Tales From The Trenches

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

What will the Krauths do when education expenses no longer consume Rita's income? "Things we've put off for years are finally in the near future,' says Rita, such as traveling, buying things for the house and "building up that bank account" for retirement.

Debt: The only option

TOTAL COST: About $260,000, for four years (times two) at George Washington University.

HOW THE GERAIGERYS PAID FOR IT: Loans.

WITH A SMALL printing business to finance, a summer home, a divorce settlement and child-support payments, Dick Geraigery didn't manage to set aside college savings for his daughters, Janine and Jennifer--despite a six-figure income. "How could I have a quarter of a million sitting in a college fund somewhere?" he says. "That kind of money could buy a new press."

So when the college bills began to arrive and he didn't have the cash to cover them, debt was his only option, says Geraigery, who lives in Cambridge, Mass. His daughters were undergraduates at George Washington University, in Washington, D.C., over a five-year period (Janine graduated in 2000 and Jennifer in May) during which Geraigery borrowed nearly $175,000 from American Express.

A divorce settlement years ago put Geraigery's share of the college bills at 75% of the total, or about $195,000. His former wife paid the remaining 25%. What wasn't paid for with loans--such things as transportation and personal expenses that schools include in their student budgets but don't actually bill you for--was covered out-of-pocket and by a couple of small scholarships Janine and Jennifer earned in high school.

With two kids at an expensive school, it's possible the family would have qualified for financial aid--or at least for student loans that would have shifted a portion of the debt load to the girls. But Geraigery soured on that idea early on. "They want tax returns and financials for both spouses," he says. "If you're in a don't-get-along scenario, they make it very difficult."

Instead, Geraigery has begun making payments of $1,000 to $1,500 a month on the PLUS loans (Parent Loan for Undergraduate Students) he arranged through American Express, which will take ten to 20 years to pay off. But he still feels as if he's ahead of the game because he no longer pays $550 a week in child support. "The numbers are working," he says.

The scholarship route

TOTAL COST: About $24,000 for two years at the University of Southern Maine. HOW BERNADETTE WILLIAMS PAID FOR IT: Scholarships and jobs.

A GENERATION ago it wasn't uncommon for students to put themselves through college. A couple of decades of soaring costs later, students such as Bernadette Williams of Belfast, Maine, are rare. Williams is paying her own way as an education and psychology major at the University of Southern Maine, in Gorham, with part-time jobs and an impressive string of scholarships.

Williams chose USM for its modest costs, which run about $11,500 a year for in-state students, including room, board, books and personal expenses. About half of that is covered by the MBNA Maine Scholars program, a four-year renewable award she won as a high school senior.