When I went to undergrad, I reluctantly avoided student loans. I was ready trod the well worn path of taking out loans to go away to school. My dream school was Worcester Polytech. It was the only school that I toured before applying. I knew it was expensive and at when I was applying, I didn’t really care. As an 18 year old, I wanted the “college experience.” Besides, I was going for engineering, so I’d be able to pay it off anyway. After applying to some schools, I got my acceptance letters back. WPI was giving me roughly half off. Then I got my acceptance letter from my safety school, UMass Dartmouth. In the welcome folder, there was a second letter offering me a full, four year academic scholarship. It seems silly now, but I was a little disappointed when I read it. Because even back then I was Frugal Jon and I can’t say no to free. Since I was able to avoid student loans, I could go to grad school. And it made it easier to take on my wife’s student loans after we got married. Here are my tips for minimizing yours.
Tip 1: Start at Community College
The first big money saving technique is to do an Associate’s to Bachelor’s program at the local community college. Most states have programs where you can get an Associate’s at the community college and then get immediately accepted into the Bachelor’s program at the local state university. At the other end, you have the same Bachelor’s degree that everyone else in your graduating class has. But you’ve paid much less than they have. For example, my local community college is $9,000 cheaper than my local state university. Taking all the gen ed classes at the community college with save you $18,000. That’s about the price we paid for our 2018 Toyota Camry. So you can have the same Bachelor’s degree as everyone else in your class plus a rockin sedan. This isn’t counting the tuition break and other scholarships you can get by doing the Associate’s to Bachelor’s program. The total savings start to get closer to $30,000 when these extra scholarships are factored in.
Tip 2: Go to a Non-Flagship State School
This tip is actually a two parter. The first part is to get the in-state tuition rate at a state university. The average private college tuition cost (without room and board) is $38,185 compared with the average in-state tuition cost of $10,338. The vast majority of private colleges are not giving an education that’s 3-4 times better than the state schools. I look around my workplace and see other engineers that went to bigger name engineering schools than me. And they have no advantage over me and my other fellow UMass Dartmouth grads. They certainly don’t have a 4x advantage over us, considering we have the same job. The four year cost saving of going to your state school is $111,388. We’ve exited “awesome four door sedan” territory. This is the difference between have the down payment on a house and paying it all to a student loan servicer.
The second part of this tip is a little harder to measure. It’s to attend the non-flagship state university. These are the ones you see on primetime playing in college sports games. From a pure math perspective, it’s not clear. In my home state, the cost of UMass Amherst (the big one) isn’t much more than the cost of UMass Dartmouth. The difference comes in the competitiveness and availability of good merit scholarships. The big public universities are using merit aid as a way to attract top out of state students. The competition for these scholarships are fierce at the flagship schools, where many of them boast an out of state enrollment over 50%. There’s better opportunity for good-not-great students at the non-flagship state universities. My number 1 example for this is me. I had a good GPA in high school and had a good SAT score. But I wasn’t in the top 10 of my class and I didn’t have a 4.0+ GPA. I didn’t get good merit aid from the big state schools, but UMass Dartmouth offered me a full merit scholarship. There’s opportunity at these smaller state unis.
Tip 3: Commute
And now I’ll give some unpopular advice: commute to college. It won’t ruin your “college experience” but it will save you tens of thousands of dollars. Choosing to live at the non-flagship state university instead of commuting is going to double the sticker price of college. Every year, it’s an extra $10k+ on top of the tuition. In practical terms, this means paying $1,100 per month to share a one room apartment without its own bathroom. And since you’ll be sharing your dorm room, the total cost of this two person “apartment” is actually $2,200/month. If you feel like you really need to live at college, become an RA for sophomore year and take advantage of the free or really discounted dorming price. In general though, commuting to school will save you $40,000+ over four years. And you don’t have to eat at the cafeteria for every meal.
Tip 4: Get All the Scholarships
So far I’ve gone over ways to avoid debt by reducing the sticker price of college. Scholarships can get you the rest of the way. The ins and outs of stacking scholarships together is a whole post by itself. Instead, I’ll link this article from ChooseFI and give a little summary here. $100 million dollars in scholarships goes unclaimed every year. All you need to do is find the $10-15,000 it takes to attend your state school every year. And if you can find scholarships that cover books and expenses too, even better. The key is to be smart and strategic for scholarships. The more difficult it is to apply for a scholarship, the less competition you’ll have. Ones that require essays are the sweet spot. Assemble a whole list of these scholarships. Chances are, the essay requirements are similar. So write a single really good essay that generally fits what the scholarships are looking for. Then tailor it to each individual scholarship before you apply. Think of applying for scholarships as a lucrative summer job. Writing the main essay is going to take maybe 3 hours. Tailoring an essay may take an additional 30 minutes. Say you apply to 10 of these scholarships, each worth $500. That’s 8 hours of work. Even if you only get two of them, you’ve been paid $1000 for those 8 hours of work. That’s a “salary” of $125/hour. Few jobs in the real world give that kind of pay. You can cover your entire tuition if you cast a wide enough net.
What No Student Loans Enables
Even though I reluctantly avoided student loans, I went all in. I was as excited to commute to UMass Dartmouth as my classmates were to go away to bigger out of state schools. When college started, I joined some clubs and made friends. I enjoyed my classes as much as I would at UMass Dartmouth as I would have at WPI. Sometimes when everyone (especially my girlfriend) went back to school in the fall I felt a twinge of disappointment that I wasn’t too. But once I got back in the routine of the semester I always felt better. And now that I’m out of school, I wouldn’t trade my commuting experience for a dorming one. Because avoiding student loans made it possible to go away for grad school. And to go to Ireland. If we had to pay her student loans and student loans for me, we wouldn’t be able to invest and save for a house like we are now. Avoid student loans by any means necessary. It opens whole worlds of possibilities.
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