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Ask Dave

Loan converts to scholarship

Garrett is a high school senior, and he has a unique offer from a small, out-of-state college. Dave says the idea may not be as good as it sounds. He encourages Garrett to explore opportunities closer to home.

QUESTION: Garrett is a high school senior who is considering studying business through an interesting offer from a small college in Michigan. It revolves around a $3,000 student loan program, where the loan converts to a scholarship if the student maintains a grade point average of 3.3 or higher. The college offering the program is also pretty expensive. Dave doesn’t like some of the things he hears, so he lays out other options for Garrett.

ANSWER: Well, it’s not my favorite idea just because you could end up with a loan. In business, one of the things we look at is return on investment. If I can go to one place for $34,000 a year, and I could go to another place for $7,000 a year, the question becomes am I going to get a five times better education — or is my income going to be five times greater — by going to the expensive school. I think most of us who have been walking around a while would say no.

Your income is not based on where you went to school, and it’s not even necessarily based on your grade point average. It’s based on your ability to take what you learned into the marketplace and kill something and drag it home — which has as much to do with your initiative, your perseverance, character qualities and integrity as where you went to school. So the great joke in America today is that where you go to school matters. We’re talking within reason, of course. Some places have better programs in certain areas than others. But is this particular college, which isn’t a prestige place, five times better than an in-state school there in Arkansas, like Arkansas State or the University of Arkansas? No, it’s not.

I don’t think you’re going to get a return on your investment overall in this picture, so you’re going to need a much more compelling reason to attend this school. Add to that this little student loan nuance, which is a small part of the equation—it doesn’t really move the needle. They’re not giving you enough “free money” to make this good.

The deal doesn’t work overall, and I’m not going to tell anyone to go into debt. And you could hypothetically end up in debt here. I want you to put more critical thought into the overall college choice. Because ultimately, going to college without debt is possible. Our BRAND-NEW book will teach you how to pay for college without student loans. Don’t fall into the student loan trap.


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Answer a few questions, and we'll create a plan tailored just for you. It only takes three minutes!
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