[pictured above: the fountain at Purdue University]
The Spend | The First Two Years of College
Standard parental operating procedure is to raise your kids, have them graduate high school, go to college, and make a life for themselves. While this sounds nice, parents and students regularly go into massive amounts of debt following this SOP.
This sucks. And it doesn't need to happen.
While many will rant about how college is no longer affordable - with at least one building a political campaign around this message - the fact is that college is affordable! You just need to think a little outside of the box...and outside of the standard 4-year college progression.
You can send your kid to a community college for the first two years rather than going straight to a 4-year institution. In doing so, you'll save a truckload of money.
Specifically, we're saving a projected $13,908.46 over the first two years of my son's college education by sending him to Gateway Technical and Community College rather than Northern Kentucky University. Instead of paying $375 per credit hour, we're paying $147.
Multiply that over 60 credit hours, add in a little tuition inflation, and BAM! $13,908.46.
The Opportunity Cost | Retirement
That nearly fourteen grand in savings can help us with retirement. By adding that savings to our retirement plan (or more realistically, by not having to reduce our contributions), we'll get a total of $5,983.50 in tax deductions and $9,945.98 in employer matching.
Total that up and $13,908.46 turns into $29,837.93 in net retirement contributions.
The Long-term Opportunity Cost | 30-year Value
By making this one decision and letting our investments go to work, that ends up adding/preserving $433,098.90 of our retirement nest egg in 30 years.
In obnoxious all caps lettering, FOUR HUNDRED THIRTY-THREE THOUSAND NINETY-EIGHT DOLLARS AND NINETY CENTS is some pretty serious coin. You'd have to back up the Brinks truck to carry forty-three million three hundred nine thousand eight hundred ninety pennies!
A Debt-free College Graduate
Our goal is not to have our son graduate, but to have him graduate debt-free. When you add the second part of that goal, your thinking quickly changes - and so do your tactics.
As for the second half of college, let's get through the first two years first:-)
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