Reyna Gobel - CliffsNotes Parents Guide to Paying for College and Repaying Student Loans

CliffsNotes Parents Guide to Paying for College and Repaying Student Loans

Copyright 2016 by Houghton Mifflin Harcourt Publishing Company

All rights reserved.

Cover art by Jackie Shepherd

Library of Congress Control Number: 2015943210

ISBN: 978-0-544-57790-9 (pbk)

eISBN 978-0-544-57915-6
v1.1015

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To my father, Ed Gobel, who taught me how to do math without a calculator and that the most important accomplishment anyone can do is volunteering in their community.

Thank you:

Peggy Engel, my mentor, for believing a book on repaying student loans needed to be written and that I was the one who should write it.

Grace Freedson, my literary agent, for sticking by me through fruition.

Greg Tubach, Katrina Kruse, Lori Glazer, and the rest of the gang at Houghton Mifflin Harcourt for giving me the honor of writing under the CliffsNotes brand. And, of course, my editors, Christina Stambaugh and Lynn Northrup, who kept my writing and timing on track when I started to go off on tangents.

My interviewees, who agreed to talk conversationally about their subject of expertise: Betty Lochner, Jason Washo, Ed Slott, Stacy Francis, Ryan Law, Martha Holler, Steve McCullough, Julie Hartline, Bob Bardwell, Jim Brooks, Craig Munier, and Dr. James Conover. Dr. Conover also deserves credit as my favorite finance professor.

My real-life interviewees, who trusted me enough to share their debt stories: Janae, Randy, Mary, Benjamin, Kimberly, Mickelle, Doug, and Erin.

All the editors who let a former and still occasional entertainment and pop culture writer near the subject of education. Caroline Howard, who welcomed me as a Forbes contributor.

My nieces and nephews: Abbi, Eddy, Eddie, David, and Jade. The other important children in my life: Jacob, Asher, Ora Bina, Eliyahu, Mendel, Yakov, Grace, Rae, Clare, and Louis. My mom and my brother Marcus and his wife Sharon.

My friends, who support me in everything that I do, including tolerating me talking endlessly about student loans and paying for college: Ambroise, Irene, Allegra, Arthur, Melanie, Gadalya, Fagie, Laurenn, Laura, Justine, Charlie, Stephanie, Nadia, Krista, Kati, Liz D., Liz H., Liz W. Camille, Anthony, Marla, Beverly, Mary, Dan, Lynnette, Carolina, Suzi, Justine, Simcha, Eileen, and Ariella.

Richard Culatta, for invaluable research help on student loan topics.

My first writing mentor, Jeff Inman, who was the first person who taught me how to write well.

Finally, Id like to thank Brooklyn for being such an amazing place to live and work as a writer. When I want to leave my home to be around people while I write, theres never a shortage of writer-friendly cafs that let me work for hours while ordering one cup of coffee.

Reyna Gobel, M.B.A. and M.J., is a .

Dear reader,

I wrote this book because I get emails from parents who are worried about whether or not theyll be able to pay for their childs education. Theyll tell me theyre willing to cash out their 401K plans to do it, even if theyre unemployed. Dont do that. Im going to show you how to chip in what you can actually afford without sacrificing your own retirement and goals. Youll also get tips for how to get family to chip in a bit, too.

Beyond not depleting your own savings to save for your childs future, Im also going to talk about how to not mortgage your own future by borrowing an excessive amount of parent loans or cosigning private loans for your children. And if you do decide to borrow loans, youll know the best options to repay them.

This book is for parents of children who are not born yet all the way through children who have graduated college.

But dont think an early section on beginning saving for college wont help you if your kids are in high school or college. You may be able to pick up a few pointers for boosting your savings, choosing a new 529 plan, or budgeting better. Use the table of contents or the index to find information on the topics youre interested in. The section introduction pages will also give you tips on how parents of children of different ages can use those chapters.

I hope this book helps you make informed college financing decisions, while also helping you figure out how to encourage your children to find a career theyll love. Happy reading!

Best,

Reyna

S ECTION I

This section is labeled for parents of young children because it goes over the basics of starting to invest and save for your childs college educationfrom finding the money to start a savings plan to the basic details of a 529 plan college investment and other accounts. The information is primarily for parents of young children. However, these parents should also check out budgeting tips in other chapters and consider reading ahead to start to plan other stages of funding. This book has a thorough table of contents and an index, so you can skip around other sections easily to find topics important to your family. Parents just starting to save for their childrens college education, even those with children who are in college, will still find this section useful.

With tuition rising nationwide at rates over 6 percent annually, saving for college can seem like an impossible task, especially if youre still paying on your own student loans.

What kinds of numbers are parents looking at for future tuition? According to the College Board, a not-for-profit known for the AP and SAT tests, the national average cost to attend a 4-year public college including room, board, tuition, and fees for the 20142015 school year was nearly $19,000. If the total cost rose by just 3 percent annually, a family with a baby born this year could pay over $32,000 for the childs first year of college.