This post may be controversial and based on conversations with friends and coworkers, many will not agree with me. I was always a good student and placed huge value on education. That being said, I never liked the idea of owing money to anybody. Our only debts are three mortgages (our primary residence and two rental properties) and we cannot wait to pay them off.
When you read about millennials graduating from college and starting their working lives, you often hear about the hefty student loans they carry. I know many will argue that student loans are a “good debt” since you are investing in your own future. For me, it’s tough to call any debt good because until it is repaid, you are its prisoner.
It seems that oftentimes, people don’t put much consideration into the cost of schools they’re thinking of attending before they apply. Instead, more importance is placed on perceived prestige, location, quality of sports teams, or where their friends are going. One of my coworkers, who I would consider a frugal and money-conscience type, even chose her school primarily because it had the “college feel” she was looking for, along with a $32K/year price tag.
On another occasion during in my senior year of high school (1999-2000), I asked a good friend of mine what college he planned on attending the next fall. He excitedly replied the University of Pennsylvania. I was absolutely stunned and confused.
DTG: “Dude, what the hell?”
Friend: “It’s Ivy League!”
DTG: “Isn’t it expensive? Did you get a scholarship?”
Friend: “Don’t worry, I’ll get loans. Can you believe I got accepted into an Ivy League?”
Of course I could believe he got into a great school like Penn. After all, he was the valedictorian of our graduating class. I was confused for a different reason. You see, he had a full academic scholarship to any public university in the state of Florida, as did I, and he was turning this down just to attend a school across the country, and subsequently incur a mountain of debt, solely for the prestige of attending an Ivy League university.
A couple years later after our sophomore year of college, I met up with him again. He seemed to be doing well and was enjoying life at Penn studying history or something similar. To pay for school and living expenses, he was taking on about $30K a year in student loans. We lost touch after that so I don’t know how things turned out for him. Assuming he maintained the same level of borrowing, he would’ve been $120K in the hole by the time he graduated. Holy shit, that’s a mortgage!
Meanwhile, I was accepted into Illinois Institute of Technology and Penn State, but since they did not offer me a full ride, I chose to attend a local state university in Florida and studied electrical engineering at no cost. To save more money, I lived at home the first couple years. Even though it ended up taking me a little longer to graduate (5.5 years), I was on a full scholarship the entire time and graduated without any student loans. Besides, the life of a college student was pretty fun, so I didn’t mind the extra year!
Although my bank account was severely depleted by the time I graduated, it quickly grew as I started working full time. Not having any debt really boosted my savings rate. Even on my single income, Mrs. DTG and I (we were newlyweds at the time) were living comfortably and saving a substantial amount while she finished her last two years of school.
If you or one of your children will be entering college soon (or if you’re currently a student), do whatever you can to limit student loan debt. For me, this included scholarships (academic and later ROTC) and part time employment (various jobs on campus, local restaurants, tutoring, and a two-semester cooperative education position). Similarly, Mrs. DTG received a 4-year ROTC scholarship straight out of high school to pay her way through undergraduate study, and she also graduated with zero student loans. I have since gotten two Master’s degrees and the Mrs. is a year away from graduating with a Doctorate, all of which the military has sponsored/paid for. In total, we’ll have completed five degrees easily worth a total of $250K without paying tuition, while others are taking out mortgages for just their undergraduate degrees. It’s no wonder that even those with higher education and decent jobs are still struggling.
I’ll admit, Mrs. DTG and I grew up in privileged households when you consider our parents supported our decisions, stressed the importance of education, and gave us a good foundation to be successful. Even with this, we both had a very middle class upbringing. We didn’t have millionaire parents who paid for our education. We applied ourselves in school, earned scholarships, and made decisions (and some sacrifices) that resulted in free education. We just want others to understand that going to college doesn’t have to mean leaving with a heavy burden of student loans. Not everyone is fit for the military, and we understand that, but anyone can find ways to minimize costs.
Coming out of school without any debt really accelerated our savings and helped put us in the position we’re in today to retire decades before our peers. It may be tempting to attend the “best” school you’re accepted to; however, what really matters is how you apply yourself once you’re there. If you’re driven, you will find opportunities in any situation. Is the premium you’ll pay for attending a prestigious and/or out-of-state school worth jeopardizing your financial future?