In the absence of hope, despair and status-quo become acceptable. This is the feeling I get when talking to many families about the chances they feel their children will be able to get through college debt free. No hope so status quo (student loans) become acceptable. Perhaps a family hasn’t had the means to save because of poor financial habits in the past and now, after getting connected to Dave Ramsey and Ramsey Solutions, they’ve finally found their way out of debt, built an emergency fund, yet one problem – their child is 16 and they’re staring down the barrel of almost nothing saved for college. What’s an advisor like us to say to this client? Perhaps we could tell them that over the next two years they could save $1,890.58 / month and at a 10% rate of return they’d have approx. $50,000. Yet, as you’re probably thinking, who has $1,890 / month laying around, especially considering you should not put your retirement on hold (Baby Step 4 is before Baby Step 5, right!) to fund your kids’ college.
Good news, as an eternal optimist, because I believe in the power of positive thinking and positive attitudes, we’ve got some excellent recommendations to guide your student through college debt free. Of course, you can always find reasons, why YOUR child won’t be able to do some of the things we recommend in this article and if that’s you, I don’t think there is much we can do to help you, however if you’re open to ideas and suggestions let’s walk down this road together.
First things, first
Just like in real estate, where the common phrase “Money is made at the buy” is so important to your ability to be successful as a real estate investor, college success is dictated, many times by school choice. For example, according to collegecalc.org, colleges in Ohio can be as cheap as $2,802 / year (Belmont Technical College) to $54,346 / year (Oberlin College). Let’s say that little Johnny, tells us he wants to go to The Ohio State University. We know that tuition costs at main campus are going to run us $9,852 however we’ll also have to fork out the cost of dorm, food, car, etc. because Johnny will have to move down to Columbus. Instead we know that we could send him to the Mansfield Regional Campus (assuming we live in or around Mansfield) for $7,416. Or we could send them to the Wooster Regional Campus for $7,416. Thus, saving an additional, $2,400 / year plus the costs of room, board & other misc. expenses. Now this may not be what Johnny wants to do but remember, you are still the adult and it gives you a great opportunity to teach Johnny about economics such as, what economic benefit are you getting for the additional $2,400 / year plus expenses? Nothing at all!
Tuition Reimbursement Programs
One of my favorite pieces of advice is tuition reimbursement programs at some of the best employers for young people. This is exactly what I did when going through college and it was extremely helpful in two ways. First, it allowed me to keep my out of pocket costs for college to a minimum but additionally because I was juggling 20 – 25 hours (sometimes more) of work along with my school schedule, I learned the importance of time management and built a resume while in school. So here are some great examples of employers that will provide tuition reimbursement and the amount they reimburse in parentheses.
AT&T ($5,250 after 6 months at company)
Bank of America or probably any bank for that matter. I worked for PNC Bank, they paid for most of my MBA ($5,250 after 6 months at company)
Chipotle ($5,250 or 100% of tuition yearly if you enroll in one of the specific degrees offered through their partner programs)
Home Depot ($1,500 per year for part time hourly workers)
Starbucks (full tuition to Arizona State University online degree program after working 240 hours and continuing to work 20 hours per week)
UPS ($5,250 for part time and full-time employees from day 1)
Walmart ($1 per day cost for part- & full-time employees to earn college degrees in demand fields at one of their online partner colleges).
Target ($3,000 per year)
Verizon – another favorite of mine because I worked with them one year during undergrad and they paid all my tuition that year ($8,000 / year if the degree is applicable to Verizon operation or $5,250 if not).
Lowe’s ($2,500 / year for full time employees with one year of service)
Chick-fil-A (Tuition discounts and grants for more than 100 colleges and universities that partner with them).
Best Buy ($3,500 per year if you work 32 hours / week)
Fidelity (90% of education costs with a maximum payment of $10,000 per year, after 6 months of service).
Scholarship Search & Apply
As Dave Ramsey says, during your child’s senior year, their full-time job should be searching for and applying for college scholarships. A simple Google search will yield a couple websites to visit to narrow down scholarships your child might be well suited for. A favorite of mine is https://bigfuture.collegeboard.org/scholarship-search They have scholarships and internships for more than 2,200 programs, totaling nearly $6 billion. A board of directors I once sat on, had a $1,000 scholarship they gave each year. Sadly, for the three years I sat on their board, we only had about two kids apply for the scholarship each year (50% chance!). Imagine, with great school choice, such as The Ohio State University Mansfield Campus, example above, how even $1,000 could have a huge impact (15% of your costs would be covered).
How did Johnny do?
In our hypothetical example above, Johnny has decided to attend The Ohio State University Mansfield Campus which means he’ll need to come up with $7,416 per year. Mom & Dad (you) have decided you’ll help cover $1,200 of the cost ($100 / month). Johnny applied for and received a $500 scholarship from his local community bank. He also got a job at UPS working from 7am – 10am each morning, meaning he’ll need to take afternoon classes – no big deal! He gets paid $14 / hour (my guess) which is $252 / week on a six-day workweek. Guess what – that’s his spending money because between his scholarship, $1,200 from you, $500 from his scholarship and the $5,250 that UPS will reimburse him for he is out almost nothing.
Some of you may be instantly thinking my child can’t work while in school. They need to focus on school! Well, you’re wrong! According to a study done by the National Center for Educational Statistics (https://nces.ed.gov/pubs94/94311.pdf) among full time, full year undergraduates those working only 1-15 hours per week while enrolled were more likely to have GPA’s around 3.5 or higher.
Acknowledging the fact that you have little saved is the first step. The second step shouldn’t be to instantly pursue student loan options. Create a plan for your child, that helps them to create life long skills instead of burdening them with life long debt. As always, your Whitaker-Myers Wealth Managers Financial Advisor is here to help you take those steps towards financial freedom.
Author: John-Mark Young, Financial Planner
Whitaker-Myers Wealth Managers, LTD is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.