Episode 126 - Big Picture: How to Pay for College (Even if you didn't save enough)

Most families don’t have a perfect college savings plan—but that doesn’t mean debt is the only option. In this episode, we break down how to figure out what you can actually afford and build a plan to pay for college without student loans. If you want clarity, better decisions, and a path forward, this episode is for you. 

Transcript

Welcome to Catholic Money Talk, where we talk about all things money and finance, and we try to do it through a lens of being Catholic, where our ultimate goal is to one day be in Heaven with the Lord. I am your host, Paul Scarfone. Thank you for being here today.

Before we get started, let’s say a prayer.

In the name of the Father, and of the Son, and of the Holy Spirit, Amen.

Heavenly Father, we thank You for this day. We thank You for all the ways that You love and bless us. Lord, we know that You have a plan for our lives, and that includes how we use our money, how we make decisions, and how we care for our families. We ask You for wisdom today. Help us to think clearly, to plan well, and to trust You in all things. We ask this in Jesus’ name, Amen.

In the name of the Father, Son, Holy Spirit, Amen.

“This is part of a series I’ve been building called BIG Picture—where we step back and look at the biggest financial decisions in life, and how to approach them the right way.”

“I actually did an episode last year breaking down college costs and some real numbers… if you haven’t listened to that one, go back and check it out. Episode 86.  Today, I want to build on that and show you how to actually make a plan.”

Today we’re talking about something that a lot of families deal with and right now, this is the time of year when families start facing this head on. And believe me, it can be stressful and challenging.

How do we pay for college… especially if we haven’t saved a ton?

Maybe you’ve got a junior or senior in high school. Maybe you’re starting to look at schools. Maybe you’re seeing the price tags and thinking, “Wait a second… how is this even possible?” I hope you are looking at price tags!

But before we get into the cost and how to pay. I point out something that is very important to understand. Especially if you are working with your first child, your oldest. If this is something you are dealing with the first time. 

There is already enough stress and emotion tied into your baby is becoming an adult. It is ok to feel emotions about this. It is totally a natural to have some fear and concern of the unknown. But whatever the fears and unkowns are, what ever the level of stress or anxiety this new moment is causing, do not let it be an excuse to do something stupid, or maybe not stupid, just something unwise. Don’t make a quick or a slow irrational decision here. Just acknowledge the fear or concern for the season of life that it is, take it to prayer and make a good solid decision with your spouse and include your teen. They might have some of the same excitement as you, or maybe they are in the opposite emotions, Joy, excitement, sense of adventure, you need to help them understand that emotions, although well and good many times, are never the reason to make a decision. Particularly one with such large ramifications as Life after Highschool.

That goes for the good emotions and the bad emotions; we can’t let them drive our decisions. In 2nd Corinthians, Paul tells us to “take every thought captive in obedience to Christ.” That means that we need to take all these thoughts, all these emotions, and ask the Lord what He wants. 

“That means just because you feel something… doesn’t mean you follow it.

Especially when it comes to big decisions like this.”

And that is the main key to all of this. We need to set aside our dreams and fears, and surrender them to the Lord and ask him, Lord, what do you want of me. Recall an episode from this fall, I had Decaon Art on my podcast, and we discussed his daily prayer, “Lord, what are we going to do today?” That is the prayer we want, that is the prayer to teach our children, “Lord, what do you want of me? How do you want me to serve you and your church with my life?”

That is the question we are constantly asking the Lord; we should be constantly asking him. We need to take that approach in all of our decision making, and figuring out life after highschool, whether it be college, a trade school, or other specific career training, maybe it is to go right into the work force, or take a year to do mission and serve, we must ask the Lord, what is he calling us to…..

Now, if we feel the Lord, and our child feels the Lord calling to do something specific, then we need to build a plan to go pursue that. That is what we are going to talk about today. I am going to reference college, but that could be anything like I mentioned above, maybe it is a trade school, maybe they want to go serve on a mission and need to fundraise, whatever they are facing, there will be a need to create and execute a plan to follow the prompting of the Lord. 

And I want to start here. How do we pay for what is next? Again, I will focus on my college example, but other post-high school education(trade, profession, or otherwise can be included here)

“If you haven’t saved enough… You are not out of options.

But you are out of the luxury of ignoring the math.”

But—and this is important—you are out of the luxury of ignoring the math. That goes for all of us, we can’t ignore the math. 

That’s really what this comes down to.

This is not just a dream conversation. This is not just “where do you want to go?” This is a math problem. This is a decision-making problem. This is a planning problem.

And the families that do this well… they don’t avoid the numbers. They lean into them.

Most people start with the wrong question.

They ask, “How do we pay for college?”

But I think the better question is this:

What can we actually afford… without going into debt?

Because here’s the reality. If you don’t answer that question upfront, the default answer becomes student loans.

And I’ll just say it plainly—student loans are not a blessing. They are a burden. People want them gone. Entire political campaigns are built around forgiving them. That should tell you everything you need to know.

So instead of backing into debt, we want to build a plan that avoids it.

Let’s talk about cost for a minute, because this is where things start to get real.

College is expensive. We all know that.

But what people don’t always realize is how wide the range is.

You could be looking at $15,000 to $25,000 a year for an in-state school.

Private schools? Now you’re talking $30,000, $50,000, even $70,000 a year.

And then there’s one decision that can swing the numbers dramatically.

Living at home… or living on campus.

That one decision could be $10,000 to $15,000 per year.

Not total. Per year.

So right off the bat, you’re not just choosing a school—you’re choosing a lifestyle. And that lifestyle has a price tag attached to it.

Now, here’s how I like to simplify this, because when you start looking at spreadsheets, it can get overwhelming quickly.

There are really only five ways to pay for college.

That’s it.

Five buckets.

Number one, savings. Money that you’ve already set aside.

Number two, income. The student working—summer jobs, part-time work.

Number three, parents contributing.

Number four, free money. Scholarships, grants, and financial aid.

And number five… debt.

And if the first four don’t cover the cost, the fifth one fills the gap.

That’s just how it works.

So what we’re trying to do is maximize the first four… so we can eliminate the fifth.

Let me walk you through an example. I did this with a group of students recently, and it’s helpful because it puts real numbers to this.

Let’s say we have a student—we’ll call him Marcus.

Marcus is planning to go to Rutgers. His tuition and fees are about $18,000 a year. He’s living at home. His monthly expenses are about $700.(now his monthly expenses are his car, gas, phone, some food, personal expenses, maybe he contributes a few dollars to his parents for living at home) Regardless, his monthly expenses, not including the school costs, are $700 per month. 

He’s got a job making about $17 an hour. He works full-time in the summer, part-time during the school year. So that’s his income: 40 hours per week in the summer, let’s say 20 hours per week during school. 

He’s got some help towards paying for college; he is getting $2,000 a year from his parents. He’s got scholarships—$4,000 a year. Some additional aid—$3,000 a year.

So we’ve got income, we’ve got help, we’ve got free money. We’ve got all the pieces.

Now we run the numbers.

Over four years, working consistently, Marcus can earn about $60,000. That is total, all in, 40 hours a week for 3 months each year, 20 hours a week for the other 9 months. This is his calculated take-home pay. $15,000 per year for 4 years. Total of $60,000

But he also has life expenses. That $700 a month? That adds up. Over four years, that’s about $33,600 just to live.

So now his available money drops. Let's do the math. I know doing math on a podcast is not easy to follow, but let me walk through it slowly.

We calculated all the money he would make, that is $60,000, we then subtract his anticipated living expenses, which total was $33,600, let’s call it $34,000, he has the difference, $60 minus $34 is $26. He has $26,000 total over 4 years to pay for school.

But that is not all, we mentioned he is getting some help.

Now we layer in the help. Parents, scholarships, aid: $2,000 a year from his parents. He’s got scholarships—$4,000 a year. Some additional aid—$3,000 a year.

When you add it all together, $2,000 + $4,000 + $3,000, that is $9,000, and that was per year. So let’s multiply it by 4. That is a total of $36,000

So we add up the $26,000 he has left from working less his living expenses, we add the help he is receiving from parents, scholarships, and other aid, we add that $36,000, and Marcus has a total of $62,000 to pay for all 4 years of school. 

He’s close. The total of school for 4 years, at $18,000 per year, is $72,000. So he is close, 

But not quite there.

At the end of four years… he’s short about $10,000.  Right, we figured he had, between what he earned, less his living expenses, plus the help he was getting, he would have a total of $62,000 available to pay for school, and the total 4-year cost is looking like $72,000. So he is $10,000 short.

That’s the moment. This…this is where most families either panic… or borrow.

But that’s not the only option.

Now we start asking better questions.

How do we close that gap?

Can he earn more? Maybe he gets a better job, makes $20 an hour instead of $17.

Can he work more hours?

Can he reduce expenses? Maybe that $700 budget becomes $650.

Can he find more scholarships?

Can he start with some savings?

All of a sudden, that $10,000 gap starts shrinking.

And two big points here ***this is why it is crucial to begin to look at this before you're looking at schools. The earlier you look at this, the better, it gives you more time!!**** and the other big point is don’t just look at this year, one year at a time…look at it as a whole. All four years, or for the entire program if it is not a 4-year degree, you are looking at, maybe it is trade school or a 5-year master’s program. Look at the whole thing. Stephen Covey, in his book, 7 Habits of Highly Effective People. He says, “Begin with the end in mind” - LOOK AT THE BIG PICTURE!.

So we look, or rather, Marcus and his parents look, and he is going to be $10,000 short. 

And here’s what’s powerful about this.

Small changes make a big difference.

An extra $100 a month… over time… changes the outcome.

An extra few hours of work per week… changes the outcome.

One more scholarship… changes the outcome.

Now let’s flip one variable.

Same student. Same school.

But now he decides to live on campus.

That adds about $13,000 per year.

Now the gap isn’t $10,000.

Now it’s over $60,000.

Same kid.

Same school.

One lifestyle decision… completely changes the financial outcome.

That’s why this matters.

Let me bring this a little closer to home.

We’ve been walking through this in our own house. It started years and years ago when we paid of our consumer debt and then began to save a little every month for college. WE spoke with my son Josh years ago and told him we could probably cover the cost of county college for him for two years with what we were saving. If he wanted to go to a 4 years school, he’d either have to pay or find the difference between scholarships, work study, or maybe an employer tuition reimbursement program. 

He chose to attend a NJ county college. He knew he had to work and save if he was going to go to school beyond his associate's degree. 

Fast forward to today. We have been able to pay his $6,500 per year(yes, that is per year for a county college in NJ) for his associate's degree. He will graduate next month.

He has decided that he wants to attend trade school; he was thinking electrical, but after he had done some research is leaning towards plumbing. So he would like to attend plumbing trade school in the fall. We went and visited the school, and he likes it. He knows a graduate from there who is doing well as a plumber, and his best buddy will graduate from the same school next month as an electrician.

So over the last several years and now the most recent months, we have walked through this same type of planning.

He’s been working. He’s been saving. Trade school is going to cost about $24,000. I told him we could help him with some of that, and he has already saved almost $20,000. And, and this is big, he still has all of this summer to work before school starts. So, he should easily save another $1,500 per month to give him a little over $25,000 in savings before school starts. 

That means when he graduates in a year, he will have an associate's degree, plus an employable skill as a plumber, and no student loan debt. This is huge, a game-changer for a 20-year-old. 

That didn’t happen by accident.

That happened because we had a plan.

We had conversations.

We made decisions early.

And here’s the thing—I want to be really clear about this.

The goal is not college.

The goal is a life.

The goal is to be able to step into your vocation, to provide, to build, to live without being buried under debt.

For some people, that’s a four-year degree.

For others, it’s trade school.

And trade school can be an incredible path. Lower cost, shorter timeline, strong income potential.

But again—it only works if you plan it.

Here’s the hard truth.

You might not be able to afford your dream school.

At least not without debt.

And that’s not failure.

That’s clarity.

And clarity is a gift.

Because once you have clarity, you can make decisions.

You can choose a different school.

You can choose to live at home.

You can choose to work more.

You can choose a different path entirely.

But you’re choosing from a place of truth… not assumption.

And I’ll leave you with this.

Creating the plan… that’s about 20% of this.

Executing it… That’s the other 80%.

That’s the hard part.

Working the job.

Saying no to spending.

Applying for scholarships.

Having the conversations as a family.

Making the sacrifices.

But it’s worth it.

Because you’re not just paying for school.

You’re building discipline.

You’re building ownership.

You’re building a foundation for the rest of your life.

And I want to call back to this important point. I haven’t mentioned it here, but I bring it up regularly with couples when I am coaching them and students when I am teaching them in high school. 

Imagine if you were 25 years old, and you started investing $100 per week. And you did that from age 25 to 55. 30 years, you would have over $1 Million in your savings account. If you do that for 40 years, until you are 65, you would have $3 Million dollars in your investment account. And that is only $100 per week. 

A $100 a week is not a lot of money, but regularly I meet 30-year-olds, 40 and 50 years old, 60 year olds, who are nowhere close to that. I have only met a small handful of people in all the 100s and 100s of people that I talk to, who are on that track. Why? Because they never did that. They never developed the discipline to do that. Other things got in the way, for many of them, student loans, for others, it is just the lack of planning, not having a goal, or just pure lack of discipline telling themselves no to certain things so that they could save.

And why do we save, invest, and build wealth? Is it for us? For our benefit, so we can sit back and “take it easy,” no. It is to give and to serve others. 

What could your legacy of generosity be if you had developed a good plan for yourself when you were graduating high school? What could your student’s legacy of generosity be if you teach your student to develop and execute a plan to put themselves in a place to be able to serve God and his church?

So here’s my encouragement.

Sit down as a family.

Run the numbers.

Be honest.

Start with the end in mind.

If the goal is to graduate without debt… then build a plan that supports that.

Because it’s possible.

Not easy.

But possible.

Thank you for being here today. If this was helpful, share it with someone who needs it—a parent, a student, a family that’s starting this process.

And again, this is part of my BIG PICTURE series, which I am weaving through my episodes. “If you haven’t listened to the others in this series—car buying, marriage, and money—go back and check those out.” Just search BIG picture in my episode list, and they will all jump out. 

So as I said. Thank you for listening. I hope this was helpful. And as always, remember—our ultimate goal is not just financial success.

It’s to be in Heaven with the Lord.

God bless you.