Student loans aren't always necessary. With a little planning, you can have an all cash college experience.

The Secret to Paying for College with All Cash

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If you have kids, one of the main worries you have is how you’re going to be paying for college for them.  College costs have been increasing wildly.  So many kids are starting out their lives with huge student loans dragging them down.  Or worse, many parents are putting their home or retirement savings at risk for paying for college.  

I really worry about that.  So when our kids were young, we determined that we were not going in that boat.  We have 3 sons, so that could have a crash and burn, it worked out pretty well for us.  We aren’t quite done, but so far, we’ve been able to pay all cash for school.  Although our that our boys are unusually far apart in age – almost a decade each.  So we had time on our side and that’s important.

paying cash for college

Start Saving Early and Remain Steady

One thing we did was to start fairly early.  Even though we had very small amounts to work with, we were very regular about our college savings plan.  I don’t think we ever set aside more than $25 a week for paying for college.  It’s only $1,300/year in actual dollars.  But when you add the power of compound interest to it, over an 18-year time span, it can grow remarkably quickly.

When our oldest was just a baby, they had a savings bond program at work.  Back then, we got paid weekly and they would take $25/week to buy a $50 savings bond.  I thought that was brilliant, so I signed up for it right away.  Then I eagerly tracked my growing stash of savings bonds every week.

Keep in mind that 30 years ago, savings bond rates were a lot higher.  You’d probably need to find something better now, like a T-bill or an educational Roth account.  By the time that job ended two years later, I had over $2,000 in savings bonds.  Fortunately, I shoved them in a drawer and mostly forgot about them for a decade.  By the time our son was ready for college, they were valued at over $10,000.  Sweet!

He ended up choosing to go to a trade school rather than traditional college.  He was also able to get some grants and scholarships.  So we only ended up out of pocket by about $4,000 for his education, and we were able to easily cover that.  #1 was through his schooling debt-free and off to his career.

We also were saving up another $25/week in a more traditional savings program for our second son who was about 10 at the time.  That’s the key:

  • Start thinking about paying for college as early as you can.  Resolve to avoid the student loan trap if at all possible.
  • Save what you can – even if it’s only $25 a week.  Even on a tight budget, that is do-able.
  • Set up an automated savings program that you don’t have to think about.  Remember those savings bonds in the drawer.  If they hadn’t been such a hassle to cash, we might have been tempted to use them when things got hard.  But we never touched them.
  • Find a good investment plan that will pay decent interest in the long term with minimal risk.

Make Smart Choices in College Programs

I think another part of the equation is finding with affordable college options.  We all have that dream of being able to send our kids off to some ivy league school or a fancy out-of-state University.  But that’s not always realistic on an average family budget.  You need to have a frank talk with your High Schooler about a few different things.

  • Be realistic about what is or isn’t possible on your family’s budget.  My youngest son wanted to be a Forensic Pathologist.  It would’ve required 13 years of school – college, plus medical school and specialized training.  It’s great to dream big, but in this case, a big dose of reality was needed.  Kids do not get to choose any career that suits their fancy, regardless of the amount of money it will take to achieve.  Not to mention that his so-so grades and lackluster study habits weren’t medical school material.  So, we talked him into a more affordable medical technician program.
  • College is a massive investment – be smart about it.  In order for me to sign off on something that expensive, there’d better be a BIG pot of gold at the end of that rainbow.  You want to study French Literature, Basket Weaving, Acting, Latin, Greek, or Russian.  Do it on your own dime.  These are great hobbies and pastimes.  But if I’m footing the bill for a pricey education, it had better be something that has an actual JOB attached to it!
  • Take the time to pick the RIGHT field of study.  I don’t know how many adults I know that have an expensive degree, but are doing a job in a completely different field.  Again, what a huge waste of time, effort, and money.  Take the time to help your child research different options carefully to find out if the job they think they want is actually going to be a good fit for them.  Make them do some research – do job shadows, some internships, or some part-time jobs in the summer before you will sign off on their course of study.
  • Be open-minded to ALL options.  That college degree from a “brand name” institution is definitely the gold key, but you know what – with some smarts, hard work and ambition – the silver key, the bronze key, and the brass key can all lead to the same place.  My two oldest boys opted for trade school programs and are doing very well in their careers. Only my youngest son opted for college, but he is starting with community college and a relatively affordable state school.  Also, both of my younger boys had the benefit of High School tech programs that were completely FREE.  Both of them graduated High School with their certification in basic medical assisting programs.  That’s a pretty good way to start out and they were able to build up from there.
  • Set them up for success.  It is heart-breaking to see a kid who drops out or doesn’t complete a program, and it’s a boatload of money going down the toilet.  My friend had her son blow-off his scholarship and drop out in the last semester of a four-year $40,000 dollar program.  That was awful.  Kids this age are still KIDS.  They need a certain amount of independence, but you can’t just send them off to sink or swim.  Keep the lines of communication open.  Schedule monthly or quarterly discussions about their school performance and their overall mental outlook.  Are they getting burnt out, partying too much, and are they fully invested in making the most of their opportunity.  Make sure they are keeping on top of their paperwork and other requirements.  Trust but verify is my motto.

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Don’t Forget about Scholarships

Scholarships are critical to a loan-free college experience.  You really can’t spend too much time applying for scholarships or grants and there are a lot of them out there.  We are still working the scholarship angle for #3 son – those lackluster grades in High School are not helping.  Especially since we can’t demonstrate much in terms of financial need – although we both work about 60 hours a week to keep on top of everything and our son works too.

But so far, we’ve been able to pay for the first two semesters tuition, books, bus pass, and meal plan, all in cash from our college savings.  And we have enough saved up for at least two more years of state school.  Hopefully, by then some scholarship money will show up, and we’re still saving our faithful $25 a week.

We definitely do it on the cheap – rented textbooks, no fancy laptop – we bought him a used Surface at the local pawn shop for $100 bucks.  He’s saving for a car, but so far, the bus pass is getting a pretty good workout.  School lunches are pretty cheap, but there’s a Del Taco right across the street with coupons it’s quite a bargain.

Watch Out for the Marketing

It’s interesting to see how many offers we get in the mail and Email for college “aid” (which is a nice way of saying LOAN).  One college actually “admitted” him to their program with a paltry $200 scholarship (bribe) even though we had never stepped a toe on their campus.  These programs are money makers – each student can generate tens of thousands of dollars in profits.  And Mom and Dad are a nice juicy target for their marketing plans.  They do want to educate your child, but there definitely is a profit motive that you need to be aware of.


So, it will take some planning, some seriously fueled savings, and a bit of strategy.  But you are paying for college on your own, both you and your child will be SO much better off.  Even if you can only swing a year or two, you’ll be better off than people who just automatically sign up for the student loans.

Sidebar:  I had an interesting realization as I was writing this post.  I was looking at the three generations of my family – my parents, my husband, my sister and I, and all of our now-adult children.  We have the full gamut of educational backgrounds – my father had a University degree, my Mom and I had an incomplete college education, my sister and several of the kids had some kind of trade school programs, and many of us only have High School diplomas.

But surprisingly, regardless of our educational background, we’ve all been pretty successful.  It’s hard to admit, but I think most of us have been MORE successful than my University-educated father, who as a well-educated while male in the 60’s, had the full benefit of the good ol’ boys network.

College isn’t everything – sometimes creativity, hard work, and a good dose of ambition can be more helpful than a piece of paper.

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  1. Good points in the final comments.
    An education is only what you make of it. It can be a waste of money pretty much like anything else. It might help you get your foot in the door, but if we don’t step up and work hard, care about our work and the people we interact with and show passion for our job, we won’t succeed. College or any higher level education isn’t the holy grail to get us rich and happy like it is sometimes made out to be.

    1. I think you’re absolutely right! It’s like the elderly couple next door – they spent more than $30,000 on a brand new state-of-the-art travel trailer. But it hasn’t moved from their driveway in two years and now they are in such poor health, they probably can’t use it. Just because you spent a boatload of money on something, doesn’t mean you’ll get that amount of benefit from it. You have to be strategic and smart about it and sometimes the best decision is just not to do it.

  2. My wife and I contribute $170 every two weeks to my son’s college fund. In the state of Virginia we are allowed to deduct up to $4,000 a year on our state taxes. So we figured we’d take advantage of the tax deduction while we can. Hopefully with compound interest that it will more than cover school and if not I hope that he can get some scholarships or grants.

    1. That is SO smart! Just think of how far ahead you will be than those poor parents who just sign up for huge student loans without even thinking. Good for you – your son should be thanking you.

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