A couple of years ago Laura was driving my daughter Tannah to school. They have this conversation:
Tannah: “I want to go to a prestigious school like Amherst or Cornell….”
Laura: Hold on a second baby, you know we’re not paying for your college, right?
Tannah: Whaaaaaaat? What do you mean, you’re not paying for my college????
Laura: That’s why we’re sending you to a private school now – so you can take AP classes and get scholarships and get into a good school and get a deal.
Tannah: Hey wait a minute! You HAVE to pay for college! You’re neglecting me if you don’t!
Laura: Our folks didn’t pay for our college. We worked our way through, we got scholarships and figured out how to make stuff happen. We’re very glad we did.
Laura and I had NOT pre-planned that conversation. When she came home I said, “Laura you just saved us half a million bucks! Bravo!” Tuition for 5 kids is pricey.
Fast forward to now. Tannah’s a senior. She’s seriously in the application game, taking her SAT’s etc. But college is 5X more expensive now than it was 20 years ago. The Return On Investment is worse now than ever before.
Nevertheless I do still believe in a university education. You can explore things there that you simply cannot explore elsewhere. I am extremely thankful that I got my degree.
Another thing I believe in is: NOT going into debt. If we don’t pay for her school, she could get out with $100K of student loans chained to her neck.
Also I don’t believe in pampering kids and paying for everything until they’re 25.
How about you?
Are you staring down the same challenge?
How are you solving this with your kids?
In the next few days I’ll parcel out more of this conversation.
Tell me in the comments: What have YOU decided about your kids’ education?
Perry Marshall
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About the Author
Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.
He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.
26 Comments on “Staring down the College Tuition Beast”
Perry,
I did some quick research on your daughter’s Amherst dreams and I think you’re gonna like it.
Turns out, you can earn up to 75 credits of an Amherst degree (roughly 62% of it) via “alternative credit methods.” This includes AP courses and also CLEP exams, which cost $80 and grant students the same credit they would have paid thousands for in the classroom. I’m not sure if your daughter is a good test taker, but if she is, she could EASILY save tens of thousands of dollars on the degree she wants.
This is what I help students do at my site (shameless plug: http://www.doityourselfdegree.com). Hardly any parents realize the extent to which exams can be substituted for classes to lower their college costs!
On a similar note, check out author/entrepreneur/blogger James Altucher’s similar views about education:
http://www.amazon.com/40-Alternatives-College-James-Altucher/dp/1479269387/ref=sr_1_4?ie=UTF8&qid=1381671919&sr=8-4&keywords=james+altucher
and his related blog post:
http://www.jamesaltucher.com/2013/09/the-ultimate-college-challenge-to-fool-my-kids-into-not-going-to-college/
Perry as always – a real thought provoker!
I agree its vital to have clear expectations on our part, clear goals on our children’s part, and a vision that they hold onto as to the WHY …college will open doors. For us leveraging good grades as part of the equation is the key.
Here is how we are getting their attention, clarifying the options and having them actively involved with the conversation at each step.
Our oldest 10th grader is techy and highly creative but struggles with getting things done.
Our youngest 8th grader, is the straight A student but not nearly as fearless or solution driven. Teachers love him.
Exposing them with college campus visits starting in grade 6 has certainly piqued their interest. They are clear they want to get a degree and have talked with enough adults , executives, HR recruiters, dean of universities… etc to understand the opportunities.
I require them as part of science projects to set an interview with a university staff member to get real world experience. Of course I chauffer them and help with appropriate questions. but they have to prepare, take notes, and incorporate into their project. The school project is what sets the deadline , not mom.
We had the conversation with them that we will help with half of the costs and we will do this by
1- assisting them in getting a student loan in their name ( sets them up with credit lines and they need 5 to buy a house) which we will pay off at the end of each semester as long as they maintain a 3.0 or higher. Otherwise they have the joy of paying that off ( my husband and I discussed paying off the loan and transferring the debt to another lower cost loan option beyond a student loan).
2- Our oldest is actively working each summer and has a goal to double revenue each summer. So far that is working.
3- We found a great article from USAA about setting a contract with kids around driving agreements and so he is learning to pay for gas, insurance and cell phone (tracphone is a great way to go with 3x minutes and 90 day contracts with renewal notices that our son manages himself.)
4- He is still managing to grow his savings for a car and some college.
5- Website- Our youngest is in a charter school that promotes entrepreneurship so he has a business and has dabbled with a website to sell his schools t-shirts online and offline. Offline was much higher sales.
As our oldest goes through his high school computer science class he is building a new website so he can improve online marketing for his summer business. He discovered he could take a programming course in python ( http://www.khanacademy.org ) to start another revenue stream and is meeting with a training company that is local that connects grads to first programming jobs.
6- Scholarships are a big part of the quest(mom finds some of them but our son has to fill the forms).
7 – One of the scholarships from INTEL I think, suggested a portfolio so our oldest is building an online portfolio to position himself for some competetive local scholarships.
8 – cool scholarship he is pursuing is with the CIA that includes an internship- look into that one if you have techy kids.
We really like the idea of low to no debt, and helping as long as our sons have some skin in the game. May sound like a lot but we have plenty of time on weekends for hiking 14ers, football games and friends.
May I strongly recommend an EXCELLENT, inexpensive little book on post-secondary / college choices called “WORTHLESS” by Aaron Clary, who blogs under the name of Captain Capitalism. Last Christmas I bought 9 copies, one each as a ‘stocking stuffer’ for each of my neices/nephews currently in high school. Five of them have gone out of their way to thank me PROFUSELY (as have their parents), with two of them saying “why hasn’t anybody ever told us this stuff BEFORE?”
Before anybody here pops major money for college, Aaron Clary’s book “Worthless” is worth it’s weight in gold. No, I’m not getting anything for this recommendation.
Hi Perry …a recent but very impressed fan of your business AND ‘life’ insights. Our 2 kids are now 34 and 35, both married, working and doing fine raising their young families.
1) Back from the earliest days that they were old enough for ‘dinner table conversations’, WHENEVER “the future” / university / jobs & careers ever came up in conversation, my wife and I would always weave into our input the seemingly innocuous phrase “…when you guys go away to college” and “when you’re away at college you can probably do that” and “being away at college was the most fun we ever had in our lives”, etc. … it was NEVER about just “college”; it was ALWAYS about “being AWAY at college”. We wanted them to automatically assume they WERE going to college, and they were NOT going to be living at home when doing so, even though our city had 2 universities and some excellent colleges. We truly believe that the most important lessons are those learned OUTSIDE of the classroom, such as getting along with others, budgeting, self management, etc. These “being AWAY at college” dinner table chats started around grade 7 or 8 and never stopped.
2) As they got into high school and ever-closer to college age, these chats started to include the fact that “mom and I will pay HALF your college costs for 4 years …if you take 5 years or more, or want to add a post-grad degree, YOU can pay for everything beyond 4 years.” This was never spoken in any sort of hostile, angry way, just very matter of factly. They both worked part-time jobs for their entire high school years to save money AND they maintained good grades. Both graduated in 4 years from Univ. of Georgia and were working at GOOD jobs within 30 days.
3) One final thought … in their final year of university we’d manage to casually slip into conversations that “Of course you’re welcome to move back home until you find a job, and we’ll even let you live with us rent-free for the first month … but after 30 days our rent for each of you is going to be $400 a month / $100 a week.” Nothing angry or hostile, just a casual factual statement given IN CONTEXT of the broader conversation. Both kids were OUT of our nest and OFF our ‘payroll’ within the first month! …and we maintain very close, loving, fun relationships with them and their growing families.
In short, if you let them know the rules / expectations / boundaries early enough so that there are NO surprises, they actually DO make reasonably good decisions.
Keep up your terrific work, Perry!
Davers
I’m looking down the same barrel as your daughter right now, senior year, and not a nickel or a dime to expect from my parents. Charlie Foxtrott.
I divided the problem into two parts. One is financing/admissions. The other is insurance.
Question A, how do I get in, and how do I pay for it?
Question B, if I don’t, how do I minimize damage?
My solution for QA seems to be entrepreneurship. It’s one of the only things that can pay off enough to support a college education, whilst staying within time constraints and requiring no extrinsic credentials. Your daughter likely has a couple more options, as well as the advantage that her dad may know a thing or two about building and marketing a business (I’ve heard he’s pretty good at teaching that, hearsay, really).
On to Question B. If all plans in A fail, everything comes down, DEFCON 1 – Warheads flying, how do you pick yourself up? My plan is getting a gig as a coder over my personal network, and then workinf at emulating a college experience, from the academics to the networking and the experimentation that goes on there. If one of your goals is getting to know ambitious coders from the MIT, you can either go there and get to know them, or sign up for one of their hackathons. More legwork, and you don’t get a degree, but it seems like the substantially cheaper option.
We have insurance policies for both the kids. These policies build cash value. We are also investing in the 529 plan. But it is a scary thought.
I see the world and market becoming more competitive, not less. I also believe that a college diploma is what a high school diploma used to be – with a few notable exceptions, one simply has to have one. My husband and I paid for our college educations ourselves using scholarships, grants, jobs and loans. Honestly, all the stress and debt isn’t an experience I want my kids to repeat. I would have enjoyed and gotten a lot more out of college if I wasn’t burning the candle at both ends. As long as my kids work hard, take their education very seriously, my husband and I are happy to pay for their college to the extent we are capable.
Hi Perry,
My wife and I are considering taking a different approach (our kids are 13 & 9 so we have some time). Our kids will take out student loans. Once they graduate, we will repay the loans. If they drop out, they’re responsible. We believe this would help in keeping them engaged and motivated rather than just sliding by knowing mom & dad are paying the bill. This also gives us a few extra years to save for their tuition. We’re optimistic for a win/win.
Perry,
Let me tell you, boy you know how to hit a pain point with a certain demographic.
My wife and BOTH went to one of those prestigious schools you specifically mentioned above (Cornell) and this is a huge debate and issue in our house right now.
I had a military scholarship that payed for most of it, but my wife had 90% of her tuition payed for by her parents.
When we went 20 years ago, the pricing was roughly 20K per year, but now its up to 45K per year. Really? 45K per year????
Quite honestly there is absolutely no way we could pay for a handful of kids to go to our alma mater. More than likely unless they qualify for major scholarships, it’s just not in the cards for them to go where we went.
So to answer your question, yes, we are staring down the same questions and haven’t come up with an answer other than I have started to prepare them mentally that they may not go to school where we went unless they get some kind of scholarship.
The Proof is in the Pudding.
We followed your plan with our daughters .. our eldest graduated 6 years ago and the younger this year.
We believe that waiting until University to start developing exceptional kids is to late. It is the foundation-education they get as littl’ uns that is the most important.
Investing in your kids early education can be much more important and formative than footing the bill for what ever Uni (if any) they may end up at.
We told our kids from their earliest days at school that we would provide for their education to grade 12 .. from there .. it was up to them. For our part his included Montessori School, private education and extra-curricular activities they were interested in.
Perry, you’re description of how you hope it all works out is accurately describes how it worked out for us.
Both girls decided to do Uni in spite of there being no free ride. Both worked very hard to get scholarships etc. from an early age (our system provides a ‘Passport to Education’ scholarships starting in Jr. school) because it was in their interest (financial & personal) to do so.
Their course loads were very heavy and they both decided to take loans rather than extend the number of years spent in school (to accommodate the extra time needed for a job). But even that was calculated to be as quickly repayable from the higher income their degrees provided (rather than the minimum wage jobs available as students).
Also .. Both chose a career path that included skills that were exchangeable for an income. Rather than one that only follows an ‘interest’ and ends with the only work available .. being to teach others how to do the same unproductive thing. This may also have been because they were actively engaged in developing their own future.
The end result is the elder runs the engineering dept of a small aerospace parts company and the younger was employed straight out of school in a position paying $60,000 a year starting salary and is being considered for one that will increase that another 35%.
Again .. money and all else aside .. we and many other parents we know, who have followed a similar path, have found that inspiring kids when they are literal ‘knowledge sponges’ .. their formative years and giving them some responsibility for their educational and career future .. is the best way develop kids who are well rounded and understand ‘what side goes up’.
As a parent we all hope our kids will end up doing something they love .. and in the big picture, your plan, looks to be an approach that has a very good chance of helping our kids ‘have their cake and eat it too’ .. and isn’t that a better legacy for your kids than a ‘free’ (no responsibility) education (or 3 year party .. as some turn out to be)?
I am a proponent of education and I strongly oppose wasting money. Seems to me the majority of people spends a lot of money on a degree and then end up in a completely different field.
I told me kids that once they are done with high school they have to work for a year or two. They need to have two goals in mind. Save up some money for college and figure out what field they want to enter.
Once they figured out what they really want to do, they can go to college, but have to be prepared that they will not get any financial assistance from me. That means they have to figure out scholarships, have a source of income and so on.
Once they do that and take their schooling serious I just might end up paying their tuition. If they jump through all those hoops I am pretty sure my money will not be wasted, but result in a top notch education. It will be top notch, because they really really want it and therefore will put in the time and energy to make it worthwhile.
Perry, I have one daughter who is going to attend Junior College first 2 years, then onto pre-vet at Texas A&M, then on to Aggie Vet School. My other daughter is undecided, but wants to attend private college with boyfriend. I told her I will pay for public school, but not private. She was not happy. Oh well.
No kids, no worries.
Forgot to add, she is working 2 part-time jobs while she attends full time. As a single mom, I do help but not as much as I would like too.
Good Luck with that, my daughter now in her third year and will be paying for it herself with student loans, it will be well over $100K til she finishes. She too took AP classes in high school therefore was able to get into Penn State main campus with all her previous credits. She did receive a one time five thousand dollar scholarship, plus state and federal grants each year but we could not find any other funding so student loans all the way.
Oh, I forgot – the oldest one is considering School of the Ozarks – because of the work ethic and free tuition – and will qualify as low income.
We added up the costs other day. For our 2 daughters, we will have spent by the end of next summer, £500,000.00 sterling on their education – quite an investment. And the aim of that has been to give them many things that will optimise their future, one of which is the confidence, self belief and desire to pursue their ambitions. This means that university fees, (and they have both chosen to pursue a univesity career), are a way of them investing in themselves. If they do well, the fees will have been worth it and will take very little time to pay back. Of course, along the way, we will support them so that they do not develop a sense of “lack”. We are generous. Interestingly, they both have a strong work ethic and with no prompting at all seek out their own opportunities to earn money anyway. Ask me again in 4 years….
I would love to give my kids a college education, but I think they should contribute something or they won’t appreciate it and succeed when they get there. They need some skin in the game. Perhaps a brilliant kid needs to go to Harvard and needs more financial help from parents or a scholarship. A less academic kid can to a local college and live at home. My kids were not very academic so they went to community college. I was a bit disappointed, but every kid is different and has different aptitudes.
The real question is – does it make sense for society to drain the entrepreneurial labor supply with a debt-inflated system of education that provably (outside of STEM – and not always inside it) does not return on investment.
18-22 is prime time for young men to take real risks with high rewards. If they aren’t going to school to pick up a defined applied skill – they are wasting precious risk time with a bunch of credentialing that, if they are lucky, will land them in a cubicle. Even if you are getting your kid through school debt-free, that doesn’t mean he’s getting bang for the buck. You are just buying a $60,000 credential whose worth is very much inflated.
Having said that, I still try to prep for the college contingency, because a kid who graduates fast in a STEM field without debt can find fulfilling work, although, if they are thinking of an academic career – I’d steer them away. Anyone proficient at basic math can see that that bubble is about to burst like thermotenured bomb.
Four kids – hoping to steer as many of them from the flypaper diploma of higher education that I can – barring that – to do it while avoiding adult life-aborting debt.
We homeschool and each of our kids knows that if they want to continue to college they must figure it out for themselves. They have a few things going for them:
1. As autodidacts, they already know how to learn – where to go to get the knowledge that they’re looking for and how to assimilate and execute.
2. They grew up with an Internet Marketing mom, so they’re pretty business savvy. They understand more about the world than most kids their age do because of their experiences, and they understand what they do and don’t need a degree for.
I have a daughter who wants to be a physician. She’s already working smart to maintain the grades she needs to get scholarships, etc. for Med School.
I have a son who is a budding Internet Marketer and a paid graphic artist. Self-taught. Very talented. Obviously doesn’t need a degree to do what he’s doing, because he’s doing it and getting paid.
I have another son – dancer, actor – who sees that his chosen path can be fraught with “down time” waiting tables. He’s considering biology or a career in orthodontics (wonder if all those years in the orthodontist’s chair had anything to do with his choice?) and is maintaining the grades he needs to get to where he wants to know.
All of them know (and live by) the 10 Little 2 Letter Words: If It Is To Be It Is Up To Me.
We have folks (family and friends) who are horrified with us for homeschooling, for allowing our children to choose their own paths, for not making college mandatory, and for opting out of paying for their continued education. We feel, on the other hand, that we are raising competent, caring kids who are figuring out what they want and how to get it – skills that will serve them their whole lives.
Just one Mom’s take on things.
Dr. Kevin Leman http://www.BirthOrderGuy.com wrote an awesome book called Parenting Your Powerful Child. Great read about not making your kids the center of the universe and I would think simply handing your kid a college education feeds what Dr. Leman says in his book. Thanks for posting Perry. Very raw and real life for sure!
Paying for college tuition is a tough challenge – especially now that the Federal agency that figures out what each student’s package should be parcels out loans to both the student and the parents. This is placing more of a financial burden on my wife and I. Both of our daughters were 4.0 students in high school, but were so busy with many activities, homework from AP level classes, etc. that they didn’t have much of a chance to apply for scholarships. Fortunately, they both decided to go to state schools, which keeps the tuition reasonable. But we’re faced with helping to pay for their education for years to come. Not so easy when we’re also paying for mounting medical bills, since health insurance doesn’t cover as much as it used to…
Perry,
I have two seniors…one in college and the other in high school.
My oldest will graduate with a 4 year Bachelors degree and no debt. From the beginning, we told her that her choices have consequences, good or bad. We told her that mom and dad were in for $X,XXX for each of four years and she was on the hook for the rest and that she will graduate with no debt. She read books about debt free college, pursued on campus leadership roles, became and Residence assistant (to pay for living expenses), worked the scholarship system and simply worked her fanny off. At the beginning of her senior year she told us that she didn’t need all of the contribution that we were giving her. We said that she gets to keep the balance. Now she is going to pursue a Masters degree in Occupational Therapy which we don’t mind if she takes on some debt for because the ROI will be worth it. Debt free college as a goal is a significant achievement in financial education. It took my daughter until her sophomore year before she really got the concept and the value of money. After that, she rolled on her own just fine.
I have 5 kids. Two already in college. We have Florida Prepaid for all. Oldest used that plus academic funding due to good grades. Second son scholarship for hockey. Twins trying to get athletic scholarship for hockey, good chance. Youngest is only 11 but we have Florida Prepaid and potential for academic and/or sports from Soccer eventually.
Hi Perry,
Great post. My business partner and I made our kids “employees” of our company a number of years ago so we are able to give them each $5,000 a year toward tuition. Our oldest kids are in college now and taking advantage of this.
My son is double majoring in Music and Computer Science taking 18 to 19 credits per semester, playing in 3 symphonies, small ensembles and with church praise bands. We have told him that we would pay his way (since he has no free time to work). My daughter works hard to maintain a high gpa thinking ahead to scholarships and will probably choose to work – she is a different person than her brother.
Will