How to Save Huge on a College Education
By: Opher Ganel
Tags: Finance, College, Financial Strategy, Money, Higher Education

It’s no secret that the cost of a college degree has increased over time, to the point where it’s out of reach for even many middle-class families.

The average cost of attending your state’s public university for 4 years, even as an in-state student, is now higher than the median annual household income!

If you’re in the nearly 60% who take 6 years to graduate from a nominally 4-year program, that jumps to more than 20 months’ worth of household income!

Below, I offer advice in 5 areas that can save you 6 figures on your college costs, and increase your lifetime financial results by 7 figures.

Take Advantage of Your State’s Public University

According to the National Bureau of Economic Research, research shows that after adjusting for the higher SAT scores of students accepted by highly selective schools, the difference in return from the investment in a college degree is “ …generally indistinguishable from zero. “

This means that you can save well over $60k (on average) by attending your state’s public university, without losing much in your lifetime return on that investment!

Take Advantage of Your Community College

It’s no secret that community college costs are significantly lower than the cost of 4-year schools, even public schools’ in-state-student costs.

To save the most money without losing any long-term credibility, attend your local community college as a commuter (living at home with your parents will supercharge your room and board savings) for 2 years. Then, transfer to your state’s public university.

To save the most without losing any credibility, attend your local community college as a commuter for 2 years, and then, transfer to your state’s public university.

You’ll likely save $30k or more, and the same 4-year school’s name will be on your diploma. No future employer will ever know or care whether you attended the school from which you graduated for your entire academic career.

Choose a Major that Pays Well

According to CareerExplorer.com, the average wages of different (bachelor-degree-requiring) careers vary more than 3-fold!

A childcare program administrator earns an average of $46k.

A drafter, $48k.

An elementary school teacher, $54k.

On the other hand, a financial advisor earns an average of $80k, a geologist $92k, an information security analyst $98k, and a petroleum engineer $137k.

A difference of $90k a year, summed over a 45-year span from graduation to retirement can translate to a multi-7-figure difference in lifetime earnings.

A difference of $90k a year, summed over a 45-year span from graduation to retirement can translate to a multi-7-figure difference in lifetime earnings.

Take into account that it’s far easier to save money out of an $80k+ salary than a sub-$50k one, and that your compounded returns will get turbo-charged by saving and investing from your first year in the workforce, and the difference in your ultimate nest egg could be even bigger.

Even If You Use It, Treat Student Debt as a Necessary Evil, not Found Money

If you’re already taking advantage of the above points but still can’t cover the cost of attending college, student loans may indeed be a necessary evil.

However, do everything you can to minimize the debt load you take on.

Save as much money as you can before going to college

Get a part-time job while in school (even better if it’s in the same field as your major)

Rent a house with several friends to reduce your housing costs

Cook as many meals as you can to avoid the cost (and unhealthy outcomes) of ordering in or going out (groceries are far cheaper than purchased meals)

Don’t use student loans to finance parties and vacations — this is money you’ll need to pay back with interest, not found money

Don’t use student loan money to finance parties and vacations — you’ll need to pay it back with interest — it’s not found money!

Keeping your student loan payments (once you graduate) to less than 5% of your expected first-job salary is doable and important. Under 3% is even better.

Excessive student-loan (and other) debt can and does significantly reduce recent graduates’ options. This impacts your ability to qualify for a mortgage, pay for a wedding, and even afford to have children.

I’ve had clients and prospective clients who had taken on multi-6-figure student debt (albeit this was for both undergraduate and graduate school). These were not lawyers or doctors who could expect to easily carry and pay off such massive debt. Their annual income was a fraction of their student-loan balance, causing enormous stress and anxiety.

Don’t let that be you.

Graduate as Quickly as Possible

If you look at most schools’ official graduation rates, you’ll find that the majority of undergraduate students take longer than 4 years to graduate. Coming from a country where undergraduate programs are designed as 3-year programs, this astounds me.

Since your cost of attendance doesn’t change significantly between Year 4 and Year 5 or 6, graduating in 4 years will save you on average over $44k compared to taking 6 years to graduate.

Here are some tips on achieving this.

Treat your studies like a job where your supervisor doesn’t take kindly to you playing video games or partying on company time — focus on your studies

If you find yourself falling behind, don’t wait until you fail the class — proactively ask for your instructor’s help

If you have a learning disability, apply as soon as possible for any and all support offered by your school, and then take advantage of it

Don’t take too many challenging courses at the same time, so you don’t get overwhelmed, fail, and have to retake them

Don’t take too few classes, so you don’t have to take extra terms to finish your degree requirements.

The Bottom Line

Yes, college is expensive, and getting more so every year.

Yes, there are other options if those appeal to you (e.g., pursuing a trade-based career).

For most Americans, college is still a good investment.

However, for most Americans, college is still a good investment. If you’re one of those many, follow the above advice to save 6 figures on the cost of your degree, and get 7 figures higher return over your lifetime.

About the Author

Opher Ganel has set up several successful small businesses, including a consulting practice supporting NASA and government contractors. His most recent venture is a financial strategy service for independent professionals. You can connect with him there, or by following his Medium publication, Financial Strategy.

Disclaimer

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.