TO: People that want to graduate from college without an insane amount of student debt
FROM: Someone who did it
Student loans suck. There are so many better things to spend your hard earned money on. According to this statistic-packed Forbes Article, more than half of college graduates leave school with student debt. Of student loan holders in the U.S. the average loan balance is $28,950. And it’s not just young people that are impacted by student loans; There are 2.4 million people aged 62 and older that owe more than $98 billion. Madness!
So many people have been taken advantage of and misled into what has become the “new norm.” There is a better way and I would love to provide you with some inspiration to get started with a better plan. I personally graduated from college without any debt. It took hard work, creativity and sacrifice; but it was worth it and a decade later, I still consider it one of my greatest accomplishments. Not having to deal with student loans gave me a jumpstart in my “rich life” that would be hard to replicate if I had the burden of six figure student loans. Since graduating from college, I have been fortunate enough to run a successful side hustle, have a rewarding career, buy multiple properties and grow a top 1% net worth for my age. My hope is the same for you! Let’s do this!
(And in case you’re wondering: No, my parents didn’t pay for my school. And no, I didn’t have any grants or financial aid assistance.)
In hindsight, I didn’t have a plan. I figured it out as I went. I was stubborn and wanted to prove that I could make it on my own. I didn’t want the hassle of a big loan to worry about paying back. I am a normal guy. I got a 23 on my ACT. I came from a family of two hard working parents; I didn’t qualify for any form of financial assistance. I went to a 4-year private university (and don’t regret it). I worked hard and was intentional with my time and money. I got lucky, too. By lucky, I mean that it all worked out for me without a true plan. I just figured it out as I went and things played out.
The fact that you are reading this puts you way ahead of me in the planning department, so great start! You are going to remove some of the luck from your equation and have a plan! Hopefully, I can help! Plans can be flexible and change over time. Start thinking about what it would be like to have the college experience you’ve dreamed of, getting a great education that will lead to a rewarding and well paying career; all without the burden of debt. Everyone’s story will be different, but I will share mine as inspiration to help you get started.
Step 1. Dream – what is your ideal situation and outcome?
Step 2. Plan – what steps can you take now to make the dream a reality?
Step 3. Get started – at some point you just have to get started. This is often the hardest part where most people get stuck. I thought about starting this blog for years and eventually had to just hit publish! Once you get started, you’ll find the motivation to be energizing.
Before we dive in:
In full disclosure, I am privileged. I grew up in a safe suburb and was fortunate enough to attend a great public school system. I had two parents along with other family who were loving and supported me in my ambitions. I didn’t let my privilege leave me entitled though. At a certain point, I wanted to prove that I could do it on my own; I was industrious and enjoyed the thrill of independence and pushing my boundaries. The unfortunate truth is that even if we are all running the same race, the starting line is different for everyone depending on their individual situation. The goal of Let’sWinAtLife.com is to help everyone make the best of their situation. Also, in some situations, some student loans do make sense but minimal to no student loans is obviously ideal! Be open minded about how you can do things a little bit differently to better your situation!
Opportunity Cost
To get started, it is important to recognize that this is going to take sacrifice. The 4-year vacation that has been advertised to you by universities may look a little different as a part of this sacrifice. The state-of-the-art workout facilities, lavish student apartments, five-star cafeterias, lattes, lazy river (WTH?!), and glamorous study abroad trips, etc… may look a bit different.
If you have very well-off parents that have nothing else to spend their money on and insist you have the advertised college experience, by all means go for it! Enjoy!!
If you’re like the rest of us, do not put your and your parents’ financial life at risk or get stuck paying for sub-optimal decisions made now for the rest of your adult life. Remember, college is simply meant to provide you with a well-rounded education and prepare you for employment. You can have plenty of fun and enjoy your experience without needing to pay for it for the next 10-20+ years.
If you have started researching or are currently attending college, you can see how racking up $100,000+ in student loan debt could be pretty easy. Let’s take a quick look at what a $100,000 student loan balance would look like post graduation:
- Over a 10 year period with a 6% annual interest rate, you would be paying $1,110.21/month.
- You would be paying $33,224.60 in interest in addition to your $100,000 principal balance.
- With a $50,000/year salary post graduation, you would be paying roughly one-third of your take home pay to student loans, leaving very little left to live on, let alone start saving to build wealth.
This is not a hole that you want to dig for yourself. You can still get a great education, have an amazing time and create lifetime friendships. To graduate without an overwhelming amount of debt is going to take hard work, dedication, discipline and a degree of sacrifice.
I mean this in the nicest way possible: get used to it. All things worthwhile in life involve opportunity cost and I know you will find the balance between finding enjoyment and fulfillment while also doing it in a way that is fiscally responsible and sets you up for a successful future.
The Numbers
Your college education will be one of the biggest purchases of your LIFETIME. In the example above, using a total cost of $133,224.60 for your loan payment and interest along with a salary of $50k, it will take you roughly 7,000 hours of your life ($24/hour and 20% tax rate) just to pay off this debt. That is potentially 170+ full-time work weeks dedicated to just paying for your education. The interest alone would take almost 35 work weeks to pay back. This example is far from mathematically sound since everyone’s situation will be different regarding earnings and hours worked per week, but you get the point.
Let’s dig into some of the numbers. Colleges post their costs on their website. If you haven’t chosen your college yet, use this opportunity to evaluate the cost difference in the schools that you are considering. Get nerdy and start a spreadsheet comparison. Take into account the cost for tuition, fees, housing and meals. If you are planning to live off-campus after freshman year, also take into consideration costs (rent, parking, etc.) for the area.
As an example, the University of St. Thomas (where I attended from 2008-2012) posts all of their costs for 2021 right on their website.
Grand Total: $27,241.50/term or $54,483/year or $217,932 over 4 years
NOTE: This does not include meals, books or additional fees for some courses such as science labs
If you are considering different colleges, be sure to take these numbers into account when deciding which college is the right fit for you. You may not choose to go to the least expensive school – and that is okay – but it is important for you to seriously take the cost into consideration.
Meal Plans
The numbers included in the previously referenced table do not include the cost of meals. This is on purpose. You are not going to an all inclusive resort, you are going to college. The cost for a freshman meal plan for the university in my example is $4,480 for the first year of school. This is an “unlimited” meal plan.
Here is some basic math: 8 months on campus x 30 days per month = 240 days
$4,480 / 240 days = $18.67 per day / 3 meals = $6.22 per meal
This ASSUMES you eat 3 meals per day on campus 7 days per week! Realistically, with weekends, holidays and just being sick of cafeteria food the price per meal could realistically reach the $10-$12 mark with less frequency (and is attempting to eat your money’s worth really a game you want to win?).
Many universities allow you to choose how many meals per semester you would like to purchase. I recommend considering this and doing the math. No matter how great your school’s cafeteria is, how many meals per day will you realistically want to eat there? If you don’t pre-purchase enough, you can always pay out of pocket for extras as needed. With roughly 105 days per semester, 1-2 meals per day at the cafeteria may be plenty making a smaller meal plan likely a better option than what the college recommends. You can also make simple items at your dorm and go off campus for meals at restaurants for variety.
Cutting costs on living expenses
Using my example university above, the annual cost for staying in the dorm is $7,100. Over a 9-month school year, that breaks down to $789/month. That is crazy expensive rent to share a tiny room with a stranger; not to mention having to shower in communal bathroom while wearing flip flops to protect yourself from foot fungus.
In my opinion, living in the dorms (even just for one semester like I did) was worth it! I still hang out with friends that I met in my dorm. I get together with them often and recently officiated a wedding for my friend who lived in the room next door to me. It was a great way to get to meet people.
After freshman year however, it is definitely worth exploring your options for a better value for housing off campus. I had an awesome duplex that I lived at through most of college with a couple friends. You couldn’t pay me to stay there now, but at the time that duplex was our penthouse! We had a great time during our stay there, paid only $325/month each and were just a couple blocks off campus. We found the listing on Craigslist at the time (I would use Zillow or Facebook Marketplace to find a rental unit now). It was owned by a sweet old couple that lived in the neighborhood. We took good care of their property and they rewarded us by letting us stay for the next few years at a great rent price. Beware of on campus apartments run by the university – those may be for suckers. We would have easily spent 2 to 3 times the cost back then in order to live in one of those university-run apartments on campus.
This is NOT the time to live in a luxury apartment, especially if you are taking out student loans. Find a place with 2-4 bedrooms that is reasonably well kept up in a safe area. Value, location and reasonable proximity (5 minutes extra of walking won’t hurt you) to your classes and social activities are the most important aspects in choosing the perfect housing during your college career.
I would also recommend having your own room if possible. Do you really want to spend 3 more years sleeping in the same room as another human being (you’ll get to experience plenty of that when you’re married). Stone countertops, pools, gyms, fancy common areas and large marketing budgets are likely red flags that a property manager is trying to overcharge for rent. Don’t be the sucker: you can use your THOUSANDS of dollars of savings to afford the down payment on your first home and rental property. (See how I purchased my first home at the age of 21 and later turned it into my first rental property)
Beating the system with transfer credits
One of the most impactful ways that you can save money on the cost of tuition is by taking general courses at a community college. You can take these classes both online and in-person.
If you are still in high school, start taking classes for college credit as soon as possible! You can likely take classes at your highschool or online/in-person at a community college for FREE. You have to take these credits in order to graduate anyway, so you might as well get FREE college credit while you’re at it. You’ll thank yourself later, I promise!
Unfortunately, I did not take any classes for college credit while in highschool as it was not as common at the time (and I may have just been an idiot). Instead, I discovered a loophole at my university where I could take the minimum course load required each semester of 12 credits to be considered a full time student. I then took as many college courses at the local community colleges I could both online and in-person. The community college offered courses in the evenings and on the weekends which made it extremely easy to work them into my schedule. Some of the classes I took at the community college included math, economics, science, film studies (art) and criminal justice (social studies).
To ensure you are taking classes that will correctly transfer, simply ask the counselor at the university for a list of eligible transfer courses for the local community college near you. The list clearly outlined which course numbers at the community college would fulfill the requirements for that course at my university.
These courses would be a great to consider taking the summer between your senior year of high school and your freshman year of college! Taking just a couple classes online or at your local community college gives you a great head start into college life and also saves a ton of money. As a comparison using the University of St. Thomas, the cost per credit is $1,287 vs. a local community college that only charges $187 per credit! That’s a savings of $1,100 per credit x 20 credits (only 4-6 classes), which brings you to a total savings of $22,000 over your college career. Even better: If you are willing to forego the traditional 4-year university experience by attending community college for the first 2 years, the savings could add up to over $70,000 just for tuition. (This example assumes you pay cash and doesn’t take into consideration the additional savings from interest you would pay).
In my opinion, transfer courses are the simplest and most impactful way to save on your college education.
Does your university charge per credit or per term?
Something to watch out for is a pricing structure that some universities are now using. In the example above, the University of St. Thomas now charges the same amount per semester for 12 credits as they do 18 credits (they may have caught on to my scheme). If the university you are attending does this, be sure to take the full course load available (within reason for you) to achieve the lowest cost per credit possible.
You can still take classes at a community college during breaks and may be able to even graduate early. For example, the university my wife, Megan, attended charged a flat rate per full time student each semester regardless of the number of classes she took. For this reason, she found it most valuable to take as many courses as she could each semester since any courses over 13 credits were free (her most was 20 credits one semester). By taking an extra course each semester, she was able to graduate an entire semester early, allowing her to not only save an entire semester’s worth of tuition and fees, but also start working full time in her career about 5 months early. That gave her a huge headstart! She graduated with about $15,000 of student loans that we were able to quickly pay off over the next couple of years from our side hustles that you can read about in this blog!
Closely review the tuition details for your university to see how you can best maximize your time and money! Everyone’s situation will be different, but we all have the same amount of hours per day. You will need to find the right balance of focusing on your education (you’ve seen what a significant investment it is, so make the best of it!), being planful and strategic, making money (read about how I started my own business at 16), and have an amazing time during such a fun time of life!
The Talk
Have you had “the talk” with your parents?
No, not that awkward talk; the one about college and who is footing the bill. Regardless of whether you are just getting started in planning for college or already attending school, it’s important to have this discussion with your parents. I never had this discussion with my parents. I worked hard in high school and had enough saved to pay for my first semester of tuition and room and board out of pocket, so I did, and was able to continue supporting myself and funding my college education throughout the next 4 years.
If I were to go back in time my conversation would go something like “Mom and Dad, you paid for your own college and I am planning on doing the same.” Their response would have been that they were proud of me and would support me however they could, but I know they also would have offered to have my back if I hit a streak of bad luck and needed some short term support.
Maybe your parents have money set aside in a 529 College Savings Account for you. If so, great! Find out how much and create a plan with them regarding how these funds will be used.
If your parents are not able to afford helping you pay for college without going into debt themselves, think twice before allowing them to take out student loans on your behalf. This is a huge sacrifice and could lead to a tremendous amount of guilt for you. Don’t you want your parents saving for their retirement and taking care of their own financial future and not taking on the $133,224.60 burden that was outlined in our previous example? It is important to have a discussion and outline a clear plan; don’t put this off and risk not having a plan or – worse yet – a misunderstanding.
Working
I think working is an important part of winning at life. It feels great to be productive, stay motivated, learn new things and interact with people professionally. Regardless of your age and experience, you are valuable and can make an impact to the economy and society. Working during college is an important part of the equation. It doesn’t matter whether the work you do is directly correlated to what you want to do post graduation. It will provide you with great experience and help you relate to different kinds of people.
Even with a full course load of 16 credit hours per week, there can still be time to work.
There are 168 hours per week. Let’s say you sleep 56 hours (8 hours per night), spend 14 hours exercising, eating and taking care of yourself (2 hours per day) and 20 hours in classes or commuting to campus (4 hours per weekday). That leaves 78 hours per week for work, studying and leisure. By productively managing your time, there can be plenty of time for both work and fun. And don’t forget about summer and school breaks which provide even more time for earning an income.
When choosing your class schedule, you can carve out certain times that will allow you to be able to work throughout the week.
You can work or start your own business. I ended up doing both.
Starting your own business
Starting your own business can be a great option. The income potential is endless and it also provides you with the ability to create your own schedule and gain entrepreneurial experience. I owned a DJ business and provided DJ services for weddings, parties and school dances.
I also had a great part-time job in high school which fortunately turned into a role with additional responsibilities when I started college. I worked 24-40 hours per week in this role and provided my DJ services on many Friday and Saturday nights.
The wedding industry is a perfect fit for college students with most work being done on the weekends. Other great opportunities for college students to earn income include serving or working at a restaurant, painting, lawn care, babysitting or nannying, internships, warehouses, pet sitting, retail, security, cleaning, delivery, teaching/coaching (swimming, dance, snowboard lessons, etc…) receptionist and more. With the ability for nearly half of jobs to be done remotely now, there could also be opportunities for roles or internships in sales, data entry, customer service, etc., to make an impact and gain experience.
You might find that you have enough income coming in to cashflow your college expenses by using some of the hacks I have shared and by working like I did. It may not work out for you to earn enough money to cover all of your expenses based on your individual situation and that is okay, too. A great compromise would be to earn enough to cover your living expenses which will drastically reduce the burden of loans. It will also give you a sense of independence to be able to to take care of yourself. Every dollar counts in getting started, and you’ll thank yourself later!
LET’S GO!
Thank you for investing your time in reading this! Nothing would be more rewarding than helping others navigate this incredibly important, complicated and exciting part of life. I hope my story and advice helped provide you with a new perspective as you navigate this important step in winning at life!
As I mentioned, everyone’s story will be different! For many, some student loans will still be a necessary part of the equation and that is okay!!! Just be intentional regarding the debt that you are taking on and have a plan of attack for how you will pay it off. An investment in education is one of the greatest privileges we have. Chances are that an investment in higher learning, whether it be a 4-year university or trade school, will exponentially impact your earnings and quality of life.
That’s me on the right, DEBT FREE! Your turn!
We’d love to hear from you!
Have you discovered any tips/tricks to get the best value out of your college education?
Are you currently in the process of or did you cash flow your college education?
Explore this blog to find out what I’ve been up to the past decade after my college graduation!
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