How to pay for college

College is expensive but generally worth it if you pay as you go. Paying double, however, by putting the cost of a college education on credit to be paid for over the next 25 to 35 years, borders on the unthinkable. Student debt has the potential to be so destructive to a person's life, so it should be avoided where possible.

Realistic ways to pay as you go:

  • Community colleges. There are fine two-year community or junior colleges in every area of the country where prerequisite courses can be taken, then transfer to a four-year college for the third and fourth years. Be sure the classes will earn credits that are transferable.

  • State colleges and universities. These offer an excellent education for a fraction of the cost of a private school provided the student meets the residency requirements.

  • Living at home. While the social aspect of college has its benefits, it is not worth going into debt to pay for room and board in a dormitory or apartment.

  • Sitting out. Many times, a year or two of dealing with the real world convinces a young person that getting an education as the path to a better job is highly desirable. The young person could save for tuition during this time.

  • Starting when they're babies. This is the most painless way to pay for an expensive education. Up to age 12, faithfully put your money, month after month - good times and bad - into stock mutual funds, reinvesting the dividends. At 12, begin depositing your regular amount into safer vehicles such as U.S. Savings Bonds and long-term CDs. As the college years approach, begin transferring the money from the stock mutual fund into the safer havens. Some states have programs that allow parents to pay for their children's college education while the kids still are young. Be careful. Make sure that the funds are fully refundable - with interest - in case your child decides to attend a different college or you move out of state.

  • Share the cost. Tell your kids from an early age that they will have to contribute part of the cost of college and have them begin saving with their first after-school job.

  • Current income. Spending current income - either the parents', the students', or a combination of both - is a more costly way to go. This definitely will require a change in lifestyle and considerable sacrifice, but can be worth it to avoid debt.

  • Working for the school. Many colleges give an excellent discount to the children of college employees.

  • Grants. A grant is a flat-out gift with no requirement to repay. The most common is the Pell Grant - money from the federal government to assist lower income undergraduates. The amount will be small - as little as \$200 or as much as \$2,500. Displaced homemakers and dislocated workers also qualify.

  • Work-study programs. A federal program provides on-campus jobs for students. There is no requirement to pay back the money even if the student does not graduate.

  • Corporate benefits. Many businesses have educational reimbursement programs for employees who qualify. Consider working for one of these corporations before going back to graduate school.

  • Military. The military will put you through medical school, for instance, if you enter as an officer and agree to stay for a period of time upon completing your residency.

  • No-need scholarships. There are millions of scholarships available that are based on ability or one's ethnic heritage - many of which go unawarded every year. You can find exhaustive lists in the reference section of your library or contact the National Scholarship Research Service at 707-546-6777, NSRS 5577 Skylane Blvd., Suite 6A, Santa Rosa, CA 95403, for a list of scholarships.

If you must take a loan:

  • Take the very minimum amount you can possibly get away with. Don't accept more than you need so you can invest the excess, buy a computer (use the one at the library), buy a car (use public transportation), live off campus, or do anything else that is not absolutely.

  • Know the facts. At all times know exactly how much you have borrowed, the interest rate, the exact terms, and when the payments will commence. Students, not just parents, need to know this.

  • Start repaying at the first moment possible and pay more than is required.

  • Never default. Don't push the limit, consolidate, or rewrite the loans extending the period of time.

  • Practice frugality. College is not a four-year vacation.

From Debt-Proof Living by Mary Hunt, copyright (c) 1999. Used by permission of Broadman & Holman Publishers, Nashville, Tenn., 1-800-233-1123.

Mary Hunt is founder and publisher of Cheapskate Monthly newsletter and an authority on spending habits and financial responsibility. She has appeared on Good Morning America, Oprah and The Crier Report. She has written The Financially Confident Woman, The Complete Cheapskate, Tiptionary, Debt-Proof Your Kids, and Debt-Proof Your Holidays.