We have 4 children, so you would assume that we have some sort of college-savings plan in place. After all, we’re huge money-savers, I’m a big fan of Dave Ramsey, and that is one of his Baby Steps to Financial Peace. But it may shock you to hear we’re not saving for college. Not even a little bit. Not even at all.
These are just a few of the many reasons why.
Since we homeschool, our kids are able to work ahead at an advanced rate. They are advanced in nearly every subject, and moving further and further ahead each year. Because of this, they will be ready for college work early. Which leads me to point #2.
2. Post Secondary Options
In many states, kids can attend college during their junior and senior years of high school, and the state pays for it. We fully intend to take advantage of this program. Many students are even able to graduate high school with an associates degree, or two years of college under their belts for free.
3. CLEP tests
CLEP tests are standardized tests that allow you to test out of general education courses in college, and receive credit for it. I personally took these and got ALL of my general credits out of the way for my degree, without ever taking a class for them. They are a cheap & easy way to get some college checked off the list.
4. Scholarships & Grants
Most financial aid (including FAFSA) considers all of the parents’ assets except 2 things: the equity in their home, and their retirement savings. My husband and I are working on maxing out these two things (we already have a home that is paid in full, and we are saving still to upgrade to a nicer one). When the time comes for the kids to attend college, any money we have saved for them actually counts against them when they apply for financial aid.
PS: Homeschooled kids are becoming more and more sought-after for scholarships & financial aid! Universities are recognizing what great students and assets they are!
5. Community College & In-State Tuition
When our kids are considering colleges, we are going to encourage them to find a good in-state university that has a great program for their intended major, then first attend a local community college in that area. Community colleges are cheaper BY FAR. The local ones also have relationships with the larger colleges, so many of their credits will transfer over. Then the student can transfer to the larger university only for the last few credits they need for their degree.
6. College Savings Plans are trouble to cash out
When you save for kids’ college in a tax-favored college savings plan, like an ESA or a 529 plan, what happens if your child decides not to go to college, or they get scholarships and don’t need it? It is transferrable to another student (within the family, there are some restrictions), but if there isn’t somebody else who can use it then you are assessed huge fees and penalties, along with income tax. It doesn’t make sense to me to save money for college when only 65% of high school seniors even go, and only 39% of people finish college.
Research shows that college students who work 10-19 hours per week at a part time job have higher GPAs and a lower dropout rate than students who do not work at all. They learn time management, and they get valuable work experience. They also have a stake in their education, so it means more to them and they work harder at their studies. It’s too easy to waste time and money if they have an ambiguous student loan whose payments are too far in the future for them to feel it. We expect our kids to pay for at least some of their college expenses, so they have a more vested interest in their success.
8. Paying Cash
When our kids head to college, this will be our financial situation: my husband will be back in the military, making $7000 per month or more as an Army Chaplain. We will have a completely paid-for house, no debt, and substantial retirement savings (hopefully worth $1 million or more by that point). Our kids will have half of their college under their belts, and hopefully some scholarships to help cover the rest. By my estimates, college will cost approximately $6000 per student per year*, and we can easily afford to just pay that out of our monthly income. We will under no circumstances support our children taking out any sort of debt to pay for college.
*this amount is based on projected cost of college in 10-15 years’ time, along with the savings I expect to get through the aforementioned means. Even if I am off by 100% and it costs double what I project, we will still easily be able to afford it because of sound financial decisions we made while the kids were little.
So how about YOUR family?
Are you saving for college? Why or why not? A lot or a little?