Are you following us as we listen together to the new podcast from Ramsey Solutions called Borrowed Future? The link to the podcast is posted below, and you have to carve out time this afternoon to listen when you decide NOT to borrow for college, everything changes. Step 4: Do the math.
It’s a listening party! I’m tuning in, you should tune in too. Let’s talk about how your teen can work Dave’s plan and get your teen through college debt-free.
Do the Math
During this week’s podcast, I was shocked by how many students didn’t know what they borrowed, but then it hit me: once they’re enrolled, it doesn’t matter. They didn’t bother to find out because once they were in progress, the possibility of not graduating because of MONEY is horrifying. It’s one thing to flunk out. It’s another thing to transfer or move away. But to drop out when all you have to do is sign on the dotted line? I’m guessing that’s an easy decision for almost everyone – just do it, and worry about the repayment later. After all, a student loan is “good debt” we’re told. Once your student is enrolled and committed, it’s too late for most students. The humiliation and shame associated with leaving college is too much to bear. Borrowing is easy, and since most people do it, there’s no shame in taking a student loan.
I’d like you to approach your teen’s degree by doing some difficult math. I want you to look up the total cost of tuition, room, board, and fees. Add in a couple thousand dollars for books, and now multiply that by 4. If you don’t have a plan to fund FOUR YEARS on day 1, then the likelihood of needing out a student loan is about 100%. Also, I’m being conservative. The real numbers tell us that IF your student graduates (about half won’t) that it is likely to take them 6 years (not 4). In fact, colleges don’t even calculate the 4-year graduation rates because they don’t have to. They are only required by the government to report their 6-year graduation rates.
The 6–year graduation rate is:
60 percent at public institutions
66 percent at private nonprofit institutions
21 percent at a private for-profit institutions
Unless you’ve got a great college savings account in place, you’re probably freaked out by the number you just calculated. I’m such a huge Dave Ramsey fan, but I have to disagree with the approach they offer of getting through college debt-free. They suggest choosing the cheapest school, working 2 jobs, and applying for scholarships like crazy. I think that approach is fine, but it leaves a lot of low-hanging-fruit on the vine. If your student starts college with 30 credits already earned (that you’ve paid $0 for!!) then instead of multiplying that number by 4, you’re only multiplying it by 3. It’s easier to come up with 3 years of expenses than 4! Now, imagine your teen could enter college with 60 credits already earned. For those students who use their community college to fund the first 2 years of a 4 year degree, that becomes possible. And so many of you have access to either free dual enrollment or free community college. Now, you’ve literally cut the cost of that 4 year degree in half! Motivated parents can bring that number down even more – leaving only 1 or 1 1/2 years to pay at rack rate (full price) tuition. Now you have a reasonable amount to work through, plan for, and get scholarships for. One year beats 4+ all day long. Do the math!
Over the next several episodes, let’s listen together and plan strategically for your teen’s college credit journey. Following each episode, I’ll offer my own spin on how homeschooling families, specifically those who are Homeschooling for College Credit can take the challenge of going to college debt-free.
Can your teen go to college debt-free? There’s no question in my mind. Keep following and we’ll build a plan together.