Dear Roadie,
Due to health issues, our family’s income has been dramatically cut, but we already told our twins we’d be paying for college. I’m a teacher and my husband works in IT, but we never expected to have to cover college and healthcare costs at the same time. Other than college savings, we don’t have many investments. Should we use the money we earmarked for college to pay off our healthcare debt and tell our twins they’re on their own?
— I Never Saw This Coming
Dear I Never Saw This Coming,
First and foremost, I hope whatever ails you or your husband is treated and healed. Your story is a painful reminder that even when you think you’re doing all the right things, life can throw you a curveball, and all your plans go out the window.
It’s also a stark reminder to include the inevitable in any financial planning because it’s the things we’re not expecting to happen that can throw us off course the fastest.
That said, neither you nor your husband could have known that health issues would toss a wrench in your twins’ college plans, and the most important thing is that you’re receiving good care. I realize that comes with a steep price tag, which leaves you wondering if it’s best to tap your college savings and let your kids fend for themselves.
It sounds like the plan was to pay for both of your twins to attend college, so they would graduate debt-free. It would be helpful to speak to a financial planner about the implications of tapping your college savings to pay for medical bills. If the money is in a state college savings or 529 account, it’s unlikely that it can be tapped for anything other than educational purposes.
If your money is free of those restrictions, a financial planner can walk you through the pros and cons of using it for medical bills vs paying for college.
I suggest approaching this problem as a family and including your children in all conversations. They’re old enough to understand that this is no one’s fault and that our health is paramount, even above attending a great college. They’re also old enough to understand the implications of borrowing for college, should they choose to go that route. Including them in your decision-making tells them you understand how this affects them and you’re ready to figure out a way out of this together.
Make Sure The College Knows What’s Happening
Before you make any decisions, ask for a meeting with a financial aid representative from your children’s college. Yours is not the first family to find itself in a last-minute predicament. The details may be different but many families experience unexpected hardship shortly before kids attend college. This is why it’s important to communicate with your children’s school and let them know what’s going on.
A financial aid representative should be willing to meet with you to discuss options that perhaps you’d never considered before, such as grants, work-study opportunities, scholarships, and student loans. While the latter may not sound ideal when it was presumed your children would be graduating debt-free, student loans have some of the lowest rates available and can be deferred until after graduation, so they may be a better bet than racking up your credit cards and falling deeper into debt.
There are things your children can do, too. They can get a job to help pay for classes, take fewer classes to start, defer college for a year or two, or attend a more affordable school close to home. I realize none of those options may seem appealing to them at the moment, but a healthcare crisis forces us to look at life differently. This experience will shape them, yes, but likely for the better, because it emphasizes what’s most important in life.
Don’t lose sight of the biggest positive in all this. You’re lucky there is money earmarked for at least one of your two looming debts. With a little patience and a lot of togetherness, your family can take the steps needed to reach an informed decision about what’s best for everyone.
Have a perplexing college question? Email Dear Roadie for advice at dearroadie@road2college.com
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