Wednesday, April 8, 2015

How to Pay Cash for College - Lesson 2: Choose a College You Can Afford

I wrote "How to Pay Cash for College" for April edition of Autumn Ridge Church Magazine. You can find the condensed version on the church website. They did a great job of publishing the article with pictures and graphics. I had to take out a few examples to fit their space requirements. This is the full article in its entirety. I'll split it over several posts to make for easier reading.  Thanks to Lisa for helping me write and edit this article.
Choose a College You Can Afford...

The least expensive options will typically be community colleges and in state colleges.

The sticker price is not the final price in most cases. You need to understand what scholarships and grants are available at the schools you are considering. With our students we have found that tuition has been reduced from 1/3 to ½ through scholarships. This can vary widely and some schools are not as expensive to start with. Also, consider the costs of room, board and books.

The student should then understand what the family can contribute. If mom and dad have been saving for college, pick a school that fits the budget. In our case, we had not saved much for college because we have had our children in private Christian school. We knew we would not have money for college and made that choice. We have no consumer debt so we can cash flow a certain amount for college, but it only covers about ½ of the tuition. If mom and dad can't help or can only offer a limited amount of help, then your student will have a gap they will need to make up.

Don't go to that elite or prestige college if you can't afford it. Being able to afford it means you can pay cash for all four years. Don't believe the marketing hype. There is little return on investment for an undergraduate degree from these elite colleges (return on investment means a significantly better salary that justifies the additional cost). Also, there is no benefit to pay 3X the tuition just to step over the line for an out of state college. If you can't pay cash or get a very good scholarship that neutralizes the financial hurdle to going out of state, don't do this.


Brian and Lisa Petersen, lead the Financial Peace University course at Autumn Ridge Church. They just finished leading their 10th class, where over 400 people have been trained in the Biblical principles of money management. Each family situation is unique and they welcome your questions and dialog on this important topic.

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