize they’re receiving money as gifts, allow them to keep a small portion of the cash and explain where the rest of the money is going. My kids were content with buying a small toy or treat and banking the rest. It was also a great opportunity to start an ongoing family conversation about college and the future.
• By age 11 or 12, most kids start asking about ways to make money and are eager to try their hand at pet-sitting, mowing lawns or baby-sitting. Don’t miss this opportunity to have your kids contribute to their own future. It’s astonishing how much money a 13- or 14-year-old can make and how quickly it can disappear if you don’t require them to save.
Regularly deposit their earnings into their college accounts. Share the statements with them so they can see their money grow.
• Be willing to be different. Despite what your kids might say, they don’t need a phone with a data plan. Use that $30 to $40 a month to put in your child’s college account. The same goes for the travel with sports teams, gym memberships and late-model cars that have become commonplace in the teen years.
• Once your child is 16, it’s time for a part-time job. Working weekends and summers will go a long way toward avoiding student loans. It also looks good on college applications.
• Encourage your child to take Advanced Placement courses in high school. Not only do they beef up the GPA, they can earn your child college credits, which can end up saving thousands of dollars in tuition.
• Talk to your kids early on – before they form a strong allegiance to a particular school – about the costs and benefits of public versus private colleges and universities. If your child has his heart set on a private school, encourage him to choose a public university as a backup choice. Early on we had a Duke fan who ended up a Tar Heel.
• Help your child apply for scholarships. Concentrate on school- and community-based awards. Check to see if your company or your child’s employer sponsors scholarships. Many fast-food chains offer their student workers college scholarships.
If you had a child graduate high school last month or if you have a current college student, there’s still time to save.
• A campus job builds character, teaches time management and helps with the extras. It’s not a good idea to add the price of Friday night pizzas to a student loan tab. My younger son stacked plates in the cafeteria for a year before landing a better job in the library. He hated that cafeteria job, but without it, he wouldn’t have had spending money.
• Ask your child periodically if he’s on track to graduate in four years. Barring illness or emergency, most college students should be able to complete a degree in four years. A fifth year of college dramatically raises the cost of a college degree. Take too long, and students are also charged a tuition penalty. In North Carolina, students pay a 50 percent tuition surcharge after 140 credit hours.
I asked my sons, now 25 and 22, about their debt-free college diplomas the other day.
It’s no surprise that as teenagers, they weren’t always happy to hand over half their pay checks. “Taking away half of my hard-earned money seemed patently unfair,” my 22-year-old said. “College seemed so far off and so foreign,” my oldest told me.
In hindsight, they’re grateful, of course. “It means I’m not entering adult life with a 10,000-pound weight on my back,” the eldest said.
The good news is they’re still talking to me.
Dunn: 919-829-4522 or firstname.lastname@example.org