By JJ Montanaro, USAA CFP®

Heading off to college after high school is an American rite of passage.

But in your haste to perform that rite, don’t lose sight of the potential pitfalls in paying for that education. If you can’t do it right, it’s not the right time to do it.

As I continue discussing the importance of timing in making financially sound life decisions, I turn my focus to higher education. It’s not news that this is a troublesome topic. According to the Federal Reserve1, Americans owe more than $1 trillion in student loan debt, and each year, graduates leave campus with more.

The case for education is pretty clear. Beyond the wider range of career opportunities, college grads experience about 70% lower unemployment rates than the national average, according to the Bureau of Labor Statistics2. They also bring in about 60% more in income than those who stopped at high school, according to the Pew Research Center3.

That said, there are still some steps you should take to help afford the cost of college.

Survey the landscape. The College Board pegged last year’s cost for a public in-state university at about $19,0004. Go private, and that pops up to $42,000. Either way, that’s big bucks. And if you’ve got a newborn, you’re talking about $50,000 a year by the time he or she is ready for an in-state public education. Be aware of these numbers as you plan and save.

Begin with the end in mind. I’m still shocked when I talk with folks carrying six-figure college debts but only earning a modest post-graduation income. What’s the expected salary for one year in your new profession? Try to leave school with no more debt than that amount. That calculation likely will have a bearing on where you decide to go to school. If you only expect modest income after you graduate, you may want to avoid a pricey private school. The Bureau of Labor Statistics website is a nice way to check out the earnings potential of just about any occupation.

Recognize not all financial aid is actually aid. Completing the Free Application for Federal Student Aid is a must to obtain financial aid, but be wary of aid that comes in the form of loans. Borrow only what you need, and seek out helpful aid like grants and scholarships to foot the bill. Last year, 31% of college costs were paid with scholarships or grants, according to education-lending giant Sallie Mae. Check with employers, charitable groups and professional organizations for opportunities to earn grants and scholarships, and then apply. Free money is good.

Speaking of loans … If you must borrow, start (and hopefully end) with federal loans. They offer competitive interest rates, flexible payback options and even forgiveness programs. The federal government provides a wealth of great information at

It’s not too late to save. Every bit helps. A dollar saved is a dollar you don’t have to borrow. That means it’s never too late to start stashing money away, and 529 savings plans can be a great way to do that.

Education is good. Completing your education in a way that doesn’t leave you saddled with debt is great.

So if the time is right for college, being prepared means you can worry less about money and more about your grades.

1Federal Reserve, Consumer Credit-G.19, May 2015 (

2Bureau of Labor Statistics, May 2015 (

3Pew Research Center, February 2014 (

4CollegeBoard Trends in College Pricing 2014/2015 (