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,



11 thoughts on “An open letter to parents of high school students

  1. Pete, while this is great advice for students who can perform well in these college level classes; it actually works against students who load up on these classes but can’t handle the rigor… Dual credit, AP, and IB options are great ways to prep for college and reduce college costs. However, us college admissions professionals are getting tons of well meaning students taking these classes that are not performing well because they are not ready. Ultimately, they lower their chances for both admission and scholarships (a tuition reducer) and they haven’t adequately learned the material. In addition, our professors are finding that these students who have sophomore or higher status are sometimes not ready for that level of college coursework.

    Just sharing my two cents on this post. I know your book probably addresses many more options and methods but I had to comment on this one.

  2. Hamilton Southeastern Schools is looking to build a third high school in which the student “graduates” in 3 years and then spends their senior year taking the entry level college level classes in 6 major areas. We are in a working partnership with IU, PU, and Ball State. It will be free and open to about 1500 students. Hopefully the tax payers in Fishers will go for it.

  3. In a perfect world the dual credit high school classes are a great idea, however, here is the reality:
    1. Manh high school teachers are not equipped to teach these classes at a college level. It is not the SAME class as the one you would take at IU.
    2. Getting a good grade in the ACP class does not really mean you are ready for the next step in college for the above stated reason.
    3. In many cases at IU and other schools, incoming freshmen must take a placement exam to determine which level of class they belong in, no matter what credits they come in with.
    4. These credits count as general elective credits (if counted at all), should the student opt to not attend the college sponsoring the program (like IU).

  4. Debbie, thanks for your comment. My goal is very simple: teach people how to reduce the cost of college, thus reducing the amount of student loans that they subject themselves to.
    1. The teachers that teach these programs have required standards that they have to meet. This includes getting certified to teach the classes. The certification is not a formality. It is rather intensive process.
    2. The same could be said for passing an entry level college course in college. That same argument could be made for a 6th grader passing a social studies class. Passing a 6th grade class doesn’t necessarily make you ready for a 7th grade class.
    3. That’s fine. The student should be ready to do well.
    4. That is why advanced planning is needed. Although I highlighted the IU program for a reason. The credits are widely accepted at other institutions. They are accepted at over 150 universities nationwide. And even if the credits are just “general elective” credits, most degrees require general electives. Thus you are still buying your credit hours at a 90% discount.

    We need to stop finding reasons why a cost saving measure like this won’t work, and start being smart about planning our kids’ educations. The ACP program offered through IU is legitimate, and many students have benefitted from it. But it requires a plan. You can’t take the classes and then head to a school that doesn’t accept the credits. That would be poor planning, and you would be forced to take student loans. The point of the Avoid Student Loans movement is to plan intelligently, using the dual credit method and many other methods, to Avoid Student Loans. The “reality” that you suggest is the “accepted reality”. It’s not real reality. Just because people foolishly go to schools that don’t accept dual credit courses, doesn’t mean that the method is flawed.

  5. And since the credits would be IU credits, it is state law in the state of Indiana for all other state institutions to accept the credits. (The Indiana Legislature passed House Enrolled Act 1347, now known at Public Law 185-2006 in the spring of 2006).

    IU, itself, says “Most, but not all, colleges and universities will transfer the credits based on the transcript. Some postsecondary institutions will require additional information and a few will not accept the credits.”

  6. I have to go with Pete on this one. Our daughter took AP Psych, Calculus, Spanish, English, World History. Moderation is the key. This saves us an entire semester or perhaps gives her the ability to take a light semester here and there. I am a big fan of AP courses. I know they are abused by some, but overall, they are good.

  7. If you’re already in school another great way to pursue the reduction of college course needs is to take CLEP tests for college credit. Although I didn’t use them correctly when I was in college to save money and finish earlier, I used them to take light course loads which allowed me to carry jobs outside of courses to help pay for costs while I was still in school. When it was all said and done I racked up about 32 credit hours via CLEP tests.

  8. Jason is right. If a student takes and passes just one CLEP or DSST exam each semester and passes at least 15 credit hours each semester, he/she can graduate in 3 1/2 years instead of 4. That saves one semester of tuition, room and board, often $10-15K at many of the private colleges in Indiana.

    I personally know of three students who have achieved over 100 credit hours by CLEP and/or DSST testing (CLEP and DSST are competitors, just like the SAT and the ACT–they both want you to take THEIR exams). It takes 120-125 hours at most Indiana colleges to earn a degree. There are more than 40 students at UIndy who have enough hours through testing to be sophomores–that’s a year of college saved at $25-30K.

    CLEP exams are currently $77 each; DSST exams are $80 each. These exams cover a wide range of topics from business to the liberal arts to the social sciences, etc. If you pass the exam, you get the credit hours for the equivalent course and don’t have to take the course. An equivalent course could often be more than $1,000 at many Indiana colleges. Most Indiana colleges accept CLEP and DSST exams for college credit.

    CLEP info is at DSST info is at UIndy is a national testing center for both, which means that you can take an exam in our testing center for credit at any college or university that accepts these credits. Our proctor fee is $15.

    College credits for 1/10th the cost? Sounds like a plan to me.

    Bob Burchfield
    Testing Administrator
    University of Indianapolis

  9. Pete,

    I did this back in 1991 and was able to get a head start heading to IU. The program at that time was nothing like it is now. My daughter is currently in the Early College program in HIgh School, believe me it is helping and is a great opportunity. There will be detractors for anything in life, being able to lower college expenses is welcomed and practiced.

    Thanks for all you do.

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