An open letter to parents of high school students

Greetings. I'm Pete. You may or may not be a regular reader of my work. Either way, welcome to my little spot on the internet. My role in the financial world is pretty simple: protect people from themselves. Your job, as a parent of a high school student, is to help that student make the best decisions during some of the most vital years of their lives.

There is no bigger decision than trying to decide what to do after high school. I hope that you have highlighted the importance of higher education to your student. A post-secondary degree CAN open doors for them. The operative word here is CAN. And this is where our conversation needs to begin. An education does not guarantee employment. An education does not guarantee ambition. An education, the cost of an education to be exact, can actually ruin your young adult's financial life.

If our relationship just started (if you are a new reader), then chances are I just angered you within minutes of you learning of my existence. For this, I'm not sorry. If you let your student blindly buy an expensive college education, then shame on you. No seriously, shame on you. I'm not suggesting that you should pay for their education. Nor am I suggesting that you have failed in any way, shape, or form if you have failed to save for their education. In fact, you may actually feel guilty if you have not pre-funded their education. I can't make those feelings go away. It is what it is. But DO NOT, under any circumstance, dig a deeper hole by allowing your student to mortgage their financial future via student loans. And for that matter, you should not take out loans for their education either.

The solution IS NOT to forego post-secondary education. The solution IS to lessen the cost of said education. The $75,000 question is: how in the heck do you do this? Very strategically. More on this in a moment. But first, let's chat a bit more about student loans.

There is a popular sentiment circulating that suggests a student should never take out more total student loans than what their first year salary will pay them upon graduation. As an example, let’s say their first year salary upon graduation is $40,000. If they were to follow this popular suggestion, then they would feel comfortable taking student loans up to $40,000. Based on a 5% interest rate and a ten year payback period, upon graduation their student loan payment would be $424.26 per month. That is 17% of their take-home pay in their first year. That is completely unacceptable. They don’t have to put themselves through this. Yet, according to the statistics, over 70% of private school graduates may be faced with this very situation. Say no to all of this garbage. Help your student AVOID STUDENT LOANS altogether. There’s a better a way. There’s a smarter way. And you are about to learn it. Don’t let them ruin the first 10 years of their lives after graduation paying for something that they didn’t need to borrow money for in the first place. It’s ridiculous.

There are several ways to decrease the cost of a college education while avoiding student loans. One of the most significant cost-cutting measures is to secure college credits while your student is still in high school. In some instances, acquiring college credits while in high school, from the high school, will result in over a 90% discount on tuition. You read that right. With early and proper planning, you can eliminate thousands of dollars worth of potential student loans. Check out the tuition fee schedules from Indiana University. The first is the credit hour fee schedule for IU Bloomington. It shows that the cost of a credit hour, for a college student, is $263.45 per credit hour. The second is the credit hour fee schedule for Indiana University's ACP (Advance College Project). This is a program that allows high school students to take high school courses - for college credit. According to the schedule, your student can gain college credit for just $25 per credit hour. Um, yeah. Many high schools and universities all across the country have programs similar to this. It's about time that you take a serious look at them.

There's more. And that's why I wrote a book about it. Avoid Student Loans: A guide for maximizing scholarship earnings and making smart financial decisions during college. I wrote the book along with Aaron Martin. He was able to practice exactly what this book preaches, and SIGNIFICANTLY reduce the cost of his education. The book is written for your student, but you obviously would benefit from reading it too.

How's our relationship now? I angered you, then taught you one small way to lessen the cost of your student's education. Want to continue the relationship? Feel free to come back to this site every day. Want to take it to the next level? Buy the book.

Your (new) buddy,

Pete