Forbes reports that over 44 million borrowers in the U.S. owe approximately $1.3 trillion in student loan debt. Additionally, the average student loan debt for the class of 2016 is estimated at $37,172. With the cost of college only increasing, we all know it is getting increasingly harder to afford college and then pay down student loans once you graduate.
Mr. FIREat40 and I have a total of 5 college degrees. I have a bachelor's degree from Boston University and a master's from the George Washington University. My husband has a bachelor's degree from Syracuse University and two master's degrees - one from University of Massachusetts and George Mason University. None of these colleges scream cheap. However, we managed to not take out any loans for these schools and have never had any student debt.
No, we do not come from wealthy families. Mr. FIREat40 pumped out porta-johns in high school to make money and grew up in a house that his parents bought for $13,000. And my parents never made over $80,000 per year combined.
So, without access to a family trust fund, how did we do it?
Undergraduate Degree: Parents and Athletic Scholarship
The pathway to my debt free undergraduate education stems from three sources: 1) parents saving in a 529, 2) an athletic scholarship, and 3) some grants. As I was admitted to Boston University, I received a few grants to help fund my education - in total this covered about 10% of my education. My parents were dedicated savers. Although my father never made more than $80,000, they were able to save for both my and my brother's education. It was not enough to cover the entire 4 years of a private university, but it was enough to get us going for 1-2 years of school.
However, I was also a talented runner. So, I decided to walk-on to the track and field team. Soon thereafter, I earned a half-tuition scholarship, which then turned into a full tuition scholarship. This ended up being the key to not having to take any student loans. I will admit it did not come easy to get the D-1 scholarship, but I was relentless in showing my coach that I could improve and compete at this level.
At that time, I really had no idea of how much my parent saved or were willing to pay for college. In looking back, this should be an upfront conversation that all parents have with their children, so no one is caught off guard by the costs of college and the long-term effects of student loan debt. In the end, my parents paid for less than half of my undergraduate degree and my scholarship and grants paid for the other half.
Graduate Degree: Work at the University While Going to School
I was a few years out of college when I decided to get a master's degree. I was working full-time with a salary of $42,000 in Washington DC. I was not sure how I would afford college or find the time to go to grad school. Additionally, there were no more funds coming from my parents to support this endeavor. Taking out a loan was completely foreign to me and also scary - I had no debt and didn't want any!
But I knew getting a degree would help elevate my career. So, I started applying to schools. While I waited for my decision letters to come in, I began looking at jobs and the benefits at each school I applied to. I noticed that most of the schools had tuition benefits for employees. Some benefits including paying 96% of your tuition! As I was accepted to colleges, I applied to jobs at the colleges. I mostly focused on Research Assistant jobs in the field I was pursuing but did not rule out administrative jobs as well.
George Washington University was the first school that reached out to me for a job interview. I ended up getting a job as a Research Assistant in the field I was going to study. They paid for 96% of my graduate education! Additionally, at that time the benefit was tax free, so no end-of-year costs associated with this huge benefit. Currently, under IRS regulations, up to $5,250 per year of tuition or benefits for employees are non-taxable. This means the first $5,250 of your tuition costs will not be taxed, but everything over that amount will be taxed. This is still a great deal if you are getting an education for free, especially at an expensive university.
The degree costs totaled about $30,000. I paid only 4% of that. And although jobs at universities do not pay well, this deal allowed me to also collect a salary ($45,000) that paid for my general living expenses (i.e., rent, food). (I didn't go without some struggles though during this time as I couldn't afford car insurance or parking for my car, so I dropped it off at my parent's house until I could afford to drive again.)
This deal was a no brainer for me. So, although I was accepted to "fancier" universities like Yale and Johns Hopkins, none of them offered me a job and tuition benefits.
Undergraduate Degree: Parents & ROTC
Mr. FIREat40 applied to state colleges and also private universities while debating long and hard with his parents about why he had to go to a private university. After settling on a private university (Syracuse), I attended with the aid of my parents. At the end of my Freshman year as the economy was struggling, I felt increasingly guilty that my parents were using every drop of money they had to pay for this pricey college. I also happened to ask a classmate why he work this blue uniform every Tuesday to class. He introduced me to Air Force ROTC, which I had never heard of. After a couple of months of talking, I decided to see what this ROTC thing was all about. As an Eagle Scout, lover of our military, and America, I quickly fell in love with Air Force ROTC. Wait, what is ROTC? It's the Reserve Officer Training Corps, which produces military officers and many universities have this on campus.
Later that summer, I received a phone call from the Air Force offering me a full-scholarship to Syracuse, free books, $450 per month tax-free for spending money, and a guaranteed job as a Commissioned Officer in the Air Force upon graduation. I took the offer and later that year, my dad was laid off from his job. It's funny how things work out, but I was able to get a $100,000+ education (back in 2001) for free. Oh, and as a bonus, the Air Force sent me to flight school after graduating college, where I earned my pilot wings, which is valued at over $1 million and a lifetime of experiences that is unrivaled.
Graduate Degree 1: Air Force Tuition Assistance
The Air Force was challenging, rewarding, and consumed a lot of my time during the height of the Iraq and Afghanistan wars. Yet, in able to be promoted to Major at the time, officers needed to have a Master's Degree. Luckily, the Air Force paid a portion of my graduate degree of up to $9,000. I selected a state university (UMass) to get my MBA on my "free-time." This ended up costing me $16,000 out of pocket, but luckily, I was making about $100,000 a year as an Air Force pilot due to all the flying overseas and tax-free incentives while serving in combat. Yeah, you can make $100,000 a year as a 25-year old in our military, you just have to be in the right place at the right time I suppose.
Graduate Degree 2: Post 9/11 GI-Bill
By now, you will start to see a trend. A few years in the U.S. military reaps exceptional benefits to you and your family, especially when it comes to an education. I actually think the military gives us too many educational benefits and here is why. I had a full scholarship to Syracuse for my undergrad, a partially-paid MBA while in the Air Force, and because I served after 9/11, I get 36 months of tuition at any state-school of my choosing plus spending money. It's almost unbelievable. I could've went to law school, went for a PhD, medical school, you name it with this benefit. I decided to get a Cyber Security Master's degree with 16 months of this benefit, which completely paid my tuition and books. Oh, and the spending money I received during these 16 months was $2,300 per month tax-free! I still have 20 more months of tuition available to me, so my plan at around age 50 is to get one more Master's Degree for free.
Bonus: For those of you who are in your 20s and maybe even your 30s and are interested, consider joining the National Guard or Reserves and you too may receive the benefits I just discussed.
Some Final Thoughts
For those either looking to finance their education or their children's education, we hope that some of the avenues we took can help you think creatively about financing a college education. With our experiences we are going to be frank with our future children about the amount we can afford.
We are going to present them with the option: we saved X amount for you, this is all the money you are getting for your college. You can choose to spend it all in 2 years at fancy university Y that is not offering you any opportunities for financing or you can look at other universities and programs that can afford you all four years. Additionally, any money you do not spend is yours - you can spend that on your next college degree, a house, or travel. Again, we do not have children at the moment, so maybe this thinking will change over time. But teaching children about money and how to best use it is probably the best education one can get.
Additionally, we are letting go of the ideas that "name brand" university proves you are successful. My mother expected that my brother and I go to a fancy university. Her thinking was that this means we would be successful and thus she would be a successful parent. However, we know a lot of bums that attended a fancy university. And then there are plenty of people who are either still mooching off of their parents, or in debt up to their eyeballs but continuing to fund a lavish lifestyle while accumulating more debt.
Also, we are waiting to see what breaks higher education. Herbert Stein said, "if something can't go on forever it will stop." When does the ever-increasing costs of higher education stop? We are anxiously waiting to see.