Plan helps college grads with loan debt

Parents urged to start saving early for children's future

Published On: Oct 26 2011 12:41:04 PM EDT   Updated On: Oct 26 2011 01:05:59 PM EDT
JACKSONVILLE, Fla. -

The White House introduced two new measures Tuesday that the U.S. Department of Education will start offering in January to help college grads climb out of their student loan debt hole.
The average student debt is now nearly $25,000.
One of the measures is a special loan repayment program based on income. The second would consolidate graduates' loans and give them a small break on interest rates.
One way to avoid mountains of student debt is to save for college in the first place.
When children are young, the graduation march may seem like a long ways away, but recent rate hikes and higher tuition are forcing moms like Habiba Myers to make plans now.
"As the parents, we don't know what to do," Myers said. "Do we have to work two jobs to help our kids or do we have to tell our kids, 'You know, when you're 18 you're on your own.'"
That's why Myers and her husband have already started investing in their children's future. But for other parents like Sarah Clemm, it's a task so daunting she doesn't know where to start. But now that even the state's prepaid program has made a nearly $4,000, jump, she knows it's time to begin.
"It's scary because by the time he is ready to go, it's going to be super expensive," Clemm said.
It used to be that low in-state tuition and Bright Futures scholarships made it cheaper for most Florida students to attend college in the Sunshine State, and 87 percent of them did. But a 15-percent-a-year tuition increase and big cuts to Bright Futures may be changing that.
"Either you're going to be a good student and you have to be a straight-A student to make it, or maybe something is going to happen for us the parents," Myers said.
There are a number of options for parents. Florida Prepaid College Program, which costs $298 a month, is one of them. Parents can also create a 529 plan, which works like a 401(k) plan.
There are bank accounts like the Coverdell Education Savings Account that can help parents save. But whatever they chose, it's recommended they start now.
"I can't imagine how it's going to be for my kids, especially that the cost of living right now, it went up like 7.5 (percent) probably or 9.5 (percent)," Myers said. "With two kids, it's really very, very hard."