June 23, 2017

5 Ways to Save & Pay Cash for College: 4 kids in 5 years

Sep15

We will have four kids in college at the same time. How we are saving and paying cash for college

 A little over two years ago, I opened up an incredibly interesting can of worms on my facebook page with the status updated, “Why we won’t let our graduating senior go to college in the fall, unless things change.”

As you can imagine, it opened up discussion with 150 fascinating responses from people still trying to pay off student loan debt to 20-somethings who mentioned partying their first two years of school away and regretting all the wasted money, to parents who think their kids shouldn’t have to be worried about money in college. I enjoyed every comment and view point. We can all learn from each other.

Since I’m all about iron sharpening iron, I want to challenge you in your thought process about paying college, and explore alternatives by which many have not thought. 

Let me state up front, so there’s no doubt, I believe in higher education. Both my husband and I have college degrees, and my husband continued on with an MBA, but I also believe there are many creative options that parents haven’t looked into prior to making college choices.

Somewhere along the way, many high school students have assumed that continuing on with college is an entitled right of passage. Yes, an opportunity to expand their social standings, experience new realms of thought and attend classes all on their parent’s dime is the next obvious step, right?

The kids dictate where they want to attend school regardless of the cost and most parents assume that’s their duty.

I tend to disagree.

Paying for college without going into debt

On the average, students are graduating with a minimum of $30,000 in debt with no guarantee of job security when they leave. There has to be a better way to avoid years of digging out of debt.

What if parents decided early on to set some ground rules?

That’s what my husband and I did, and while there were a few touchy moments at times, we do not regret our decision. Ever since our first period of unemployment and corporate debt over ten years ago, we determined that we never wanted to feel that desperation again. After barely scraping by our second period of unemployment, we knew then that we wouldn’t go into debt for our children’s education, so we had better become quickly informed.

One of the first books I read during that time was Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents. I highly recommend it.

Shortly after, I gave our teens, Dave Ramsey’s The Graduate’s Survival Guide (Book & DVD).
Since our kids are very familiar with the Financial Peace information, much of this was review, but it zeroed in on financial issues college students face.

If your children are younger, begin with Smart Money Smart Kids: Raising the Next Generation to Win with Money
It’s a quick read, packed with critical information to starting kids on the right financial road.

Please know that the following thoughts work for our family, but it’s a personal choice. I’m oversimplifying the information because this could be an entire book. Philosophically, every family lands somewhere different, but hopefully, this will give you some new avenues of discussion.

Our five childrens’ ages are 20. 19, ,17, 15 and 11. If you do the math, you will see that we will have four college age students within five years. That’s a huge investment of resources and something we don’t take lightly.

 Five Ways We are Saving and Paying Cash for College

1. Kids should have some skin in the game

Yes, this is one of my husband’s favorite sayings and applies perfectly to eliminating the “entitlement mentality” many kids have about school.

The main ground rule we set for our children is that we will pay for half of their college education and they need to pay the other half.

Now, before you think that’s hard nosed, we set this expectation early on. It didn’t come as a surprise and they had plenty of time to work towards this goal. Most parents underestimate what kids can do and we believe that our kids will appreciate this education so much more if they have worked towards it and have skin in the game. Also, and this is a key point, any scholarships or grants they receive goes towards the half they owe. Yes, that’s a huge incentive for them to begin working hard before college hits.

2. Alternative Educational Strategies

In my opinion, a masters degree today is more in line with the prestige of a college degree 25 years ago. The playing fields have changed and while a four year degree definitely opens doors, statistically, that does not guarantee job security.

Begin to find ways to cut down on college costs before you step foot on campus. While many parents know that passing the AP exams will give their child equivalent college credit, most do not realize that children can take college level classes while still in school. Check with your guidance counselor about dual enrollment at the local community college or consider having your child take online college credit classes that will transfer to their school of choice. They can also earn credits through the Clep College Board program which is an amazing resource.

Many students enter their freshman year of college with a sophomore standing by doing this and you can master these credits during summer break.

3. Scholarships

Treat receiving scholarship money as if it is your part time job. Do the math; put aside 50 hours of time and receive $2K in scholarships. That’s $40/hour non taxed, no interest. I will take that any day.

One of the biggest myths of scholarships is that they only go to the top scholars and athletes. That is not true. There are billions of dollars in scholarship awarded annually and many do not take grades or athleticism into consideration at all.  There are hidden jewels waiting to be found, and it’s worth the time commitment.

When our #2 son was attempting to get a full ride football scholarship, we considered it his job. We invested time and resources to ensure he had the best possible opportunity. It’s the same for all scholarships. They take research and time, but it’s so worth it. A friend from church decided to put aside hours each week researching scholarships for her son. He ended up getting over 20 different small scholarship totalling nearly all of his tuition. These are not scholarships that anyone had heard of and therefore, there were not many applicants. It’s been fascinating to learn from her. A interesting read on this is Confessions of a Scholarship Winner.

4. Proactive investing for educational fund

This is one of the most important pieces of advice. Start saving now!!! While we had our huge unemployment hiccup during our eldest son’s high school year and used our savings to stay afloat, we resolved to start again. Once employed, we still lived like we were unemployed. We put everything into our emergency fund and savings.

Get professional advice now. I always recommend Dave Ramsey’s Endorsed Local providers who have the heart of a teacher. There are so many options for college savings and it’s important to have someone walk you through it. Many states offer prepaid tuition locking in today’s rates on tomorrow’s prices. A great option is to set up a 529 college savings account, which grows money tax free, or even a brokerage account designated to their education, but it’s critical to use someone who is an expert in the field to understand how best to invest your money. Whether it’s $100 a month or $1000, it’s never to early to seek professional investment advice.

5. Community College First

One of the benefits of homeschooling is the option to dual enroll at the local community college during the high school years. This enables college credits to transfer in at a fraction of the cost. Like I mentioned above, most parents don’t realize this is available to all high school students, but I want to take that a step further. In the past, community college has had a a negative stigma,  but times are changing. Unless a child is thinking ahead to medical school, law school or something highly specialized, general education requirements are very similar across the country.

Most 18 year old teens haven’t decided on a major or occupation and giving your child a gap year to work or a chance to get inexpensive college credits out of the way and then transfer to a four year school is a wonderful option. Make sure you work hand and hand with the guidance counselor of the college  in which you will ultimately attend to ensure a smooth transition. Knowing a trade is always a great option. My husband’s company hires welders straight out of trade school making a very good income for a two year degree. Skilled trades will always be needed and there’s always the option of returning for a four year degree at any time. Do you know one of my greatest regrets is not getting my cosmetology license immediately after high school? It would have been a wonderful trade to have and I wish I would have taken nine months to get it right before going to college.

Where are our kids NOW in this process?

I wish everything was as simple as on paper, don’t you? Are you wondering how the facebook statement, “Why we won’t let our graduating senior go to college in the fall, unless things change, ” turned out? We are living this and have our share of challenges, so stay tuned for part two on the reality of what this looks like in our family.

I’d love to hear how the rest of you view saving and paying for college.

Remember, there is no right or wrong answer here. Let’s learn from each other.

Saving money and paying cash for college tuition

I trust Dave Ramsey’s Endorsed Local Provider program and am thankful to them for allowing me to share our financial journey through this sponsored post.


Comments

  1. That is amazing that you can do that debt free or at least trying to. I’ll be interested to hear what’s happened so far in your next post.

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    Jen Reply:

    @Elaine, Thanks Elaine – our eldest has definitely not been a fan of our initial decision, but now in his Junior year, he’s realizing some of the benefits of our saying “no” to some initial requests.

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  2. Dawn Samuels says:

    Great information. And I agree completely with the mentality that many young adults have: that they “deserve” to go to college no matter the cost. I just had a sad conversation with a college grad – even though he is thousands of dollars in debt, he insists the “social experience” was worth it. Obviously reality hasn’t set in yet. That’s what college is now to many – it’s not where you go to get an education but where you go to “experience life”. *face palm*

    Second, I worked on a college campus for 3 years and worked directly with students. It was eye opening. Higher education is NOT for everyone. Some just aren’t cut out for it, some just are not ready for it maturity wise, and some just don’t care. I wish people could understand just how much time, energy and money is wasted trying to get these students through the classes. It is a drain on the resources of the parents, students, teachers, admins… time, energy and money that could be spent on students who are actually ready and willing to get a good education.

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  3. Dawn Samuels says:

    Oh, and one other solution to pay for college: military service. Our oldest just finished serving 5 years in the USMC. He took online classes while he served and will be starting classes at our local community college in January – with help from the GI Bill. Granted this route is not for everyone but is not an option that should be ignored.

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    Jen Reply:

    Yes, that is a great point. Some of our good friends have done this with much success!!

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  4. I was talking to a friend who is a college professor, and she was saying how sad it is for her to see kids taking on so much debt that they can’t afford to follow their hearts after college. They have to take the best-paying job rather than the most idealistic job (like the Peace Corps or mission work), which is where the energy of youth can be used to greatest effect. To me, that is why kids need to “have skin in the game” (heeheee, also a phrase my husband, who worked his way through several degrees, has used many times over the years).

    I also have the sometimes unpopular opinion that college isn’t just for maximizing your future earnings. So much other learning and growing and thinking occurs during college that can’t be quantified by a number, especially for a small town farm girl like me and my own girls. Of course, one can have such experiences outside of college, too, and maybe it’s more cost-effective to take a gap year or two and find a volunteer opportunity.

    Our oldest is moving into her first dorm in a couple of weeks, and has already been on a “wilderness orientation”, a 10 day backpacking trip above 10,000 feet in the Sierra Nevada with some of her fellow freshman (which she paid for herself!). Gotta love a California university in the 21st century! I’m looking forward to seeing how her hard work pays off! (Plus, a little verklempt, if I’m being honest)

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    Jen Reply:

    I am right there with you in believing that there is a lot of life and leadership experience through college as well. I had amazing opportunities from my private school, and while I loved everything about my four years, I wouldn’t have taken on the huge debt that I did to attend there. I ended up going into ministry and I don’t think my salary ever caught up to my debt. haha.

    I LOVE the experience you eldest is having. WHAT A DREAM!!! So fun!

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  5. Very well written post, Jen. I am now on the other side having two kids who graduated from college in 2012. Your numbers are right on target. Both of my kids graduated with about $30,000 in student loan debt even though one went to an elite private college and the other attended public universities including community college. One of my children took a professional level job in Atlanta and earns a professional entry level salary. That child is only able to make the minimum payment on student loans each month due to rent payments and living expenses. I don’t see a possibility to change that for at least a couple of years. The other child has chosen to live at home in order to pay off student loans first. Our child who is living at home has had several employment opportunities which would involve a move and an apartment but has chosen not to pursue those until debts are cleared. Our child who lives at home, which is often seen as not very cool, has already paid off $15,000 of student debt in two years and is chipping away steadily. If we had to do it all over again, we probably would do a few things differently.

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    Jen Reply:

    Yes, our eldest has decided to take on some personal debt this year with a switch to a private college, so he’ll be where your kids are shortly. Wise decision for your one child to live at home and wipe out those debts early on or they can hang over them for years. Fortunately, our second son will leave debt free from a full ride scholarship and now we are working on son #3 getting credits earned during high school. We are taking it year by year, for sure. 🙂

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  6. We are in a similar situation and I have to say, it’s fine. Our oldest finished college this summer – he went to jewelry school on a fast track because he finished all his academic classes as dual credit before he gradutated high school. Our second son is in his first year official year of college (community college) but already has 12 semester hours from dual credit. He is also working and applying for scholarships because he wants to attend the New York Conservatory of Dramatic Arts for their 2 year program. We’ll pay for a portion of that but after a 4 year stint of unemployment, there is no way we can do even half of it. Our third son taking dual credit classes for his Jr. year of high school.

    We also have a 14 yr old daughter and a 12 yr old son. We’ll be paying college costs for the next 10 years for multiple children. But our children know we won’t go into debt nor will we encourage them to go into debt for school. By the way, Debt Free U, is a wonderful book!

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    Jen Reply:

    I am right there with you, Angi. It wasn’t our son’s first choice, and as I will write about, he has decided to incur some debt personally in his transfer to a private school this past year, but he still saved so much by putting some of the other options into play first. Second son will leave school debt free thanks to his full ride and now we are working on son #3. 🙂 Bit by bit, we’ll both get there, right? 🙂

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  7. My oldest is currently a sophomore in high school. We are meeting next month with the community college in regards to the running start program. Students complete the last 2 years of high school and an AA degree at the same time. Best part? Tuition free. There are some fees for books, parking, etc but no tuition. We are hoping she can do that and then transfer to finish out her last 2 years.

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  8. I bow to you my friend!! you rock!

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  9. Late in responding to this post, but very relevant content. My daughter, an RN paid off any loans both to the school and to us within 8 months of graduating. How did she do it? She worked while going to community college, saved and had a nest egg (with our help) to work from when she left for nursing school at a 4 year college. We made it clear we would NOT cosign on a loan. When she found herself going out to eat regularly with a dwindling nest egg, she and her crockpot became very close friends. She lived on campus to save on gas and living expenses. The time came when she ran short, we told her to go down to the financial aide office weekly, make friends with the counselors and basically beg for grants, student loan etc. They found some monies for her with a loan in her name (I assume because she was persistent and showed dedication). The whole time we coached her about how to negotiate a loan along with terms in her favor. We did provide a small loan for final labs, graduation expenses, and board prep courses. Currently, while her friends are 30K or more in debt, she is looking at buying nice furniture cash. Our son is an electrician apprentice he is thinking he may want to become a journeyman. Even so if he continues on this track, he will be able to finance his own education if he decides. All in all coaching the children to deal with the people that make decisions can be very effective. We are Dave Ramsey followers also!

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  10. Military academy appointments?? Seriously, one of ours went to West Point. He got paid and had a 5 year obligation. Of course there is that unstable world going to war thing. This is NOT the life for everyone. How we did it with little debt forthe other 2 was a hodgepodge of ways. Scholarships, very small loans, state schools, AP and CLEP credits made a huge difference. They lived at home for 2 years. Grad school is on them. Two more to go!

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  11. Thanks for sharing this Jen! I think your approach is smart, but not just because we have approached it this way with our kids. It works… asking our kids to invest in themselves in their future is priceless. We have told our four children we can’t afford to pay for them to go away to school and all the bells and whistles. They can live at home and we will pay tuition, or they can get a scholarship and we will pay room and board. Our oldest child earned a double full ride scholarship, and our daughter earned her tuition and books. This has saved a huge amount of money, but most importantly, they are invested and have something to lose if they are not successful. My son is proud (and so are we!) of his engineering degree, and our daughter is working hard in her third year of college

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    Jen Reply:

    Congrats, Sheila, on all those scholarships. What a blessing!! And engineering? Amazing!! I really do think they appreciate it so much more because they understand this isn’t just a given. It’s hard work.

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  12. My son is currently a Sr in High school and has taken a college history class last year, Intro to Sociology during the summer, and is currently taking college English. Providing he passes the classes (History/English) the school reimburses me at the end of each semester. (Intro was not reimbursed as he took that on his own). I’m looking for ways to pay for school for him w/out loans because we simply can not afford it. He is not highly motivated to do much of anything but what he wants to do. I’m researching and finding scholarships for him to apply for but I have a feeling he is going to have a large case of dealing w/the consequences of your choices soon. I can lead him to the water, but not make him drink it sort of thing.
    Thank you for the article, I forget how I came across it, Pinterest I think. But am glad I did.

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    Jen Reply:

    Trust me, we have a son who is in the same boat and we’ve mentioned more than once that his choices today are going to affect his tomorrow. Sometimes, they have to learn the hard way, but it will make them stronger in the long run, right? 🙂

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  13. We have 4 kids, 2 graduated college with honors, one still a junior in college, and one a senior in high school. both kids who have graduated each have over 100,000 in student debt. They are each paying for that debt painfully aware of it, but driving old and/or cheap cars and pinching pennies where they can. They both got great jobs out of college but wish they didn’t have this huge debt. some advice: don’t do the Plus loans unless you have to – the federal gov will help them if the loans are in the kid’s names, not if the loans are in the parent’s names… hard lesson to learn.

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  14. Me and my parents worked out a deal where they would pay for my community college and I would be responsible for all of my textbooks and 4-year University. I am a huge saver and I’m incredibly proud to say that I will be paying cash without a doubt for my third year of college and hopefully half of my 4th year!

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    Jen Reply:

    That is AMAZING, Hannah!!! Way to go!!!

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    Hannah Reply:

    @Jen, Thank you so much! I am very good at motivating myself, but reading this and hearing your encouragement makes me want to do that much more!! Thank you for being such an inspiration!

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  15. It is very commendable of you to scrimp and save to assist your children with their higher education dreams!

    Unfortunately my parents were unable to assist in my college education and I knew this going in. I spent my senior year of HS taking all college classes through the post secondary enrollment options program (for free!). I also applied for each and every scholarship I qualified for. I worked 3 jobs during college. I was a resident assistant (getting me free room and board), an office assistant and as a grader which offered me VERY flexible hours and the option to work from my room while fulfilling RA duties. I graduated with about 15k in loans. Looking back, I could have graduated with less but the excess kept me afloat after graduating until I found my full time career. For me, moving back in with my parents was never an option. Very low income area with extremely high unemployment. I’ve utilized a cash envelope system to scrimp and save and should have them paid off in 2 years (5 years after graduating). That’s half the life of the loan and more importantly…half the interest!!

    Good luck to all in your endeavors!

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    Jen Reply:

    Jessica – that is AMAZING!!! You are a true testimony to hard work and how focus and determination pays off. So many college students need to learn from your example, truly!

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  16. We made our children take out student loans. First, it is the cheapest loan out their. Second, if they didn’t make the grade, they paid it back. Finally, we could pay their loans back over ten years, or if we were had the money, we could pay it off in one lump sum. Either way, it was a win for us! However, I love your ideas, and I have two more children to go!

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  17. I recently graduated from undergrad completely debt free. Early on, my parents set ground rules too! They offered to pay for our first year of college and after that, we were on our own. It worked out wonderfully! That first year, I lived in a dorm with a meal plan and got to experience a lot and get to know the area without the pressure of finding a job and adjusting to my classes. I knew I would be responsible for the remaining years and picked a school that offered me a scholarship. I worked hard and graduated a year early by taking fuller loads and avoiding summer classes, since those weren’t covered under my scholarships.

    I have a lot of friends who have a lot of debt and probably could have avoided it. And I know a lot of students who go to school on their parent’s dime and don’t take it seriously or appreciate the value of their education, choosing to party instead of study and recover from hangovers instead of go to class. I had friends, extra-curriculars, went to some parties, yet still managed to graduate debt free, early, and Magna cum laude.

    My parents did the same for my sister, but she chose a private school and ended up transferring home to our community college after the first year because it was so expensive. Now she is back at a four year institute and with very little, if any, debt. I am so proud of my parents for sticking to their plans.

    My only caution with taking high school classes that give college credit is taking too much. I brought in over 40 credits and don’t regret it one bit–but I know people who graduated high school with their AA degrees and were pushed right into choosing their major at 18 with no time to adjust to their new surroundings and schedule before taking higher stake classes. A lot of people need that time to try different fields and make a decision, but without it, just end up changing their major and spending more time and money than they had to on college.

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    Jen Reply:

    It’s wonderful to hear your story!! Such great wisdom both from you and the model that your parents gave. Love hearing your experience.

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  18. Great list and down to earth. Thanks

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  19. I loved this article. I am one of five children, and we were told early on that if we wanted to go to college, we had to find a way to pay for it. We all managed it differently, from earning scholarships, to taking a year off to work, to living at home and commuting. None of us took out student loans.
    I earned my teaching degree over 20 years ago, but still talk with pride about how I paid my own way through college.
    Now I have two young daughters who have college funds (which I didn’t have). We also might have more to give them than my parents had; however, I plan to have them pay for as much as they can. I want them to have the same sense of independence and pride that I have had for so many years.

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  20. I totally agree with your thoughts on higher education. My husband and I are lucky enough that we have no student loans, but so many of our friends still do. They can really affect your ability to take new opportunities.

    In this vein, I have researching ways to use birthday moneys/ gifts to go towards college. There’s got to be a way. Kids only need so many Legos, right? Why not have some of their birthday money/ gifts be for their future. Just begun this journey, nut wanted to applaud your philosophy.

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  21. I got my education paid from 2001 thru 2006 from my parents. Tuition costs were much less back then compared to now. I am glad I went to college and got a Bachelors of Accounting. Although I now work in a job outside my field and make about 25k per year but I enjoy what I do. Our family is financially set so money isn’t an issue for me. 🙂

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