Here's some advice from The Dove: if faced with Fewer Options Open to Pay for Costs of College, consider changing your plans.
Fewer Options Open to Pay for Costs of College By JONATHAN D. GLATER Published: April 12, 2008
Parents will have to navigate unfamiliar and difficult terrain when it comes time to pay for college this year, with student loan companies in turmoil and banks tightening their standards and raising rates on other types of borrowing.
Hey folks. If you have to go into debt to pay for your child's college, maybe you should consider sending the kid to a different college?
The article quotes a mother in Mill Valley who wants to borrow $5,000 a year to send her daughter to a local community college. I don't understand this. California community colleges have lowered their tuition to $15 a credit - so two full semesters would be about $500. Books are very expensive - say $750 for books. That's $1,250. What's the other $3,750 for? College level coursework at community college is fully transferable to all California universities in the UC and CSU systems, so at $500 a year tuition for two years, parents have saved a boat load of cash over a four year education. Is the level of teaching lower - unfortunately, it could well be, and the level of students could be lower, too. But I have known many intelligent, well-educated Californians who did their first two years at community college and finished at Cal or UCLA or similar.
Now the parents who want to take out loans against their houses, or sign their children up for student loans - how are they going to repay? Do they know? Is the education worth it? Why borrow $10K a year, saddling the young person with $40k+ of debt right out of college?
The best gift you can give is to help the student choose a college based on what s/he can afford, while minimizing loans. Then after college the young person is not hamstrung by debt. OK you might want to borrow something. But seriously consider the cost/benefit to borrowing all that cash to get through school. Look at state schools, community colleges, part-time programs.
A bachelor's degree does not guarantee a high-paying job. Borrowing to pay for that degree won't help your bottom line.
Meanwhile - perhaps if all that easy student loan money dries up, colleges will have to bring their tuitions down to reasonable amounts. College tuition has climbed much faster than the consumer price index for more than a generation. Once upon a time a student could work a summer job waiting tables and earn tuition for the year. Now such a job would pay for a few textbooks, while the tuition might cost as much as the parent's yearly earnings. ($40K, $50K). I have a theory that the easy money student loans, and American consumers' willingness to take out such loans, have fueled the inordinate inflation of college tuition.
Get off the runaway train and pay what you can afford for college. Don't let them enslave you with debt after graduation.