Personal Finance: Jobs, debt and college selection

Question: My daughter is going to college next fall, and I worry about how we are going to pay for it. We didn't get any financial aid because we have good jobs. But I'm in a profession with a lot of layoffs, and I could lose my job while she's in school. I suppose there is nothing I can do now, except encourage her to consider nursing. She seems to like the idea. I figure she will at least get a job.

Answer: You are wise to encourage your daughter to think about job prospects at the end of college.

Many economists expect the unemployment rate to stay above 8 percent into 2012, before improving.

So majors and job selection will be important, especially for students who take on considerable debt.

Clearly, even under good job conditions, students should not take on more debt than they can expect to pay off. And parents cannot afford to endanger their retirement years.

Sandy Baum, an analyst with the College Board, suggests that students try to keep college-loan payments to no more than 8 percent of their expected gross income.

The average student who borrows for college leaves school owing about $20,000. At the recent Stafford loan rate of 6.8 percent, monthly payments will be about $230 for 10 years. For a rough idea on salary, students can go to Salary.com or the Mint (http://go.philly.com/salary1). Then, compare the salary with loan costs using http://go.philly.com/LoanCost

In this environment, even the best plans can go awry. For example, while nursing is typically considered a profession with plenty of jobs, recent nursing-school graduates have said they are having trouble finding jobs because older, part-time nurses are going to work full time as husbands lose jobs.

The College Board's research has indicated that although paying for college is difficult up front, the typical graduate of a public college earns enough by age 33 to compensate for the expenses for college tuition and fees. And over a lifetime, a college graduate makes about 73 percent more than the average high school graduate.

College students must make sure they take on the right kind of debt: federal student loans rather than private loans with higher interest rates. Find federal Stafford loans, Perkins loans, and perhaps low-interest state government loans through your college financial-aid office.

Although you might not have qualified for aid, go back to the financial-aid office if you lose your job and ask to be reconsidered because of your new financial condition. Some offices will require you to wait until the next annual application process in January. Others try to make sure students don't leave college as a result of the situation, said Jim Scannell, president of college consulting firm Scannell & Kurz Inc.

Although official application deadlines have passed, some small, private colleges still are trying to fill their classes and will offer financial aid as an inducement.

This is an unusual year, and colleges have had trouble planning for the fall. Some students who planned to attend college are backing out because of concerns about family finances. Many students applied to more colleges than usual in the hopes of obtaining the best financial-aid offer.

"Rather than have chairs empty next year, some colleges would rather fill them at a lower price," said New York financial-aid consultant Kalman Chany, author of Paying for College Without Going Broke.

So if financial aid is critical to you, obtain a U.S. News and World Report college guide, look up regional colleges or small colleges that are not in the top tier of schools and ask the admissions office if you can still apply.