Smart Money Smart Kids: Debt Free College

“Student loans are a roadblock to this generation. Current college graduates are leaving school with an average student loan debt of $27,000… Altogether, there is roughly $1 trillion in total outstanding student loan debt in the United States today, and student loans have recently surpassed credit cards in total debt owed.” -Rachel Cruze, Smart Money Smart Kids

Wow! That’s a lot of debt. More than credit cards? Really? My goodness. But guess what? Your child doesn’t have to add to that $1 trillion number to get a college education. He doesn’t have to be burdened with loan payments for years after he leaves school. Smart Money Smart Kids explains how.

“BUT, we haven’t been able to save money to pay for his college and he graduates next month. He’s a good kid, BUT he doesn’t have the grades to get a scholarship. BUT he wants to go to an out-of-state private school because it offers a great degree in xyz. BUT, BUT, BUT….”

Relax. I didn’t say it would be easy, but it is very much possible. In the book Rachel states, “It all comes down to five things: parent planning, school choice, financial aid, working while in school, and your student living a reasonable lifestyle.”

Have I mentioned my husband Eric and I are weird? I think have. Anyway, both of us earned a degree in civil engineering in the mid-1990’s without student loans (ok, full disclosure, Eric had a tiny student loan, so we did it with almost no loans). Weird! We did it in two very different ways. All five of the elements Rachel discusses in the book played a role in our getting through college debt free.

Let’s talk about my story first. I was a nerd in high school, still am, by the way. So, my part-time job my senior year was filling out scholarship applications – lots and lots of scholarship applications. It was a great paying job. The first two years I attended a small local university so I could live at home and had so much scholarship money tuition and books were covered and I got money back to spend as I pleased. The last two years I attended a state university about three hours from home. I had enough scholarships for tuition and books, but no money back. My grandmother had set up a college fund for me years earlier, so I used some of that money for the dorm and meal plan. My parents paid for gas and car insurance; they felt they were getting a great deal since they didn’t have to pay any tuition. I lived at home and worked the three summers in between school years at a civil engineering firm. It was great experience for my resume and I earned spending cash. Spring break of my senior year in college I paid cash for a new car with some of the money my grandmother had set aside for college and, a year after graduating, I used the rest for a down payment on a house.

Not the typical college story, huh? But it had all the elements Rachel discusses in the book. My grandmother saved (planned) for my college fund; paid in-state tuition all four years (school choice); worked hard to get as many scholarships as possible (financial aid); had a job in the summer (worked); lived at home for two years and lived in an affordable dorm for two years (reasonable lifestyle).

Now let’s talk about Eric’s story. He served three years in the Army after graduating high school. The GI Bill covered tuition for his first three out of five years of college.   He lived at home for part of college; shared an apartment with his brother for a short time; and lived in a very small apartment on his own for a time. His first two years were at a community college; he finished at a local state university. And he worked during college – a lot. He earned an EMT certification while going to school so he could work as a beach lifeguard. There were times in which he would attend classes and work at the beach during the day, then work at UPS at night. He lived very frugally – lots of ramen noodles in his pantry. Once a week, an all-you-can-eat buffet was his only splurge (and he would make sure to get his money’s worth). During school he saw some of his friends racking up student loan debt and he really didn’t want to join him, but to finish up his senior year he did take out a small loan. He worked hard to pay it back within a year after graduating.

I didn’t meet Eric until after college, but I’m so impressed with how he did it – on his own. His work ethic during college has helped him become the successful professional he is today. It wasn’t easy, but it came down to school choice (community college, state school), financial aid (GI Bill), working while in school (a lot), and living a reasonable lifestyle (ramen noodles).

Afraid your child isn’t going to have a debt-free college story to tell? Whether he is in diapers or attending prom, now is the time to start planning. Smart Money Smart Kids has a chapter dedicated to college planning. As I’ve mentioned in other blogs, this book offers great practical, detailed advice. Click on the ad located at the top right of this blog to see more about the book (and help me out – I’m trying to win a contest for most ad clicks).

Want to help your child with college expenses, but you’re struggling with your own finances? Contact me about a one-on-one coaching session. Let’s get you on the right track so you have the opportunity to bless your child.

Know a high school senior? Here’s a graduation gift idea – a financial coaching session! What better gift is there? Let me show them how to budget, save for emergencies, live within their means, and start retirement investing early. If they grasp these concepts right out of high school, it will lead to a life of financial peace – a life not burdened by debt, a life of wealth building, a life of generosity.

What’s your college story? I’d love to hear it. Was it weird or normal? Leave a comment here or e-mail me at goodcentscoaching@gmail.com.