Costly Myths Scholarships True Cost of College and Dream School

[Music]

october 12

1983 three jobs 35 credit hours

ramen noodles i was one of many students

scraping by to

pay their way through school i was the

real

starving college student i had to lift

food from the college cafeteria

so i could eat on the weekend i held my

breath

hoping my tuition checks would clear

my dream was to have a college degree i

just never

expected the financials troubles that i

would face

later as a parent i wanted the best for

my kids

from the time they were young i had

planned for them to go to college

conversations would begin with when you

go to college

not if you go to college

but what does society tell us about

getting that college degree

of course there’s the ever-popular

having a college degree

ensures your financial success according

to a report by the u.s

board of labor statistics having a

bachelor’s degree

earns an average of 26 thousand dollars

more per year

than a high school diploma alone a

significant amount over a lifetime

but this as well as other studies does

not account

for the effect of college debt in these

figures

another common belief is that the degree

must come from a name recognized

top 20 school there were several

scandals in the last year alone of

parents teachers and counselors cheating

to get their children accepted to these

name brand schools

yet the dale and krueger study of 2011

found that students who were accepted

to name brand schools yet chose to

attend a state university

earned the same average salaries as

those who attended

the name brand schools your success

depends on you

not the name on your diploma and of

course we can’t forget

college is so expensive everyone

has college debt we can’t escape it we

hear it all the time about the high cost

of college the

student loan debt crisis but is it

really

according to the federal reserve 70

of college students graduate with

college debt and the average debt

balance is thirty thousand dollars with

an average monthly payment

of three hundred ninety three dollars

but thirty percent of college students

graduate

debt free let me repeat that

70 percent of college students graduate

with

student loan debt but 30 percent

graduate debt free college

doesn’t have to be a debt sentence

yes i had planned for my children to go

to college

but i failed to plan financially for

college

just before my oldest was to start high

school my husband was laid off

twice then the stock market crashed

we used what was left in savings and the

stock market to pay the bills

but eventually that money ran out

and we had no choice but to declare

bankruptcy

with the bankruptcy we lost

everything

my daughter was just starting high

school college wouldn’t be far away

how would we get her into college would

she be accepted how do we

pay for it that’s when i realized

we couldn’t we had no savings and with a

bankruptcy meant

we had no credit to co-sign for student

loans

what would we do would she have to go

through what i did

to get her degree i felt desperate

but desperation became focused

determination

i was determined to uncover what the

thirty percent are doing

at the seventy percent or not with more

than seven

thousand hours of research i discovered

that nearly six

hundred thousand college students

graduate debt-free

every year and they’re all using a

common strategy

i had cracked the code to free college

in my research i discovered that those

who graduate debt-free understand what i

call

money math why are college loans

such a big deal anyway when i was in

school you

signed a contract for 10 years and you

paid it off in 10 years

today students take an average of 21

years to pay off a bachelor’s degree

while the average college debt is only

30 000

so why 21 years the answer

is simple students are offered repayment

options

that reduce their monthly payment they

can put payments on hold

they can pay a smaller percentage of

their income

options like these remove the incentive

to make wise

financial choices they’re designed to

keep two

students in debt because well that’s how

loan issuers make money

and most students don’t understand the

math

the compound interest continues to build

every day

working against them not only are they

lengthening the loan

they’re increasing the balance those who

graduate debt-free

understand the loan contract and how it

affects

their financial future they did the math

as a parent i understand you want the

best for your kids i get it i did the

same

but sometimes we feel powerless and find

ourselves between a rock and a hard

place

from one parent to another let me share

with you alice’s

dilemma my client’s daughter alice

had an offer to attend a school her mom

could afford

but alice wanted to attend her dream

school

mom didn’t want to be the one to say new

to alice

so she called me i showed alice that the

entry-level salary for her chosen career

is 35 000

the monthly take-home pay will be just

under 2500

now to a teenager that’s a lot of money

now let’s talk about dream school the

four-year cost to attend dream school

is 260 000

and the 10-year monthly note will be

just

under 2 900

in this scenario alice walks out of

college and is immediately

bankrupt even if we lengthen the loan to

15 years or 20 years

she still can’t afford to pay the note

and eat

much less afford a place to live but

what gets forgotten

is the amount of interest paid over the

life of the loan

if alice has a 20-year loan she’ll pay

187 000 in interest alone

but compound interest works for you when

you’re investing

as i said the average debt is 30

000 with an average monthly note just

under 400.

that doesn’t sound like much so let’s

assume the student

pays the note in 10 years and is done

with it and can begin investing

that 400 per month at age 32.

if they continually invest at four

hundred dollars per month until

retirement

they could reach a one million dollar

net worth by age 63.

that’s great but what if they never have

college debt at all and can begin

investing 10 years earlier

at age 22. alice has that choice

if alice begins investing 400 by age 22

every month and is consistent she could

reach that one million dollar net worth

10 years earlier but the best part is

continuing to invest

through retirement at age 67. then her

net worth could be more than

4 million dollars

the difference because of a 30 000

student loan

is 2.8 million dollars lost that’s what

you lose

by waiting 10 years to begin investing

we’re so caught up in our children

attending the college of their dreams or

having the college experience

we forget that the debt could prevent

them from living

the life of their dreams college

doesn’t have to be a debt sentence

not only do our kids need to learn money

mass

but one of the most important points in

the book cracking the code to free

college

is that those who graduate debt-free

start early

they knew early how much money their

family could or could not invest

in their college education they began

applying for scholarships

very early there are scholarships from

as young as

kindergarten scholarships for red hair

duck calling yodeling a zombie

apocalypse scholarship

most applications are just a short essay

those who graduate debt-free prepared

for college early

they started working on getting good

grades from the moment they walked into

high school

they took college entrance exams from as

early as the seventh grade

taking the exams multiple times knowing

the scores they need for scholarships

those exams combined with good grades

often determine scholarships worth tens

of thousands of dollars

if you don’t like your score you can

take it as often as you like

until you get the score that gets the

money

my daughter took the a.c.t exam

11 times my son took the s.a.t exam

one more time and increased his score

enough for an additional

ten thousand dollar scholarship college

doesn’t have to be a debt sentence

number three those who graduate

debt-free

did the research we research when we buy

a car

is it stylish does it have the right

features is it reliable how much will it

cost

can i afford it most of us wouldn’t walk

into a tesla showroom and say

i’ll take the red one most of us know

we’re only there to drool over the

pretty cars

but we’re not driving out with one but

we’re more emotional when it comes to

choosing a college and we don’t consider

the cost in the same way

college doesn’t have to be a debt

sentence

those who graduate debt-free researched

colleges scholarships college major and

career paths

they made financially sound choices

there are more than

4 000 colleges and universities in the

u.s and nearly 23 billion dollars

in scholarship opportunities we’ve

allowed

social influences and college marketing

to affect our judgment

as parents and advisors our teens are

trusting us

to use our knowledge wisdom and

experience to guide them

it’s not the high cost of college or

student loan programs

that have failed our kids it’s us

not only do our kids need to learn money

math

and start early and do the research

they also need to work

you need to work for the grades and the

test scores during high school

they need to work for applying for

scholarships and doing the research

but it also takes work yes i’m talking

about getting a job and a side gig

but most importantly is the

determination to make it happen

like the 30 percent my kids applied for

scholarships

every week never giving up my daughter’s

first scholarship

that she applied for and won was a ten

thousand dollar national scholarship in

her high school junior year

all combined my kids scholarships

totaled

199 thousand dollars for four years of

college

debt-free with cash left over

years later i’m grateful for the

bankruptcy

i wouldn’t have done the research i

wouldn’t have been

as determined kids

wouldn’t have had this result without it

this strategy is repeatable six hundred

thousand college students graduate debt

free

every year college

doesn’t have to be a debt sentence

i cracked the code to free college for

both my kids

and so can you

you