Yes, College Without Loans Is Possible
The central argument that I make in my book Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents is this: If you pick an affordable school, live within your means and work during college, college without loans, financial aid or parents looting home equity or retirement accounts is within reach. I know because I've done it: I'm going to a public college (Go Minutemen!) and paying cash for it without any help from my parents.
A lot of people stare in disbelief when I say this, so here's the math.
According to The College Board, public four-year colleges charge an average of $7,020 per year in tuition and fees, plus another $7,404 for room and board. That's a total of $14,424 per year.
Most families will qualify for a tax credit of $2,500 on the first $4,000 in college expenses they pay each year. So, after-tax, that $14,424 is really $11,924.
If you break it down: $11,924 per year is $229.31 per week. Then, divide that in half: $115 per week for the parents and $115 per week for the student. All of a sudden it starts to look pretty manageable. Nearly all public colleges allow families to pay their bills monthly over the course of the semester (Ask the bursar's office about this option) so you really can "cash flow college".
A student who works 40 hours per week, three months a year and 20 hours per week nine months a year works an average of 25 hours per week. If he can put $6.50 per hour of his earnings toward college costs, he'll have contributed $162.50 per week -- which actually leaves his parents on the hook for just $67.50 per week. There are an infinite number of ways to come up with $67.50 per week: eat out less, drink fewer lattes, sell your Hummel collection, drive your car an extra year instead of trading up, pick up some extra hours at work or work one night a week delivering pizzas, etc. etc. etc. Heck, you probably save a good chunk of that $67.50 per week when your kid moves out because of lower food costs and hot water bills.
And just like that, you have your very own Debt-Free Diploma, which is a nice alternative to the Debtors Prison Diploma that is ruining the life of one in every five borrowers -- and your kid racked up plenty of work experience along the way that will help him land his first job. Worried about the effect that will have on his grades? Don't be. A 1993 report entitled College Student Employment, published in the Journal of Student Financial Aid, found that students who worked 11 to 20 hours per week had a higher average grade point average, or GPA, (2.75) than students who didn't work at all (2.69). Even students who worked more than 41 hours per week had the same average GPA as students who didn't work at all. So can it with the melodramatic crap, and get to work.
Still not convinced a debt-free college degree is possible? Consider how conservative our assumptions were:
We assumed that you had literally nothing in savings for college before the beginning of freshman year and we assumed that your kid hadn't scraped together any cash either.
You could save thousands of dollars per year by starting at a community college. We're doing it debt-free without that step.
We assumed your kid received no financial aid. In reality, 60% of students nationwide receive some grant aid and, at public colleges, the average grant award is $3,300. We assumed $0.
We assumed your kid received no private, third-party scholarships.
We assumed your kid lived on campus, which tends to be a lot more expensive than sharing a house with friends and cooking at home. You can cut your costs way down by living off-campus (check with your school: many colleges have strict on-campus living requirements for underclassmen).
The downside to this plan is that it requires hard work and short-term sacrifice based on a belief that a long-term goal is worth it, even if the journey isn't easy. Whether this plan will work for your family depends on your character: are you willing to buck the culture of self-indulgent consumerism and short-sightedness and put your child's best interest ahead of your desire to see them go to a fancy college and impress the neighbors? If you will make that commitment now, I promise you one thing: Debt-free graduates have much better lives.
Zac Bissonnette's book, Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents, is available for pre-order and will be in stores Aug. 31.
