Ouachita Stories

Chris Brune, Ph.D., CFP® is a professor of finance in the Hickingbotham School of Business, where he also serves as chair of the Department of Accounting and Finance and sponsors the Ary Student Investment Fund, managing millions of the university’s endowment. We recently sat down with Dr. Brune to hear his thoughts on questions that parents are asking — and what questions they should be asking about financial planning for college.

While you're here, learn more about Ouachita scholarships or look at free budget worksheet provided by Dr. Brune.

Part 1 | Part 2 | Part 3 | Part 4 

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Starting late is harder than starting early — but it’s a long way from being out of options. Dr. Brune shares what to do when college is two or three years off and the savings account is thin. This is part 4 in a series on planning and paying for college. 

Q: A family’s student is a couple years from college and they haven’t saved much. Is it too late? 
A: No. The goal may need to shift, and you have to be honest about your beginning point. But starting late is still better than not starting at all. 

The worst move now is deciding that because you can’t fully fund four years, there’s no point in saving anything. When combined with other funding sources, even a small amount set aside now can provide the money your child needs for college. Don’t let a late start or small balance discourage you from doing what you can. 

Q: How much college debt is too much?
A: There’s not a one-size-fits-all answer here, because every situation is different. But one important consideration is the earning potential of the future graduate. The stronger the expected starting salary in a student’s field, the more reasonable it is to take on some debt to get there. As with any debt, if there’s not a clear path for repayment, it’s probably time to consider potential adjustments to the goal. That may mean a less expensive school, or a fast-track to an earlier graduation, or a commitment to working during college. 

There’s a simple exercise I’ve started using with students in my Personal Finance class that drives this home. I have them look up the average starting salary for a career they might consider, pick a city where they might want to live, and build out a realistic first year of expenses — rent, utilities, groceries, insurance, all of it. Most students are shocked by how expensive ordinary life is. So when they add a monthly loan payment into that budget, the debt is no longer an abstract number to be paid in the future, but a line item competing with basic necessities like food and rent. 

Many students and families will borrow some amount for college expenses. So for most people, it’s not realistic to avoid debt altogether. The people who tend to get in trouble are those who don’t understand how crippling larger amounts of debt can be to a budget,  taking out more than they can reasonably expect to repay over time. 

QUICK DEFINITION: SUBSIDIZED VS. UNSUBSIDIZED LOANS
With a subsidized federal loan, no interest is charged while your student is in school. With an unsubsidized loan, interest starts being charged when you borrow the money. If there’s ever a little extra to put toward loans, it usually makes sense to attack the unsubsidized ones first. 

Q: Where can families find money they haven’t been counting on?
A: A lot of families underestimate how much scholarship money is out there, both from the schools themselves and from other organizations. Now, finding those scholarships can take some time and not every search pays off. But for a family who hasn’t been in a position to save much, an unexpected scholarship can make a huge difference. If you haven’t started, now is the time — well before acceptance letters arrive, not after.

Read more: Seven Tips in Your Search for Private Scholarships

There are two other potential funding sources that sometimes get overlooked. First, payment plans: most colleges now let you spread part of the cost across monthly payments, often for a small fee, so you can cover some of the bill from current income rather than leaning entirely on savings or loans. Ask about it directly. Second, income streams: once your student is enrolled, treat summer earnings or a larger-than-expected scholarship as a chance to reduce borrowing rather than as spending money. It’s an easy trap to see an unexpected check as found money. But trimming next year’s loans by even a couple thousand dollars matters more over time than it seems  in the moment. 

QUICK DEFINITION: STICKER PRICE VS. NET PRICE
The sticker price is a college’s published cost before any aid. The net price is what a family actually pays after grants and scholarships, and it’s often far lower. Every college is required to post a net price calculator, and the federal government publishes net price by income level too. Before ruling a school out, look up what families like yours actually pay, not the number on the brochure. 

Q: Any last advice for a family that’s starting late?
A: Don’t assume the sticker price is the price you will pay until you’ve had a direct conversation with a financial aid office. Your dream school may have more ways to piece funding together than families expect. If the numbers genuinely don’t work after that conversation, at least you’ll be deciding with full information rather than closing a door too early. 

And keep it in perspective. Starting late is harder — I won’t pretend otherwise. But harder isn’t impossible, and the value of a college experience doesn’t disappear just because the path to it looks different than you planned. Adjust the goal, use every tool available and keep moving toward it. That’s a perfectly reasonable plan. 

Read earlier posts in this series about choosing a college savings account and how to talk about priorities from the start.

 

• Tags:
• College Planning