5 Debt-Free Ways to Pay for College

6 Minute Read

If you have kids who will start college soon, it’s no surprise to you that three out of four parents in your shoes say they are concerned about having enough money to help their kids pay for school. Many want to help, but they have their own financial challenges to overcome.

How can they get their kids through school and still pay off debt or save for retirement?

Four years ago, Ron and Paula R. from Eagle, ID, found themselves facing that situation. Their son, David, was headed to college and their daughter, Debbie, was set to start the next year—but they had zero college savings.

They tried to solve the problem like millions of parents do every year. They signed up for thousands of dollars in student loans for David’s first year of college. And not just any college—an expensive, out-of-state, private college.


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That loan brought their total debt up to around $80,000, and they still owed on their home. It seemed their only option was to put their own financial future at stake and fund David and Debbie’s college education solely with student loans.

In Search of a Better Way

A few months after David started college, Ron, Paula and Debbie attended Financial Peace University together. There they learned about the mistakes they’d made, but, even better, they discovered that they did have options—debt-free options—that would allow them to get their kids through college without sacrificing their own financial future.

They immediately decided to cash-flow David’s tuition, and he picked up a part-time job to help with the costs. And what about that expensive private school?

“It was gone as soon as we read The Total Money Makeover right after his freshman year,” Paula said. “He enrolled in our local public university and found he liked the ‘college experience’ better at his new school.”

Ron and Paula jumped into the Baby Steps, focusing first on paying off their debt then saving up their emergency fund and building up their retirement nest egg.

Debbie, who was not thrilled with her parents’ new money habits at first, decided to do her part to find a way to pay for school. “She worked like crazy to find scholarships,” Paula explained. “She found three big scholarships that covered tuition, room, board and books.” It amounted to a free ride to a private Christian college.

A Completely Different Path

Paula and Ron know it would have been all too easy to sign up for loan after loan to pay for David and Debbie’s college educations. “We’d certainly have six figures of debt, not including our mortgage,” Paula said. “Worse, we’d be setting up our children for the same unfortunate circumstances without passing on any financial wisdom to them.”

Instead, after four years of hard work from the whole family, David is finishing his senior year, and Debbie is in her junior year of a nursing program—and they’re both debt-free except for that first loan David took out for his freshman year. At the same time, Ron and Paula are debt-free except their home, and they plan to pay it off before Ron retires in six years.

Their story is just one example of how a family, working together to take responsibility for their own financial futures, can accomplish many goals at once: finish college debt-free, pay off debt, save up an emergency fund, and invest for retirement.

Many Ways to Reach the Same Destination

But their way isn’t the only way to make it happen. We’ve heard from plenty of families who are cash-flowing or have successfully cash-flowed their kids’ college while still meeting their own financial goals:

Every Little Bit Helps: Angela C. from Lavon, TX, said she and her husband are on Baby Step 2, so they don’t have the extra income to help pay for school expenses. “Our son has a scholarship and works full-time on summer and winter breaks and part-time during school,” Angela said. She and dad help by providing free room and board so they can keep rolling on their debt snowball.

Extra Income Makes a Big Difference: Jenny S. from Moscow, ID, has nine kids to put through college and no college savings. So far, they’ve paid for the first two years of their oldest child’s college with extra income they make renting out an apartment in their home to vacationers. “The business is thriving, and I’m blessed to say that I’m saving for my kids’ college exclusively from this money,” Jenny said. “I’m just one year ahead of them, but I’m ahead!”

Pass on Unaffordable Schools: Thanks to the lessons she learned in FPU, Janet M., a single mom from Gorham, ME, nixed her daughter’s first choice of school because of its high price tag. “I would have ended up cosigning a loan for $50,000 this summer,” she said. Her daughter instead accepted a merit scholarship to attend a local college. Janet will resume her retirement savings once she’s saved up her emergency fund.

Take the Sinking Fund Approach: Michael L. from Bluffton, SC, cash-flows expenses for his two college students with a sinking fund. “We calculate the anticipated costs for tuition and books and divide that amount by the number of months left until the next term,” he explained. Then they deposit that amount every month into a money market account. “We just wrote checks for approximately $9,000 for tuition for both kids for the next term.”

Take Advantage of Advanced Placement Classes: If your school offers them, encourage your college-bound high school students to take advanced placement classes. Deric L. from Wilsonville, OR, said his daughter took as many AP classes as she could, and that, combined with high ACT/SAT test scores, allowed her to enter college as a sophomore, saving them the cost of a year’s tuition.

You Can Do It Too With a Solid Plan

There are a million different ways to get through college without debt. But one thing’s certain: If you, the parent, choose to take on debt or sacrifice your income to pay for college instead of paying off debt or saving for emergencies and investing for retirement, you will end up with painfully few options as you face your future.

You can feel more confident about facing the college crossroads when you have a clear plan. You’ll know that if you take steps A, B and C, you’ll set yourself up for a secure financial future.

If you’re tired of wondering how you’re going to do it all—from debt to college to retirement—try working with an investing professional today!

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