Tales From The Trenches

Kiplinger's Personal Finance Magazine,  July, 2001  by Kristin Davis

• E-mail
• Print
• Link

EDUCATION | How four families PAID FOR COLLEGE, even without a big savings kitty.

IT HOVERS in the distance when your children are in diapers and when they board their first school bus. It sends a chill up your spine when they have a mouth full of braces and later when they start asking for the car keys. But even though the specter of paying for college haunts parents from cradle to high school commencement, most families save only a token amount toward the bills, which will total on average about $100,000 at a private school for the class of 2005.

College costs aren't so scary if you've fortified yourself by saving ahead of time--an approach we highly recommend. But when your bank account doesn't measure up to your intentions, determination and creativity can fill the breach. As the families highlighted on the following pages demonstrate, it's possible to send your kids to college--even to an expensive one--without having saved for it. Not easy, mind you, but possible.

Financial-aid bonanza

TOTAL COST: About $144,000 for four and a half years at Rensselaer Polytechnic.

HOW THE CHOPPYS PAID FOR IT: Scholarships, grants and loans.

COMBINE A modest family income with a high-cost college and you're in fertile territory for financial aid. It cost $30,000 to $35,000 per year for Kristen Choppy to attend RPI, in Troy, N.Y.--roughly half of what her parents, John and Patty Choppy, earn in a year. (He's a cutting-room foreman at Standard Manufacturing Co., and she's a secretary in a dentist's office.) When the Choppys applied for aid before Kristen's freshman year, the formulas determined that the family could afford to pay about $3,000 a year toward college costs. The school promised that loans, a work-study program and grants would make up the difference. "When we saw what Rensselaer offered, I thought, `Wow, maybe this isn't impossible,'" says Patty.

Even better, as the top math and science student at her high school, in Lansingburgh, N.Y., Kristen won a merit scholarship worth $10,000 a year. In her first four years, the scholarship and need-based grants have covered about $80,000 of the expense, and Kristen should qualify for additional grants for her last semester. Her parents have financed their own contribution with about $12,000 in loans, and Kristen has borrowed about $17,000. (Those balances may rise a bit with next semester's expenses.)

Kristen, who is majoring in biomedical engineering, has covered much of the rest with her own earnings. During the past academic year, she had a job in RPI's financial-aid office that paid about $5 an hour. The year before, she earned $15 an hour in a co-op job at Foster Miller Technologies, an engineering firm in Albany, where she helped with research on artificial hearts. Between her work-study job and her co-op position, Kristen's earnings totaled about $17,000, says Patty, "but she bought a car to get to Albany, and there went all the money." Kristen also shaved a bit off the official cost of room and board by sharing an off-campus apartment with other students, which was cheaper than living in the dorms.

The Choppys won't be finished with college expenses when Kristen graduates. They have two more daughters to get through school, and face perhaps another $300,000 in college bills. Daughter Kelly is a freshman at RPI, and while she didn't earn a scholarship, her need-based grants this year amounted to nearly $20,000. The youngest daughter, Lindsay, is a junior in high school "and wants nothing to do with RPI," says Patty.

Cash is king

TOTAL COST About $50,000 for four and a half years at the University of Michigan.

HOW THE KRAUTHS PAID FOR IT: Salary.

WITH A BIT more income than the Choppys and lower college costs, Rita and Larry Krauth qualified for very little financial aid for their son, Dan, a senior majoring in English and communications at the University of Michigan at Ann Arbor. The Newport, Mich., family turned down the $2,000 Stafford loan Dan was offered because "we wanted to give him a chance to start off free and clear," says Rita.

They used Rita's salary from her job as a hospital-ward secretary to cover Dan's tuition of about $8,000 a year. "I went to work 15 years ago to pay for parochial school" for Dan and his two older siblings, Rita says, so her income has always been earmarked for educational expenses. Together the Krauths normally earn $60,000 to $70,000 a year, although their income shot up over $110,000 last year when Larry, a toolmaker with Daimler-Chrysler, worked lots of overtime. The extra money was well timed because Dan's college costs also rose.

Dan saved money during his first two years by living at home and attending the nearby University of Michigan at Dearborn, a commuter campus. As a junior he transferred to Ann Arbor, which he describes as "more diverse, with more to do and better academics." But it's also "a very expensive city to live in."

Although his parents have helped, Dan's own earnings have covered much of the extra room-and-board expense of an off-campus apartment. While still at Dearborn, he worked 30 hours a week in the payroll department at Target and saved about $2,500 toward his junior-year expenses. An internship with Fox News paid a $2,000 stipend. During the past year, he worked with the university news service and at a J.Crew retail store (and went back to Target during school breaks) to cover groceries, utilities and spending money.