Millennials are in a financial crisis right now.
If you’re a millennial, there’s a good chance that you have a large chunk of debt right now. And if you have dreams of increasing your savings or getting started in investing, you’re probably frustrated at the lack of progress you’ve been making.
Some Frightening Statistics
- The average millennial (people aged 22 to 37 right now) has about $44,000 in debt.
- The average student loan debt for Class of 2017 graduates was $39,400.
- Not only are millennials accruing student loan debt at an alarming rate, but they’re also going further into commercial debt, using their credit cards just to keep up with their peers.
It seems as if student loans are being handed out like candy on Halloween.
As a result, many college graduates are entering their working careers with a mountain of student loan debt and are forced to defer many life milestones such as buying a home, getting married, having kids, saving for retirement, and taking some risks with investing.
Are College Students Really Starving?
To most people, when thinking of 18 and 19-year olds, the phrase starving college students often comes to mind. In my opinion, this phrase couldn’t be further from the truth.
Being IN COLLEGE should not equate to being a starving college student.
When a student graduates from high school and enters into their college years, they’re now experiencing the most freedom and abundance of choices they’ve ever experienced before. For instance, they can choose to work a new job, choose their class schedule, or choose topics that interest them. At this age, college students typically have low expenses and (should have) no debt.
This creates a formula for college students that can set them up for great financial success later in life: Low expenses + abundance of time + abundance of flexibility + saving money each month = a higher savings rate each month.
Not to mention, in addition to low expenses and an ability to increase savings, college students also have less liabilities. Because they have less liabilities, they have the ability to take on new ventures or new risks. But I digress; that is another topic for another post on another day.
Here are some surefire ways to ensure that you or your college-aged student enters into their prime college years without taking on the heavy burden of debt.
1. Attend Your Local Community College
Community College is Less Expensive than 4-Year Universities
The cost of community college is typically much less expensive than a 4-year university. For example, at my local community college, if a student were taking 15 credits, she’d be paying approximately $690 per semester in tuition. When comparing the cost of my local community college with my local state university, the cost of tuition increases to ~$2,871 per semester at the state university. So, the cost of tuition for a state university is nearly 4x the cost of attending a community college!
Additionally, another community college about 30 minutes from my home actually offers tuition free education for in-state residents.
Community College Allows You To Stay At Home Rent-Free
Another benefit of attending a community college is that, typically, when attending community college, it means that you can still live at home with your parents. And if you’re living at home with parents, you’ve probably got the best rental rates in town, oftentimes, FREE! I can hear the responses now: But Kyle, I’m 18 now, I don’t want to live at home under the rule of my parents. While I can empathize with the feeling of wanting to get out into the world and start finding yourself, if it’s at all possible to stay at home rent-free, you may want to consider this option– especially if you’re interested in saving your money to begin investing.
Using those scenarios, you can see in the table below that (a) living at home rent-free while (b) attending community college can save you up to $2,000 per month. Assuming that you go to college 8 months out of the year (or 2 semesters), this could be an extra $16,000 per year you could save, which would then equate to $32,000 across two years.
Imagine what a difference that would make if you graduated from college with $32,000 in the bank versus having $32,000 in student loan debt!
|Scenario||Community College (Living at Home)||Community College (Not Living At Home)||4-Year University (Living on Campus)|
|Rent / Room & Board||$0/month||$500/month||$1,454/month|
2. Choose a College In-State
Let’s say that you took my advice and decided to go to community college to save some money over the next couple of years. Great job!
The next thing you can do in order to save money while in college is to go to a college in your home state. In other words, if you grew up in California, but wanted to attend college in Arizona, well, the cost of your tuition would be much higher.
According to the National Center for Education Statistics, during the academic school year of 2015-2016 in the United States , the average tuition for an in-state student at a four year public school for an undergraduate student was $8,804. Meanwhile, the average tuition for an out-of-state student at a four year public school for an undergraduate student was $24,854. By choosing to stay in-state, you’re saving on average $16,050 per year!
3. Work While You’re In College
Sure, college is a time of exploration, learning, fun, and excitement. But you don’t have to completely throw away these years either.
I once heard a father tell his college-aged children, “Your 20’s are yours, but when you get to your 30’s, I expect you to start being more responsible with your life.” Essentially, he was telling them: “Enjoy your youth, make bad decisions, and don’t worry about the long-term consequences.” I don’t think this parent could have been any more wrong.
Instead, I believe that the college years can be a time of tremendous growth, learning, and practicing for any college-aged student. Working while in college provides many benefits:
- Begin saving money for your long-term investment goals
- Start gaining experience in different industries without any real long-term negative consequences
- Begin networking early and growing in expertise within your industry
- Start developing a work-ethic that will serve in you in your career for the long term (You don’t have to slack off)
4. Public vs. Private College
Many people believe that private colleges possess a reputation of high distinction and prestige. Additionally, they assume that holding a degree from a private college holds more weight when applying for jobs for their new career. Unfortunately, these assumptions comes at a cost.
Private colleges are generally much more expensive than 4-year public universities. For example, in 2015-2016, the average cost of tuition was $8,804 per year, while the average cost of private schools was $32,405.
It’s true that some private schools such as Harvard, Yale, and Stanford may certainly open the eyes of some recruiters. However, if you went to a little known private school, chances are that it won’t give you any significant advantage.
Additionally, some careers don’t necessarily care what college you attended. For example, if you’re a credentialed high school teacher, you should be able to get a job just about anywhere despite which college you attended.
5. Find Scholarships, Work For Them
According to a study in 2015, high school graduates in the U.S. left more than $2.9 billion in free federal scholarship money unclaimed. In fact, there are thousands of private scholarships available each year.
Applying for scholarships can be competitive and intensive, yes. But, scholarships can also be a great way to save money and reduce your amount of debt while attending college. Fortunately, there are online tools such as Scholly that help you find, manage, and apply for scholarships.
6. Employer Tuition Assistance Programs
Many employers offer tuition assistance benefits for their employees and their family members. Check with your human resources office to see if any these types of benefits exist.
7. Try Getting A Full Time Position At Your University
If you want to work during college, you should look for a job at a university. Many universities provide employees with generous tuition reimbursement programs.
In my case during grad school, I was able to get a 90% tuition reduction while working full-time in the IT department. This brought my tuition from ~$45,000 to $4,500 in one year. (Can you tell that I went to a private school?)
Be sure to research the full details of the tuition reimbursement program at your university, because not all are created equal. For instance, some universities may not fully refund your tuition until you’ve worked there for five years. Or, some universities may require that you’ve been employed for a full year until you’re eligible.
8. College Textbooks
There’s no doubt that college textbooks are insanely expensive. In fact, in 2018, the average college student spent more than $1,200 on textbooks and materials. Sometimes, these costs are unavoidable. Fortunately, there are a few things you can do to save some money with textbooks.
Only Buy Textbooks That You Need
Many college courses have required reading and optional textbooks and materials. To save some money, only purchase what’s necessary to help you with that course and consider skipping the optional.
Share a Textbook With A Friend
If you and a friend are taking the same class, sharing textbooks can considerably cut down your costs. You can then make copies of selected chapters or materials (if permissible) and both be able to study at the same time.
Purchase Used Textbooks Online
Look for the E-Book Version
Nowadays, many book publishers make their content available in an e-book format. Fortunately for college students, these e-books typically come at a reduced cost. In fact, some publishers and secondary market vendors allow you to rent e-books at a reduced cost.
Start Building Wealth in Your 20’s
You don’t have to go along with society and take out thousands of dollars in student loans. To the contrary, using some (or all) of the methods above, you can actually graduate from college and start your working years financially ahead. Don’t waste your 20’s, and instead, start using this time to begin making sound and wise financial decisions that will serve you for the long-term.