Should Single Mom Use Savings or Loans to Pay for Son's College?

Question: I am a single mom with a son who is going to a state school in the fall (approx $18-20,000/year). I have $43,000 saved. He has qualified for both subsidized and unsubsidized Stafford loans. Should I take both or just the Subsidized? Or no loan at all and spend down the fund as we go? I am trying to figure the least amount of debt in the end for him. Thank you!

This "dean" is not qualified to be anyone’s financial counselor, but I bounced your question off of a pro, along with my proposed response. She agreed with my suggestion, which is that you should split the difference. That is, take out some subsidized loan every year but also dig into your savings. You don’t want your son to graduate with a lot of debt, but repaying a loan is good for a credit rating.

Something else that your son can look into is the possibility of being a Resident Advisor on campus. At many colleges, this sort of position is open to qualified juniors and seniors and maybe to sophomores, as well. R.A.’s get free room and, at some schools, free board, too. So you wouldn’t have to touch as much of your savings if your son can keep costs down this way.

(posted 6/1/2011)