Episode: 357 - Debt-Free College: Top Tips to Avoid Student Loans
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When it comes to the topic of college expenses, there's a pervasive myth that obtaining a degree is synonymous with accruing debt. However, I am here to debunk that idea. My three children successfully graduated college debt-free, without us as their parents covering tuition or book costs. Despite our financial missteps when they were younger, they found a way to navigate the system smartly.
The Power of Early Planning
A crucial step in our strategy was developing a plan for college well before high school graduation. Many families wait until the senior year of high school to think about higher education, but early planning is key. We held conversations with our kids about their interests, potential careers, and the degrees required. Discussing options early opened up a spectrum of possibilities and led to more intentional choices.
Evaluating Degree Value Versus Cost
We taught our kids to do the math regarding degree value and cost. It’s tempting to dream of attending a prestigious school, but the reality is not all degrees hold the same earning potential. Before even considering a college, we discussed what they planned to study and the typical starting salary for that field, comparing it to the tuition costs. Sometimes, a less expensive in-state option was the smarter decision.
Working While Studying
We emphasized the importance of working while attending school. Many think that college students can’t balance part-time work with education, but it’s entirely possible. Working during college not only manages tuition costs but also instills responsibility and time management skills. My kids contributed their earnings directly towards education, reducing their financial burden significantly while still living at home.
Rethinking Big-Name Prestigious Schools
Choosing a practical path over prestigious universities can alleviate significant stress. While the allure of big campuses and the social life they promise is enticing, it often comes with long-term financial pain. Instead, focusing on affordability and practicality provided an equally fantastic educational and social experience for my kids, without the heavy debt shadowing their future.
Harnessing the Power of Scholarships
Scholarships are often underutilized simply because they seem daunting. With some effort in applying—whether through essays or searches—students can access free money that can drastically reduce tuition costs. We discovered that all the workplaces of my children offered specific scholarship opportunities unknown to many of their peers.
Utilizing Community College Programs
Community colleges offer an affordable stepping stone into higher education. By starting there, my kids completed core credits at a fraction of the cost compared to a four-year university. Many states provide tuition assistance for initial years at community colleges, making it a strategic cost-saving route.
These strategies are not about having an abundance of wealth but about strategic financial planning. Taking control of our finances empowered us to guide our children wisely. It’s time to shatter the myth that college must be synonymous with debt. With smart planning and determination, a debt-free college education is achievable for anyone willing to challenge the norm. Consider these approaches, whether advising your children or pursuing your own educational dreams—the path to a debt-free future is within reach.
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Transcript
Ryan Nelson:
You hear it all the time right, college is so expensive and my kids are never going to be able to afford it, so everybody just has to take out loans for it. Well, I'm here to tell you that that's a myth. It's a lie, and I have three kids that are all debt-free, that all went to college and graduated and we, as their parents, we didn't pay for their tuition, we didn't pay for their books. Honestly, we just did a really poor job planning for their college education when we were younger and not really great with money, but they did it themselves and they did it smart. So how did they do it? That's what we're going to talk about in today's episode. My name is Ryan Nelson and my wife and I paid off $160,000 in debt while we were raising these three kids that all went to college and debt-free.
Ryan Nelson:
So one of the first things in point number one is having a plan for college, and this is something that my wife and I and my kids as they got into high school. We just kind of talked about it, having a plan. And what are you going to do after high school? And the biggest mistake I see a lot of people make is they are waiting until their senior year of high school to even think about college and even talk about it, and you really need to have a plan. And you need to have a plan early. And for us, this wasn't about dictating their future, but it was really about discussing options. What kind of career are they interested in? What degree does that require? Having these conversations long before applications are due opens up a lot of possibilities and it allows for more intentional choices and not last minute scrambles or that last minute feeling of, oh, I want to go to this school, but we didn't really plan for it. Point number two is you got to do the math, and this is where the degree value versus the cost comes in. And again, this is an area where I see a lot of parents and kids. They don't really think about this, and this is a huge one, and it's easy to get caught up in going to that dream school or being accepted to that dream university.
Ryan Nelson:
But let's be real. Not all degrees are created equal in terms of immediate earning potential and in even long-term potential. Before my kids even looked at a college, we talked about what they plan to study and what the typical starting salary for that field looked like. Then we would compare that to what tuition costs, especially for these out-of-state schools. Yes, my kids talked about maybe going out of state. But is paying double or triple for an out-of-state public university worth it if you're pursuing a degree that might not have a high starting salary? Often the answer is 100% no.
Ryan Nelson:
A fancy name on a diploma, a fancy school name, doesn't always translate to more money in your pocket and, quite honestly I used to interview people and I know this to be true. It's not to say that colleges don't matter or where you went doesn't matter at all, but it is not the main focus or the main decision maker for most places. For most places, it's going to be a checkbox that you have the degree when you got it from. Not going to say it doesn't matter at all, but it doesn't matter nearly as much as what universities wanted to portray it to me, because they're selling you a product and that's school. Point number three work while you attend college, and I seriously mean this.
Ryan Nelson:
This is again an area and my kids all had friends. A lot of them went to college and many of them didn't work, and all of my kids, from the time they've been 16, they've all worked and my kids all worked through college. And you know what? Millions of adults do it every single day. People go back to school all the time. My daughter just graduated with a nursing degree. There were a lot of people in her graduating class that were adults working full-time, raising kids going to school. So think about it they go back to school. They're in their 30s, their 40s, their 50s, all while working full-time jobs. But suddenly our 19-year-old kids, or 18-year-old kids that are going to college, we act like they can't work part-time while taking classes. It's 100% doable. It teaches responsibility, it teaches time management and, most importantly, it significantly offsets the costs. I mean, it might mean fewer late-night parties, but it also means a lot less years of paying off debt. It also means a lot less years of paying off debt. Now. All my kids lived at home, which certainly helped while they went to school, but their paychecks went directly towards their education.
Ryan Nelson:
Number four is ditch the prestige of these big name schools and embrace the practical. And I'm hearing it now, but I want my kids to have that college experience. You know that big campus, the dorm life, the football games, the independence. It sounds amazing. And don't get me wrong, there's part of me that wishes my kids could have experienced that. But here's the cold hard truth that experience comes with an average of 20 years to pay that loan back off. That is, the average amount of time it takes to pay a loan off is 20 years of your kid's life. And my kids didn't chase the prestige of an out-of-state university. They prioritized affordability and practicality. They still got a fantastic education, they still made friends and they still had fun. The only difference is they did it without the crushing weight of debt.
Ryan Nelson:
Point number five scholarships. And this is an area where I think a lot of people just they think it's hard to do. I don't want to spend the time to do it, but this is free money, free, like there's not a lot here that you have to do. There's some upfront work. But my kids applied for scholarships and here's one of the cool things we found out all the places they worked at that all my kids worked. There was some sort of scholarship through the place they worked. So they got money through government scholarships, but they also got money through their work scholarships. In fact, my daughter, as I said, just graduated with an RN degree and they basically paid a significant portion of her college, provided that she stays for a certain amount of time at the hospital she's working at when she's done. I mean that is awesome. It's literally free money, and, again, that's a benefit of working while you're in school.
Ryan Nelson:
It does take some effort, it may take some essay writing, but every little bit helps. I mean, even a few hundred dollars for one scholarship can cover your textbooks for the semester. So don't leave money on the table just because it seems like a hassle, and then leverage state community college programs and, I'll be honest, this was a game changer for our family and it's how all my kids started their college journey. I think community college gets a bad rap but, quite honestly, it's super affordable, and the first couple of years of almost any normal university you go to is just a lot of core classes that don't have anything to do with your major, and so we researched state programs that offer tuition assistance for community college. Many states have initiatives that make the first year or two incredibly affordable and sometimes even free, and so this allowed them to get their core credits out of the way at a fraction of the cost of a four-year university. So then they transferred those credits to a state university to complete their degrees. It's smart, it's strategic and it saves a ton of money. So there you have it Six key strategies that helped my three kids graduate college with absolutely no student loan debt.
Ryan Nelson:
It's not about being rich or having some secret family trust. I will tell you that a big component of them graduating debt-free is my wife and I. Finally, the stuff that I think a lot of people push their kids to do Go out of state. You know, my son had these aspirations of going to Florida State and, honestly, it would have probably cost $120,000 for four years to go there. We couldn't pay for it, he would have had to take out those loans and he would have been saddled with debt for the rest of his life because of it. If we didn't take control of our finances, we wouldn't have been able to teach them how to do this, and so it was about planning, being strategic, making smart financial decisions and being willing to put in the work.
Ryan Nelson:
The myth that college is unaffordable without loans needs to be busted, and I see this on social media a lot. A lot of people just constantly just how expensive college is. And don't get me wrong, it is and can be very, very expensive, but it does not have to be. It can be done on a budget and it can be done debt-free. It just requires a different mindset and a willingness to challenge the traditional narrative. If my kids can do it, yours can too. And if you're an adult looking to go back to school, these principles apply to you just as much. Start planning today, talk to your kids, research those state programs and remember the goal isn't just a degree, it's a debt-free future. We are partners with the scholarship system and in the show notes for today I'm going to go ahead and put a link there. They have a fantastic free webinar that you can attend that they can help you get scholarships and know where to look for scholarships and can get you money for your kids tuition.
Brad Nelson:
Now listen if you're ready to break free from living paycheck to paycheck which, if you're listening, I hope you are. You want to reduce financial stress. You want to build savings. You want to finally pay off debt for good, but you're not sure where to get started. Don't worry, we've got you covered. Here at Debt-Free Dad. Simplify my Money is sent each Sunday to your email. We make it easy and Simplify my Money. It's your step-by-step roadmap to better financial control, and you're also going to learn easy to follow strategies to manage your money effectively. You're going to get stress-free money decisions that will help you simplify your financial life with proven tips that actually work. You're also going to gain the tools and the confidence to tackle your financial goals head on. You can sign up for Simplify my Money by clicking the link at the top of the show notes. Thanks for joining us on today's show and we will see you guys on the next episode.
