I opened the envelope and was faced with a choice. Do I accept the plan that’s written here or forge my own path?
This letter was my golden ticket. All I had to do was sign and return, and grad school tuition would be covered. Taking out federal student loans would allow me to focus on academics without having to worry about how to pay next semester’s tuition. Once I graduated, I would certainly get a raise or a higher paying job, anyway.
It sounded reasonable. Then I thought about the years after graduate school, when I would be paying back everything I had borrowed, plus interest. I would have to find a higher paying job, even if it meant moving or doing something I didn’t enjoy. Staying at home with my children or working part-time wouldn’t be an option. Extra earnings wouldn’t translate into upgraded vacations, a better house, or more to stash away for retirement. Instead, they would go toward paying off debt, possibly for the next TEN YEARS.
While earning a master’s degree presented the opportunity to increase my earning potential, expand my career options, and take me wherever my dreams led, student loans threatened to take it all right back.
No, if I was going to do this, it was going to be paid for. With cash. End of discussion. So with that determination in mind, I put away the student loan offer, took out a blank piece of paper, and began to devise a plan.
Cash-flowing grad school (or college) is a bit like making a cross-country drive. You need to know your numbers, pace the journey, and use a roadmap.
First, know your numbers. Don’t take shortcuts here by only counting the base tuition—you wouldn’t set out on a road trip without having a reasonable amount of money for gas, food, and other necessities, so be sure to include all those educational extras like books and library fees.
If you’re attending online, do you need to buy a computer? If you’re attending a brick and mortar school, must you purchase a parking pass? Also, assume an annual tuition increase— the average is 6%. Better to slightly overestimate your costs and be pleasantly surprised than to come up short when the bill is due.
Are you experiencing sticker shock? That isn’t a bad thing!
The thing about paying with cash is it allows you to accurately assess the value of the degree you’re seeking!
Take this time to seriously evaluate whether the program of your choice is going to result in a financial return on your investment and if it’s reasonable expense. If the tuition is extravagant and you know there is no possible way to pay for it without loans, I ever-so-kindly-yet-strongly encourage you to research other options for school.
A little-known fact: very few professional fields care where you got your degree. I could have chosen a $60,000 master’s degree. Instead, I paid $30,000 for a state school that was just as valuable to potential employers. I have absolutely no regrets.
Here’s another benefit of NOT having student loans that rarely gets discussed: I am certain that I would not have had the opportunity to discover a fulfilling career if my job-searching decisions had been motivated by financial desperation.
Kind of ironic, huh? Remember that higher education should help propel you FORWARD in your life, not just give you another line on your resume.
Second, pace the journey. This is where you list out the classes you are going to take every semester and decide when you will graduate. There are so many factors involved, and your plan doesn’t need to look like everyone else’s.
First, learn the tuition structure for your school. Some charge by the unit, no matter how many classes you take. Others will charge by the semester for full-time students. If your program charges by the semester, you’ll get the best deal by taking the maximum number of units for the price. For example, if you pay $12,000 for a range of 12 to 18 units, you will pay less per unit if you take 18.
That said, it may not be feasible for you to take the maximum number of units all the time, and that’s okay. It’s all about knowing your options, weighing the pros and cons, and making a well-informed decision. Haphazard planning is costly; smart planning pays off.
Your job’s flexibility, whether you have a family, the course structure (online only? Hybrid? Brick-and-mortar?) are only some of the factors that will affect the speed at which you complete your degree. Consider what’s doable for YOU.
Once you have a course schedule outlined, it’s time to calculate the amount required for each semester or quarter based on the school’s tuition structure and the number of classes you’re taking.
This is the most critical part of the process. Skipping this part is like driving through West Texas hoping you have enough gas in the tank to get you to the next town. I want you to write a list of tuition deadlines and how much you need to have saved by each of those dates, along with the classes that correspond. The stakes are too high for mental guesstimations here!
Say the target is $4,000 every August and January for the next three years, and it’s April now. That means you need to save $1000 a month to have $4000 by August and $800 a month between August and December.
If you look at the numbers and think no way is this possible, brainstorm ways to earn extra money in the summers, review your budget and see where you can cut expenses, and if the numbers just don’t make sense, then it may be necessary to revisit how many classes at a time you’re taking. This brings us to the last step.
Use a roadmap. If you’re serious about seeing that tuition money pile up, using a written budget is CRITICAL. I’d even go so far as to say this is non-negotiable. There’s no sense paying for school with cash and putting basic living expenses on a credit card or not having enough money set aside for an unexpected car repair.
If you don’t use a budget, I can almost guarantee that your efforts to pay for school will go to waste, because you will either end up using tuition money to cover emergencies, or finance your lifestyle at a 20% interest rate.
Ask yourself, what am I willing to do in order to save the money for school? Are you willing to stop eating out? Will you work 60 hours a week in the summer? Will you move to a cheaper apartment in an area of town that isn’t your first choice?
I won’t sugarcoat it: this isn’t an easy endeavor, it’s going to require grit, but it is ABSOLUTELY possible and WORTH every bit of effort. The reward of cash-flowing your education will far outweigh the short-term sacrifice and self-discipline. You don’t have to settle for student loans. You CAN graduate debt-free!