How To Graduate with Less or No Debt

Keys_29082It’s quite the conundrum. We are told that a college education is the key to achieving our full potential and the American dream.  The story tells us it is the way out of poverty.  Access to higher education was a major priority for the last White House administration and affordability was central to that message.  President Obama even introduced the America’s College Promise Act 2015 to make the two years of community college free.

Over the past decade or so the number of Americans earning college degrees has skyrocketed.  And so has the tuition, and the debt that follows.  For many, what was supposed to be a roadmap to the American Dream turned out to be a money pit into a uniquely American nightmare.  Graduates now face enormously burdensome debt that many will never be able to pay off in their lifetime.  We’ve all heard reports about the student loan default crisis, where the struggle to keep up with unaffordable loan payments becomes so discouraging that people stop paying altogether.

Women are particularly vulnerable.  I recently read that women own two-thirds of student loan debt.  Yet a female graduate will earn only 79 cents for every dollar that a male graduate will, on average, in a similar position.  Hmm…wouldn’t it be nice if that was reflected in the tuition we pay?!  Blacks and Latinas tend to take on more debt, and the fact that they tend to make even less than their White counterparts makes it especially harder for them to repay.

But alas, there’s hope!  There are several ways to graduate with less or no debt.  At the root of decreasing the need to take on debt to advance one’s education are planning, time and diligence.  Here are some things to consider:

  1. Take your required courses at a community college.  It is not necessary to spend tens of thousands of dollars on coursework that isn’t directly relevant to your major; better yet, if you don’t even know what you want to study or career path you want to take right now, community college is a great place to sort that out.  Aside from the money, it can help you to grow in maturity and be more focused at a four-year college. Advantages:
    1. Cheaper
    2. Potentially pay tuition as you go
    3. The 4-year college transcript is what will be seen on your resume and what you will talk about at parties!  If you started at Community but ended up at Harvard no one really has to know.stundet-loan4
  2. Prepare!  There are literally thousands of grants and scholarships.  Take the time to do the research necessary to meet all of the deadlines and gather all of the information required to complete each application.
    1. Attend events at schools and community organizations of all sorts; read books and articles on free money for college. Get to know people who do this every day and keep in touch.
    2. It would be wise to start researching 18 months out from when you will begin school.  This way you can target your time and energy towards the most lucrative scholarships and grants that you qualify for and are interested in.
    3. Give yourself and your recommenders enough time to craft thoughtful, well-written essays and recommendations.
  3. Consider the potential salary expectations for your desired career.  Will your potential future income allow you to afford your student loan debt along with your realistic cost of living?  Your grades, location, network and caliber of your school are all factors in the salary level that may be available to you.
    1. This is the business of your life.  Do a cost/benefit analysis on your educational goals.  Does the pay scale for the career you intend to go into justify the cost of the degree required for the field?  For example, if you want to be a social worker, would it be worth it to go $60,000 into debt, considering what your salary is likely to be over the long run?
    2. Following the example in number 1, there are student loan forgiveness programs for certain careers.
      1. Usually when you go into one of these careers and apply for loan forgiveness there are requirements such as length of time to work in the field.
      2. Careers in public service (ex., The Peace Corps), medicine, the law and military service are all examples.
      3. For more information go here, here, here and here.splash
    3. An often overlooked yet critical advantage of going to college is the alumni network.
      1. I wrote in a previous blog, No Man Is An Island.  No one gets to where they want to be in life solely on their own effort.  Everyone needs a team to achieve their goals and dreams.
      2. As I asserted in my post about opportunity, connections are key.  That is the value of going to a top-tier school.  College isn’t just about academics; it’s the people with whom you will build lifetime personal relationships and professional connections. Further, the higher up on that U.S. News & World Report list, the higher your earning potential will be as soon as your graduate.
      3. Going to a top school matters most in the beginning of your career.  Afterward your professional record is what will really matter.  Of course top school alums will always have bragging rights, whatever it’s worth. 🙂
    4. Get a job at a company that offers tuition reimbursement.  Consider that there is more than one way to obtain an “education.”  Working in your field of interest while saving and investing as much as you can, kills two birds with one stone.  Being reimbursed for the tuition you pay is icing on the cake!
      1.  I benefited enormously by this incentive when I worked at Ernst & Young.  I was able to grow my professional competence through continuing education classes.  But they would also have paid for graduate school.
      2. Usually companies will require that you study courses either related to your specific position or the company’s industry. Length of time employed is another typical requirement. Either way if it’s your field of choice, it’s a win.
      3. The bigger the company the more likely that this opportunity will be available and the more generous.

These are just a few suggestions to get you started.  There are other personal finance possibilities that I will cover in another blog.  Have you been working on getting the money together to pay for college?  What has or has not worked for you so far?  Do you have any ideas you could add to this list?  Comment below!

 

Read more on the advantages of community college here.

Tennessee Makes Community College Free For All Adults

Detroit Is Making First Two Years of College Free

Two Tuition-Free Years in Rhode Island

Should Students Get Grades ’13 and 14′ Free of Charge?

Paying off debt with 401K

8 Reasons To Never Borrow From Your 401K

First 2 Years of College Free

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From 0 to 18: Planting the Seeds of Financial Growth When Time Is On Your Side

You’re having a baby! And your first munchkin is anxiously awaiting the arrival of his new baby sister. You did everything you were supposed to do to get ready for baby: you kept your doctor’s appointments; took prenatal vitamins religiously; ate well; stayed away from cigarettes; put your feet up when you could; prayed.  And you kept your firstborn involved, talking about the little bun in the oven and how he’d get to be a big boy and help his little sister figure things out as she grows up.  The whole family is excited!  Mom came to town to help when the baby comes.  Any day now.  The baby’s room is filled with hand-me-down furniture from the first one and all the gifts of baby supplies and clothes that you received at the baby showers – one at the office and one with family and friends – for this one.  You know that what a child needs is a loving home with parents who provide for their needs, just like you had.  To that end, you and your partner are more than capable.  You both work, bringing in a combined $80- to $90,000 a year with overtime.  You own your home and have family and friends all around you.  There are good schools in your area.   You and your family believe you have done everything necessary to be ready for when the baby comes, just like the last time.  But even though you know from the first one that raising a child requires a sizable financial commitment, you never tried to budget for it.  The one thing you haven’t considered in getting ready for either child’s arrival is how to prepare for the long-term financial responsibility of raising them.

In a Huffington Post article posted 8/18/14, it was reported that raising a child born in 2013 until the age of 18 would cost about $300,000 when adjusted for inflation. Housing is the largest expense, followed by child care and education, then food. How often is it that parents sit down and formalize a financial plan in preparation for the years to come after the baby is born?  When the first one came to bless the world, did you and his father ever have a conversation about putting a plan together to protect the family’s financial future?  If so, did you take it a step further to commit to some objectives then follow through on implementing them, consistently?  Do you know how to go about these things?  Or are you comfortable just seeing how it goes?  Is there anything about the financial situation you grew up in that you would rather not repeat with your own children?

Housing is the largest expense related to raising a child.  None of us want to think about this, but there may come a time when we are called back home earlier than expected.  There are many children who have faced this reality, having to grow up with only one or neither parent because they passed away.  Would your beautiful new baby girl and her older brother be able to stay in their home if one income or more was no longer there?  At the end of those 18 years the children you raised through struggles and triumphs will be off to college or trade school.  Who will pay for it?  The time to figure this out and take action is now.  Eighteen years sounds like a lot more time than it will be.  And the more time you let go by before getting started on protecting your family’s future, the more (exponentially more) it will cost you when the time comes that the money will be needed.

Parents spend much time and energy first planning for the baby to arrive then doing all the things necessary to ensure the basic needs are in place to raise your children properly – food, clothing, shelter, education.  But while you’re building a family it is important to ensure that it is grounded on a  solid foundation.  That is, a financial game plan based on income protection and savings and investments for emergencies and education and even retirement.  I encourage you to capitalize on the advantage of time that is in your possession today.  It doesn’t have to be the overwhelming or painfully sacrificial experience you may be imagining.

Feel free to comment and share your own insights and knowledge!