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 5: Whittle down what you actually pay for.
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.
Whittle down what you actually pay for.
During this week’s podcast, great care and attention went to help us understand how the student loan industry is set up to help our kids fail. In fact, the rescue programs (forbearance, income-based repayment, deferment, etc.) that we think can give our kids a little breathing room will almost always backfire and create a significant increase in their debt.
I know what you’re thinking because I think it too: that’s just what happens when you don’t pay your bills. Pay your bills and you’ll be fine. I want to share a true story that I’ve shared on Facebook a few times. In 2015, I shared a screenshot of a real person’s student loan repayment statement. The student had a perfect repayment history – never missed a payment and paid on time per the schedule. After 2 years of this perfect behavior, the principal balance was higher than the original borrowed amount. Yes, the balance went UP not down. So, it’s not a matter of paying your bills, student loan programs are structured differently than something like a car loan or mortgage.
I’m sure you’ll listen to this episode and come away as sick as I am – but let’s not just complain about it, let’s do something about it! Let me share the single most important step, in my opinion, that can really help you cash flow college. Step 5: Whittle down what you actually pay for!
Whittling down what you actually pay for recognizes that rack rate (full advertised price) tuition is expensive, so let’s start with the premise that you don’t have to pay full price for a degree!
There are over 30 ways to earn college credit in high school, so by accumulating college credit in advance (a lot of college credit!), you will whittle down the number of credits you teen will actually have to pay when they enroll.
Let’s use a real-world example. Let’s assume your teen wants to attend Liberty University. After checking their website, you see that you’ll spend no less than $95,000 to make that happen. Who has 95 thousand dollars? Not me!! It may feel hopeless, and that without scholarships, you have no choice but to borrow that money. That’s true, unless…. unless you can whittle down the number of credits using a degree plan!
If you create a degree plan that whittles down the number of credits your teen actually has to pay full price for, it’s an entirely different scenario. By resourcefully degree planning and Homeschooling for College Credit, your teen can complete the first 90 credits (75% of the degree) at home using inexpensive classes, credit by exam, dual enrollment, and other resourceful methods. The cost for those first 90 credits? About $3,000! Now, when your teen enrolls, they only have to fund 1 year on campus at full price (rack rate) which is a much more manageable goal. Using a sample degree plan for this university, the actual cost the student has to pay is about $25,000. Suddenly, coming up with $25,000 through scholarships, grants, part-time work, and extra savings has just made this degree possible. Here’s the best part, you can do this at hundreds of colleges!
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.
Previous posts with comments about each episode