I recently heard someone say that he is hoping his three children will opt not to attend college. Shocking statement? Not to me. I have the same hope for my son. Are we crazy?
Weird, maybe, but not crazy. Some will accuse us of not wanting our children to have a well-rounded education, or making them miss out on career and/or financial opportunities. But this is not at all the case. We want our children to get the kind of education they need. This may be four-year degree, graduate coursework, or it may be an education gained by experience by entrenching themselves in the real world of work.
And if it happens to be a college degree, we want nothing more than for our children to obtain one completely debt-free.
The following infographic portrays how federal student loans work:
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Note the estimate for monthly loan payments after graduation: from $416 to more than $500 every single month for ten years. Take that money and instead of using it to pay off a loan, put it in a mutual fund averaging a ten percent return, and after ten years, instead of having paid the government between $50K and $60K, you will have accrued almost $95,000 for yourself.
Hmmm, pay somebody else over $50K, or earn almost $100K for yourself?
Not every career path requires a four-year degree. Have your children figure this out before they become one of many calling into the Dave Ramsey Show complaining about their $50,000 student loan for a degree they are not using, and instead barely making ends meet with a $25,000 per year income.
If they do need college, let me give you the financial aid tip that will save their financial behinds: WORK.