Untitled design-4Well, the first year of college, save finals week for our oldest son Dryden, is over.  Dryden, thus far has zero student debt. Here’s why.

Although I worked year round while attending college, was an Army Reservist and in USC’s ROTC program, I still graduated with several thousand dollars in student loans. My three-year, zero interest deferral while I was in the Army was paid off within five years after payments began. My graduate school was paid in full while I was taking the classes—so as to avoid the debt repayment issues.

There are many stories about student debt that don’t end well for individuals, or our country.  Searching “student debt” online produces over 6.8 million results. NCES has the six year graduation rate at 59%.  That means 40% of students do not graduate within six years. Worse yet, the students have no degree and little ability to pay back what they borrowed in a failed attempt to complete more schooling. Those who do graduate have on average $30k in student debt. That’s enough for a few cars, or a nice car, or a suitable down payment on a home.

I recently advised law and medical school graduates how to get out from under their pile of student debt.  Their astounding loans of $250k to $300k to be repaid will take several years to a decade or more of serious discipline and may require postponement or even denial of other life goals.  Devastating, isn’t it? Granted, they have more earning power, but the debt remains, and interest on the debt takes away from other, more important discretionary expenses- a home, cars, starting a practice, or even starting a family.

Anyway, based on those dismal research findings, watching these students work hard from getting out from under enormous debt, and the possibility of deferred life goals because of those debts, we decided to avoid future student loan debt for our children. Here’s how.

  1. We began with saving what we could into Coverdell Savings plans many years ago.
  2. More recently, we began to fund 529 plans as much as possible. We’ll continue to value education and save to 529 plans instead of spending on less valuable things.
  3. Our children will work as much as possible with their first priority of maintaining good grades. They will save as much as possible during either summer months or part time work during the school year.
  4. We’ll encourage our kids to apply for every available scholarship no matter the amount. Our son’s efforts in this area paid off handsomely this year with several thousands of dollars off the tuition bill.  
  5. As hard as it may be, our children may have to take time off from school to work in order to avoid debt. We understand this is not the current norm or even ideal, but debt avoidance is our number one priority, valued above their degree!

Are you Living What Matters?
Dan and Robin Joss


Previous Debt Articles
The Issue of Debt: Part 1, The Role of an Advisor
The Issue of Debt: Part 2, 5 Types of Debt Defined
The Issue of Debt: Part 3, How We Avoid Credit Card Debt
The Issue of Debt: Part 4, What to do When Family has Debt
The Issue of Debt: Part 5, Mortgages
The Issue of Debt: Part 6, Car Loans