Cutter Family Finance: Ways To Avoid Student Debt, And Why

Jeffrey CutterRichard Maclone Photography - Jeffrey Cutter

A common concern for middle class American parents is finding a way to pay for their children’s college education without going broke. Our youth, on the other hand, want to graduate from college without drowning in debt. With the exception of the Federal Reserve spending spree, many experts see student debt as the next financial crisis and I agree.

College debt is an important issue that we should all be thinking about. Outstanding student loans now total over $1.2 trillion according to the Consumer Financial Protection Bureau and that number continues to grow. In fact, just here in Massachusetts, 66 percent of our kids have debt averaging about $30,000.

These college grads are part of the most educated in history, however, in spite of all that studying, they have fewer economic advantages than either they or their parents expected.


With so few good jobs available as a result of the Great Recession, many “Millennials” experience underemployment the first few years out of college, if not much longer.

The problem is that the health of our economy depends in part on young people getting jobs and contributing to consumer spending—buying cars and setting up households. However, as explained above, many recent grads are finding themselves underemployed and needing to dedicate a good chunk of their income to loan repayment. Household formation is half the rate it was pre-recession and most of that is due to the drag of student debt.

Last week, I discussed these same issues with a very nice young family from Falmouth. I thought I would share with you a bit of our conversation. Bob and Cindy (names changed) have two kids, ages 16 and 15. They are looking for ways to minimize their childrens’ student debt. We talked about five possible ways they can do that.

The first is to send their children in-state for school. An in-state public university often times is only about half the financial burden of a private institution. According to, the cost for a private institution is about $45,000, compared to a state university, which is about $22,000. Over four years that could total a savings of approximately $92,000. That is significant. Between their two kids, Bob and Cindy’s savings from staying in state could be north of $180,000.

Another possibility for Bob and Cindy to consider is to have their kids “stack” college, have them start at a community college for two years then switch to a four year college. More and more people are ditching the notion that a four-year college is the only option. Most of the classes students take in those first two years can be taken at a community college for a fraction of the cost. And, kids are more likely to stay at home, which saves a lot of money on room and board—another cost-cutting benefit.

Third, I suggested to Bob and Cindy that their kids consider taking classes on the web. Enrollment in online college courses is up (nearly 30 percent in the last three years). And, more than half of parents today expect their kids to take some online college courses in lieu of traditional classes. It can save money in tuition and commuting costs.

With the cost of college so expensive and with no end in sight to those increasing costs, I also advised Bob and Cindy to have their children seek out scholarships. I explained that students do not need to get straight As to receive scholarships. In fact, The Department of Education has a guide to help find scholarships based on many different criteria.

The last point we discussed is for Bob and Cindy (and their kids) to focus on four. Nothing can bust a college budget like an extra semester, year, or more. We used to call it the “5-year plan” when I was a kid. Today, more than ever, we must encourage our kids to take a full class load and pass all their classes on time.

Although their goal is to minimize their children’s college debt, I figured while I had Bob and Cindy’s undivided attention, I would also give them some things to think about when it comes to repaying those inevitable college loans.

Student debt needs to be taken seriously. Changes to the bankruptcy laws a few years back now prevent student loan debt to be discharged in bankruptcy. That means, it is not going away. Also, it’s no secret that falling behind on student loan payments can squash a kid’s hopes of building savings, buying a home or even finding work. But now, hundreds of thousands of retirees are also learning that defaulting on student debt can threaten something that used to be untouchable, Social Security benefits. That’s right! Uncle Sam has now begun withholding money from Social Security recipients who have fallen behind on making payments on their student loans.

My advice to college grads is this—don’t let it get to that! I suggested to Bob and Cindy that they teach the kids now about designing and sticking to a budget.

Cindy asked me what options kids have if they are struggling to repay their loans. I told her the first thing they should do is talk to their lender. There are alternative repayment plans based on income. There are also options offered for debt forgiveness, the terms of which vary for public and private employees. However, in either case, payments must be made regularly and on time. So, most importantly, they should not ignore this debt.
Be vigilant and stay alert, because you deserve more.

Jeffrey Cutter, CPA, PFS is the managing partner from Cutter Financial Group, LLC (, which provides private wealth and investment management through low risk, low volatility successful strategies. He can be reached at

Investment advice is offered by Horter Investment Management, LLC, a registered investment adviser. Insurance and annuity products are sold separately through Cutter Financial Group, LLC. Securities transactions for Horter Investment Management clients are placed through Pershing Advisor Solutions, Trust Company of America, Jefferson National Monument Advisor, Fidelity, Security Benefit Life, FC Stone, and Wells Fargo Bank, N.A. 1., 2., 3., 4., 5.

This column sponsored by:

Cutter Financial Group, LLC, a family owned and operated company, was founded by retirement and investment specialists. We engage high quality, independent wealth managers who specialize in significantly reducing risk during times of volatility, while capturing a large majority of the gains of the upside. This strategy allows our clients to secure a better, and worry-free, retirement.

Learn for about Cutter Financial Group on their website


No comments yet.
Please sign in and be the first one to comment.