C (1:29)

Only we're probably at 10, not very much.

A (1:33)

That's great.

C (1:33)

But I know they have scholarships. This is what I'm learning from teaching. They have scholarships for his age?

E (1:39)

Yeah.

A (1:40)

10 year olds can get scholarships.

C (1:41)

I want a meeting last week for like 4h. They said he can start working on scholarships already.

A (1:46)

How much student loan debt do you guys have together?

B (1:49)

Well, about $50,000.

A (1:51)

So you want different for your daughter?

B (1:53)

Yes, definitely. All three of my kids. I would love to be debt free when they get out of college.

A (1:58)

How do you plan on doing that? Lots of scholarships, we hope and just working hard. You've all the student loan debt and you're like, it's not going to be the same for you. Absolutely.

B (2:07)

She knows, she's like, okay, we're not.

A (2:10)

Going to do that.

B (2:10)

We're going to get scholarships and we're.

A (2:12)

Going to go somewhere where wherever you're.

C (2:14)

Majoring in and somewhere where it's cheap.

A (2:16)

Sounds like you Guys are going to stop the cycle of debt?

B (2:18)

Absolutely.

A (2:19)

How old are you? Eight. Eight years old. Do you plan on going to college debt free? Yes. How do you plan on doing that? Well, I've already got almost $1,000 saved.

C (2:29)

Up to go to college.

A (2:32)

You're eight years old and you have $1,000 saved for college?

C (2:36)

Yes.

A (2:36)

You are doing better than most Americans in this country. Do you know that?

B (2:40)

Yes.

A (2:41)

How does it feel?

B (2:42)

Pretty good.

A (2:44)

No matter how much you've saved or haven't saved, you need a plan for how you're going to graduate from college debt free. Over the last six episodes, we've taken a look at the $1.6 trillion student loan crisis and how we got here. It didn't happen overnight. It happened dollar after borrowed dollar with insane interest rates that compounded over time. Behind all of the sobering stats, we've heard stories from real people struggling to pay back their student loans. We've also learned how we've been duped into believing that taking out loans for school is good debt. The role that parents play in college decisions, why famous colleges are hurting the economy. And we expose the dark underbelly of the student loan industry. It's clear that when you borrow money in the form of student loans, you borrow against your future. And if this cycle doesn't change and change fast, more lives will continue to be delayed and the economic bubble will eventually burst. From Ramsey Network, I'm George Camel and this is Borrowed Future, a podcast series exploring the $1.6 trillion student loan debt crisis and the impact it's having on real people. In this episode, we'll explore how to fix the problem by avoiding student loans in the first place. Guiding us through this mess is Anthony o', Neill, author of the best selling book Debt Free Degree. Anthony's plan for a debt free degree isn't rocket science, but it does require sacrifice and determination.

C (4:16)

So today I want to walk through the six steps on how you can go to college 100% debt free. And the very first one is the most crucial of them all. Number one is you have to take debt off the table. I'm talking about before you go to college, while you're in college and even after college. We're not touching student loans, loans, we're not touching credit cards, we're not financing cars, we're not financing anything. Debt is completely removed. The number one thing we have to decide today, right now, at whatever stage of life you're in, if you're thinking about going to college, if you're in college, or if you've graduated, that debt is no longer an option. If I'm in college and I have student loans, okay, I'm not taking out any more student loans, debt cannot be an option. So once we decide that debt is no longer an option, one of the biggest reasons why people fail in life is because they do not have a vision. Number two is have a vision. There's a proverb that says that where there is no vision, that's where people perish. I want you to step back and I want you to think about and write down what are some of your goals in life? What do you want to do for a career? Where do you see yourself in the next 10 years? Where do you see yourself in the next four years? Where do you see yourself in the next 20 years? Now, I'm not asking you to have it all together, but I am asking you to have a plan. If you're saying, I want to graduate debt free, if you're saying, hey, I want to be a doctor, I want to be a lawyer, you got to have a vision. Because when you have a vision, that's when you really become successful. But up underneath vision, you gotta have daily habits that will help you accomplish the vision. Get a clear vision for where you're going. And number three, Number three is research and prep. A successful way to accomplish your dreams and your goals is to do the research and prep. And when I say research, what I want you to do is research three to five schools that you can go to that will be affordable, and affordable will be schools you can pay for debt free. This is gonna be via scholarships, grants, working, savings from parents, you name it. And while you're researching, I want you to do the prep. I want you to find out what classes do they require to get into this school. What do I need to be doing in high school? How many volunteer hours should I have? I want you prepping for everything. What tests do they require, ACT or satisfaction. So a clear way to be successful, a clear way to accomplish your vision, your dreams, is to do the research and prep early on. And number four is decision day. Now, while you're doing all this research and while you're doing all this planning, you're gonna write down the day that you're gonna pick the school that you can go to. Decision day means I pick an affordable school that I can pay for via grants, scholarships, savings, work, you name it. You are avoiding debt. So you need to have a decision day. On this day, I'm choosing this school. This is the school I'M going to. You cannot get lazy here. You may not be an athlete, you may not be one of the top basketball players or football players in the world, but you know what? You are still an important human being and you need to have a decision day. When you choose the affordable school and say, I'm going to such and such school and I'm proud of it because I'm going 100% debt free. That's a part of your vision, inside of your vision. On this day, I'm choosing this school. This is the decision day. Number five is work, save and behave. You're going to go to class, you're going to live on a budget while you're in school and you're going to stay out of trouble. Make sure you work 10 to 19 hours every single day, week. Make sure that you're looking for ways to save in school, looking for ways to save on the book. Or maybe not get the most expensive cafeteria plan and you're eating at home. Maybe you're not living in a dorm room or college apartment and you're staying at home and you're behaving. When you walk onto the college campus, you're a young man or woman with character and integrity. You gotta work, save and behave. After you do all that, after you've taken debt off the table, you've created a clear vision for your life. You've done the research and you've prepped, you've picked the school, you're going to go to decision day. And once you got into that school, you worked, you saved and you behaved. Number six, you're walking the stage debt free. And when you walk this stage debt free, I want you to walk with a bold walk. I want you to walk with a proud walk. I want you to walk saying, I did it when America said I couldn't do it. Yes, it may have took me five years. Yes, I may have had some long nights. Yes, I may have felt like giving up, but I did it. And I didn't just graduate, I graduated debt free. And when you get that degree and when you get into that career field and you're debt free, I want you to stay debt free. Don't touch a credit card. Don't finance a car. Do not be tempted, stay free. Because here is when you build wealth and you give. Here is when you become weird and not normal. Here is when you have freedom.

A (10:05)

The plan Anthony just shared may feel overwhelming, but it can absolutely be done if you're willing to put in the work. It's not the easy route. But it's better than the alternative of struggling with student loan payments after graduation. We've already talked about the first two steps of going to college debt free in this series. The importance of taking debt off the table and creating a plan and vision for your future. Today we're going to focus on steps three and four, research and prep and choosing an affordable school. Here's author and financial expert Rachel Cruz on where students are going wrong when it comes to these steps.

B (10:41)

I think the number one mistake students make when it comes to college is college choice. So many students are in student loan debt because they're simply going to a school they cannot afford. They step over a state line, pay twice as much, or go to some private university that they just, they don't have the money for. And so being able to choose a school that you can afford puts you on a level playing field where you get to say, okay, here's what I can afford, here's where I can graduate and get a degree and not be in a financial hole. And that means for a lot of students, community college, maybe online classes, or staying in state to a public university.

A (11:15)

Going to an affordable school doesn't always mean choosing the lowest price college. For some students who receive great scholarships or have savings from parents, an expensive private or out of state college could be a viable option. The biggest factor is figuring out where you can get accepted and attend without going into debt. But no matter what college you get accepted to, best selling author and entrepreneur Seth Godin has an important reminder.

C (11:40)

What college should I go to? So I have spent a lot of time counseling 17 year olds.

E (11:44)

Here's the first question. You get into a state school, you.

C (11:47)

Get into a famous school.

E (11:49)

The difference in price between them is $30,000 a year. Four years, $120,000.

C (11:55)

Here's what we know. I used to work in the admissions office. 20, 30, 40% of the people who apply get into a famous college. At some colleges, even less of the people who are admitted, there's three times that many who were good enough to get in, but there just weren't enough slots. It's random. The last step is random. And that's what it should say.

E (12:17)

In the letter where you get rejected from school, there should be two letters.

C (12:21)

Letter number one, thank you for applying to Swarthmore. You were accepted into the final group. We're going to have a random drawing tomorrow. We'll let you know if you got in. Because when letter two shows up and says, we had the random drawing and you didn't get Picked at least you know what that means. But instead they pretend that some magical supercomputer figured out that you were worthy and she wasn't. We need to completely destroy that notion. This is not about worthiness. They don't know you at all. They're going to spend less than five minutes looking at a couple numbers and a couple letters and then they're going.

E (12:53)

To make a decision. They don't know you.

C (12:55)

Getting in means nothing. Getting rejected means nothing about you. So given that it's not validation of you, what is it? It's just a door that opened or didn't. So go find a door you can afford and go game the system and go through that door and figure out how to marshal the resources you need.

E (13:15)

Whether it's scholarships or financial aid, or.

C (13:18)

Only going part time or taking a.

E (13:20)

Gap year and working like crazy to put $25,000 in the bank.

C (13:24)

So at least your first year you're not starting with free and easy money.

E (13:28)

You're going to be paying off for decades.

C (13:30)

And it's a shame, we have to say in this super rich country to.

E (13:34)

A 17 year old that's what you have to do.

C (13:37)

But that's the system. That's where we are.

E (13:39)

If you don't like the system, vote for somebody else. But that's the system.

C (13:43)

And if that's the system, you don't have to be a victim.

A (13:46)

Your college choice should be guided by the reality of your financial situation. Here's Dave Ramsey, financial expert and host of the Dave Ramsey show on how to choose the right school.

F (13:57)

I'm convinced that most of the mistakes around college are simply college choice. It's simple, it's the child wants to go somewhere. No one says no. The government doesn't say no, they will give you the money. The university won't say no, they will take your money. The parent doesn't say no. Because God forbid we actually told an 18 year old what to do. We just, we're giving these people no guidance at all and it's ridiculous. And so the problem is is that they just plow straight out there and make these ridiculous series of decisions where to go to school. So if you don't have the money to send your kid to school, it's okay, they can go to school anyway. Scholarships are part of the picture. Going and getting those work is a part of the picture. But the biggest part of the picture mathematically is choosing a school that's $12,000 a year for in state tuition instead of $62,000 a year for a private school or $12,000 a year for in state tuition instead of going just across the state line and paying 24 to $30,000 a year for almost the identical education. The only difference is you went across the state line. Now you can do any of these things you want to do as long as you have the money to pay for them. So borrowing to go to a private school versus going to an in state school in your neighborhood is ludicrous. Borrowing to go across state lines is ludicrous. You do not get enough bang for your buck to justify that it's choice. Where you go to school is a choice. And what you pay for it mathematically is the biggest problem you're facing if you want your kid to go to school. But if it's $12,000 a year, you can make $1,000 a month delivering pizzas, $1,500 a month delivering pizzas or driving for Uber. And so you can work, mom and dad can budget, everybody can work together. We can cover this tuition so you can go to college debt free. But the biggest part of the equation is college choice.

A (15:53)

Once you've done your research on affordable colleges, you have to figure out what financial aid and scholarships are available. Let me explain. To qualify for most scholarships and grants through a college, you have to fill out the Free Application for Federal Student Aid, or FAFSA for short. This is done through the Department of Education's website and the results that it spits out get sent over to your college's financial aid office. It looks at you and your family's financial situation to figure out how much you can afford to pay for college out of pocket and how much financial aid you'll be eligible for. Your college financial aid package may include need based aid, which is based on income, or merit based aid, which is based on talent, academics or athletics. One major thing you need to be careful of is that part of your financial aid package may be offering you debt in the form of federal Stafford loans, Federal plus loans, or private loans. Did you hear that word, loans? Yep. That's money you have to pay back. It's not a scholarship, it's not free money, it's debt. The financial aid process can be super confusing. So to help us understand it, I talked to Brent Tenner, financial aid director at Vanderbilt University. So let's go back to the basics for a moment. What is financial aid and where does it come from?

D (17:11)

Financial aid is a way to help students pay for college. There's different types of financial aid. The best money, of course, is the Free money, grants and scholarships that usually do not have to be repaid. They're based upon either need or merit, depending on the school and how those funds are being awarded. Then you have loans, student and parent loans, and then you also have work. Then you can break down where does the money come from? Four different sources. Federal, state, institutional and private. Federal aid. Pretty basic free application for federal student aid that families complete. State aid. It depends on the state. They may use the Free Application for Federal Aid for state aid, institutional aid. The schools are the ones that administer those funds. And the best news, the best source of free money is available from the schools. When we talk to families about how do you search out free money? Start with the schools, because that's the biggest source. And then the last is private aid. And we hear a lot about private money that's available. You know the Chick Fil A scholarship, because you work at Chick Fil A or parents, their employer may have a scholarship program. Vanderbilt's got a tuition benefit for employees. Those are private sources. And families and students can research those opportunities outside of the other sources.

A (18:36)

So how does this all work on the student side, how do they apply and what does that look like?

D (18:40)

Going through the college search process is like working on a school project. And in fact the school project though should start way early on with parents and students working through when do we apply? How should we apply? What are the sources of financial aid? The biggest challenges that the families have is trying to figure out what institutions want both from the admissions side, when do you need to have your application in? When do you need to have your transcripts in? And from the financial aid side, how do you apply for merit financial aid? How do you apply for need based financial aid? What are the deadlines? All of those things are important and we emphasize to students. Make your plan work with your family to chart out the deadlines.

A (19:21)

What are the things students need to pay attention to in order to maximize their financial aid award?

D (19:27)

Deadlines, deadlines, deadlines, deadlines. The process is not like going to the grocery store where there's an option of going back. In the college process, if you're going through, you don't have a good plan and there's something that you miss. You might be able to go back, but you may miss an opportunity. Sometimes deadlines are a good idea. Sometimes they're an absolute that if you miss that deadline, there's a lot of other people that made the deadline and so you have self selected out of that opportunity.

A (19:58)

So when it comes to awarding money to these Students, how does a college determine who they're going to give money to? If there's a certain amount of money and a certain amount of students, really.

D (20:07)

It'S going to depend upon the school as to how they're making those decisions. And I think that's one of the important pieces that families need to look at when they're going through the process is trying to figure out how are schools awarding their money? Is it based upon merit? What's meritorious at this school? If it's need based aid, the merit piece is what's going to be drastically different from school to school.

A (20:29)

There are thousands of scholarships and grants that aren't tied to a particular school. And every single year, $2.9 billion in scholarship money goes unclaimed. According to a study done by NerdWallet, $2.9 billion. A $200 scholarship or even a $2,000 scholarship might feel like a drop in the bucket when it comes to the Soari, but the truth is that every dollar adds up and makes a difference. Karen, a high school guidance counselor has a lot of experience trying to help students find this free money. So what is holding students back from applying for all these scholarships that are just free money sitting out there?

B (21:11)

Some of them say, I don't have time to complete all the application process, or, you know, I've got all this homework or I have all these sport activities and things. They're just trying to fit it in their schedule because they see it as a lot of work. I think that's part of it. Part of them may think, oh, what's the chance that I'll get this? You know, it's one in a million that I might get it. However, that's when a lot of money doesn't get used because everybody thinks that different local organizations give away money. This sounds odd, but I ran into a gentleman that was over a nursing scholarship through the Elks Lodge and he was like, please have them apply. Please have them apply. We have scholarships with the American Legion. They are begging for applicants. They have very few people that will apply. And some of it's because they have to do a speech or they have to do a competition. The Veterans of Foreign Wars VFW every year say, we don't have enough applicants. So, you know, they have money to give. It's just the ones that are just not applying, taking the time.

A (22:15)

Are there moments where you do tell these students and they just don't do it?

B (22:18)

Yes, we try to email the information. We have the remind app set up to where we Send out messages of deadlines for scholarship applications, and we post them either on our website or paper copies outside of our office for them to come and pick up. And they just don't. And sometimes it's a matter of waiting to the last minute, and then they're needing recommendation letters from teachers or other sources, and it's very last minute trying to gather all that information and get it in by the deadline. And sometimes they just don't get it in by the deadline.

A (22:56)

So if you can be candid, what are some of your bigger frustrations you have as you're talking with students?

B (23:03)

They don't think it's important at the moment. They can put it off till later in the year. And they don't realize that by November and December, if you're looking at academic scholarships, a lot of those deadlines are November and December. And it seems to get earlier and earlier every year. And schools are getting more and more competitive, so they're missing out on that money and, or just admissions because of waiting. And they think that they have more time than they really do. And then when second semester comes, it's just, fill this out, fill this out, turn this in, we need this. And time just runs out and then it's done. And decisions are being made for them based on their limited time frame that they would have had more options had they done things sooner.

A (23:55)

One of the best ways to get as many scholarships as possible is to put aside time to research and apply. Anthony o' Neil believes that is time well spent.

C (24:04)

I had a program where I was teaching young minorities and young people how to set themselves up for success. And part of that process was looking up grants and scholarships. I said, hey, listen, every single day for one hour a day, you're going to come home, you're going to finish your homework, you're going to check in with your parents, make sure all your chores and stuff are done. But before you get on social media, before you get on computer, before you get on and play games, I want you to spend at least one hour every single day looking up grants and scholarships like it's your job, like it is all that you have to do to become successful and to get into college debt free. With this one particular young lady, she took it to the extreme. Not only did she give herself an hour every single day, she sometimes doubled that to two hours. Then on the weekends, she called some of her friends over to the house and she would have a pizza party and they would all look for scholarships, all be writing essays and helping each other out to win. Well, this one young lady raised $88,000 in a matter of four years to pay for her college. She was not only able to get a full ride to that particular college because she had an academic scholarship, but she was also able to get a refund from her scholarships because she had more than enough to pay for her tuition. So when others was getting a check from student loans, she was getting a check for her hard work. Before going to school, you have to treat it like it's a job. You have to treat like, hey, if I sit here and I invest my time and I apply for 100 scholarships, here's the truth. You may only get 30, but what if those are $31,000 scholarships? That's $30,000 that you have raised to help pay for school.

A (25:43)

When it comes to setting yourself up for success with scholarships, Ryan Davis has some advice. He graduated from college debt free and now works on the Ramsey Education team to help bring financial literacy to schools across the country through a curriculum called Foundations in Personal Finance. What are some practical things that students can do to go to college debt free?

C (26:04)

Sure, just some bullet points. Make sure that you get great grades. That's within your control. Your grades, your test scores, your ACT, sat. If you can do a great job with those, then you'll have a much better opportunity to win grants and scholarships. As they look at, oftentimes they'll look at your grades and your test scores. And then just another encouragement is try to make sure that you have a well rounded resume so you're not just a brainiac, but you volunteer. And maybe you play a sport or there's an instrument or something that you're involved with that kind of makes you a more well rounded person. Volunteering at church or a lot of different things you could do to volunteer. When these grant and scholarship committees look at your resume or your application for the scholarship, they want to see a well rounded person. So aim for that. And then finally, I would just be looking for grants and scholarships at least for one hour a day.

A (26:59)

With $2.9 billion in unclaimed scholarships all over the country, you might not be looking in your own neck of the woods. I talked to a math teacher named Kyle who got his degree debt free by doing just that. So, Kyle, take us back to the early days. You're in high school. What's the conversations like at home? How are you deciding where to go to college?

D (27:21)

The ACT played a big part in my decision on where to go to college. I think I was stuck at like a 23 is what I got on it. And I just took it the first time, just to take it the second time. I did all the studying. I did test prep or something. And after that I was like, oh, my score's for sure going to go up. And I got a 23 again. And I think the threshold is about 25 is what you need on the act to really get the big money. So I decided, well, you know, I'll take it one more time and maybe there'll be a college that accepts the score somewhere else. And I didn't study at all the third time. I just took it and I got a 26. So I called UNL. I said, is there any way you have any scholarship money available still? And they said, no, we're sorry. We just due through the October test date. And I called Wayne State, this other college where my dad went, and they said, well, we do, but the scholarship application is due on Friday. And this was on a Wednesday. And so I worked my tail off and I got this big old essay written, filled out all the boxes, checked, everything that needed checked, and I got it postmarked in the mail by Friday. A couple weeks later, I get a notification saying that I got a full tuition scholarship to go to Wayne State College. And so that obviously was a deciding factor of where I was going to go.

A (28:34)

Wow. So you went from having almost no.

D (28:38)

Money in scholarships to a full ride, Full tuition, yes.

A (28:42)

That's amazing. And that's largely due to your resilience and taking the act?

D (28:48)

Apparently. Yeah. I took it that one last time, and that's what did it.

A (28:51)

Wow. So tell me about the scholarship application process. What made you want to search those out?

D (28:57)

Yeah, great question. So I knew that getting scholarships is what you got to do if you hope to pay for college and if you want to avoid these student loans. And I didn't know a whole lot about student loans, but I did know that I was going to go to college debt free, otherwise it wasn't an option. That's just the way I was raised to be a good steward of my money. And so I sought those out my senior year, and I was looking for the big ones, like the full tuition scholarships, but at the same time, I was applying for these little $250 scholarships here and there. There was one that all the teachers in my school could wear jeans on Fridays, and they paid $10 at the beginning of the year. And that ended up being, like I said, about 250, that they chose one student at the end of the year. And that was me. So there's some of those some thousand dollar scholarships here and there that I applied for that were local.

A (29:42)

Let me go back to that scholarship because that's amazing. So the teachers, as the school year starts, they pay $10 in order to wear jeans every Friday. And that $10 adds up to a $250 scholarship that you applied for?

D (29:56)

Yeah, sure. I mean there's, it was a super small school. I was one of 26 in my class. There's only about 25 teachers and they each pay 10 bucks. They give all the proceeds to one lucky senior that they choose that they think is deserving of a $250 scholarship.

A (30:09)

That's amazing. So why were you deserving out of all the students?

D (30:14)

That's a great question. I was a decent student and I had a pretty good work ethic in the high school classroom.

A (30:21)

So did they have a name for this scholarship?

D (30:23)

I think it was literally the Gene Scholarship. I love that. Very simple.

A (30:29)

Okay, so you got, you got the.

D (30:30)

Genes scholarship, I got the Gene Scholarship.

A (30:33)

So what are some other scholarships that you applied for and actually got?

D (30:36)

I think there was one that was like a Circle K1, a Rotary Club one. Some of those were a little bit bigger than others. I think one ended up being like a $2,500 scholarship. I think one was like 1,000. But you have to remember that being debt free, going to this college I went to, it's only about $12,000. So that first year, after you take away the tuition part, which was 6,16,000 over the four years, so 4,000 for one year, there wasn't a whole lot left to pay for when those local scholarships knocked it off. And I think that first year that scholarships did pay for all of it.

A (31:10)

Getting a few thousand dollars in scholarships is great. Getting a few hundred thousand dollars in scholarships is really great. If you think that's a pipe dream, meet Christina. She managed to score $500,000 in scholarships. You heard me right, a half a million dollars, which completely covered her Dr. School for both undergrad and a master's degree. Here's how she did it.

B (31:34)

The first day of my freshman year of high school, my mom sat me down and she basically said, Christina, I love you and I believe in you, but there is just no way that I can support you financially once you graduate from high school. So you've got to figure out your own way to pay for college. It was hard to choke down that day. I was like, I'm a freshman in high school, what can I do about It. But the same time I knew she was trying to help and just be real with me and honest about our situation. My dad passed away after a long and painful battle with brain cancer. And my mom did the best she could to support me and my brother, but unfortunately we still really struggled and she just knew that there was just no way she could afford the crazy tuition rate. So we started researching scholarships and trying to figure out a strategy for how I could stand out in the process. I just hustled throughout high school and did the best I could to build a strong resume that would stand out in the application process. I took up leadership roles, I volunteered, I created different opportunities to stand out from the crowd and just went for it. Just did everything I possibly could. And then senior year came around and I treated it basically like a part time job. I started looking for scholarships every night. It was a discipline. My mom would often go to the library with me and we would stay up late at night digging through scholarship databases, trying to figure out which scholarships would be the most worthwhile to apply for. And once we had like a really good targeted list, I started the application process. So there are millions of scholarships given away every year. You obviously cannot apply for all of them. So it's important to take the time to figure out which scholarships fit you best. And this is a spot where parents can really help their students navigate the process. It's a really time consuming part that, you know, they can get in the ring with them and go through the databases. I spent hours combing over essays and getting feedback on the essays and trying to figure out how to craft the best application. And then I submitted the applications and anxiously waited, hoping it would all work out. And thankfully, I was able to win over half a million dollars in scholarships and go to my dream school, Vanderbilt University, completely debt free. Thankfully, my mom started talking to me freshman year and started that conversation so early that I don't even think I realized that there were student loans at that point. Like, I thought that if you wanted to go to a college that cost $50,000, you either had to have $50,000 or you didn't go to the school. So I think having that dialogue from my mom so early on really helped me avoid the student loan issue before it even became an issue, because I didn't really know that they were going to be available to me. She realized that what she couldn't give us in money, in professional capacity, she knew that she could give us some support and love and encouragement. One of the great things about applying for Scholarships is once you go for a few big scholarships, you have great application materials that you can recycle. So it's not like for every single scholarship, you have to write a brand new essay and you're putting in all the work each time. I submitted a few really big scholarship applications, one of my applications had eight different essays. And it was challenging to do that application and to do it well. But once I had completed that application, I had eight essays. One of those essays would fit almost every scholarship I applied for after that. So I put a ton of effort into that first application. I had about seven teachers or mentors review every single essay on that application. So I went to one teacher and I'd be like, can you look at this essay? And they would give me feedback. And I take the feedback, I'd correct it, try to make it stronger. And then once it was stronger, I would take it to the next teacher. They would give me feedback, I'd make it stronger. And I just kept repeating that process until I had super strong essays. And then once I had those really strong essays, those are the ones that I use to recycle over and over again for different scholarships. So the process gets a lot easier as you go along.

A (35:15)

Students aren't the only ones who need to plan ahead for their future. Parents are putting themselves in a financial bind when they're trying to save for college while dealing with their own debt. Here's Anthony with a message for parents who want to help their kids go to college.

C (35:29)

So if you're a parent right now, you have this heart, this passion, if you want to help your kids get into college, you know, I want to say this up front. You have a great heart, and thank you so much for even being just a solid parent. Because there are certain parents out there who do not care what their child is going to do, who do not care to even have a heart to help them. But for those listening to me right now saying, Anthony, I'm not in the best situation, but I want to help my kids get in the best situation. The best way you can help your kids right now is not cashing in your 401ks or completely draining out your savings. The best way you can help your kid, especially for their future, is to make sure that you are financially set. What you do not want to do is cash in everything to help them out. And then as they get older, now you're hurting financially, and then now they have to come back and help you out. They have to put stress on their family, on their lives, on their careers to come help you out. So parents, how do you do this? How do you get yourself situated first before helping out your child? Here's number one, you're going to set aside a thousand dollar emergency fund. Then number two is I need you to get out of debt. I need you to be completely debt free. The method to get out of debt is using the debt snowball where you line your debt up from smallest to largest. You're making minimum payments on all the debt. We're going to really look at our budget and assess our budget and look at ways we can cut back so we can have extra money to put in our debt snowball. And so all that extra money, you put in your first debt first. And then once you get done paying that first debt, you're going to take all of that money and put it on top of the next minimum payment. And we're going to keep that process going until you're 100% debt free. Now listen here parents. We are not going to now start helping and investing into our kids college future after we become debt free. No, we're going to set aside at least three to six months of expenses for our emergencies. Then after that, this is something that's huge to me is you're going to invest 15% of your household income into a 401k or into a Roth IRA. I know some of you are saying, but why am I investing into my future when I need to be investing into my kids future? Well no, because we know this for sure. You will retire. We do not know if your child will complete school. So I want you to start the process of investing at least 15% into your retirement. Now once you have that process started, I'm all for you helping your child, but I do not want you to do everything. I want your child to have sweat equity in the game. They need to be working harder than you for their college experience. They need to have a part time job. They need to be looking up grants and scholarships. They are driving the car. You're the passenger, you're guiding them. Hey, watch out for the speed bump. Hey, slow down right here. Hey Ashley, I'll help you out here. Let me take the handle just for a little bit. Okay, I got it. Here you go. They need to feel like the majority of their future is on their shoulders and you as a parent is just guiding them. Because when we do that, both parties are actually in a healthy place. You, the parent, you are financially stable, you're invested into your retirement. The child feels like, hey, this all Depends on me. I have to make the right decisions. And you know, because I made the right decisions, because I have sweat equity in the game, I'm going to do my very best in school. Now Both people are 100% happy because we both did it the right way.

A (39:11)

Once you've got your finances in order, there are a few options to start saving for your kids college. Let me explain. The first option is an education savings Account or an ESA. With an ESA, you can contribute up to $2,000 per year per child. While there are some income limits, with an esa, it's a great option because that money grows tax free. The second option is a 529 plan. This plan is great if you started late or want to invest more than $2,000 a year. It also grows tax free. But there are more restrictions and fewer choices within the plan. To determine which plan is better for your unique situation, get in touch with a financial pro who can help. Don't underestimate the power of determination to save for your kids college. If college is right around the corner and you haven't been saving, don't panic. There are still some things that you can do to help cash flow your kid's degree. It starts with taking a hard look at where your money is actually going. Brad Barnett, financial aid director at James Madison University, explains, when we talk to students and parents about preparing for college, most of the time we're getting them really late in the game. And that's the real challenge for us. You know, I like to get into elementary schools and middle schools so I can have those conversations about preparing for college. When I talk to parents of high school seniors or even juniors, it's really late to start making a lot of changes to prepare yourself for school because the saving and investing time is almost gone. I mean, there's only so much you can do. So what those conversations look like with those prospective students who are really late in the game, it's less about, okay, now how can you Invest? Can you do 529s? Can you do all these other products? Now it's about, let's look at what your lifestyle is like today. And the conversations we have kind of go something like this. Have you ever sat down and really looked at where your money goes? And the reality is most people haven't. And once we realize that, then we can start making some changes to free up some cash to pay for school. So when I go into high schools and I'm talking to these groups or I'm doing individual counseling with people, we first Start talking about, let's really get a handle on where is your money going? Because I bet you you could make some behavioral changes in what you're doing today to free up some cash that will help you pay for college so you don't have to default to borrowing. The problem is people have this lifestyle and the lifestyle is I'm maintaining my lifestyle. College is another expense. So I need more money, I'm gonna go get it from somewhere. Which oftentimes is a loan. As opposed to saying, can I do better with what I have? And what I see with parents and students is the same thing that we're going to college if I don't have the money, instead of thinking creatively about how I can afford college, the default is I need to borrow. And the students are getting those behaviors oftentimes from their parents. So sometimes it's getting the parents to open up that, yeah, we could do some things differently. And then trickling down to the student because the student has 18 years of behaviors that they've learned at home that they're carrying with them. So it becomes a family discussion. Which is why when we do workshops and have the discussions, I prefer to have students and families together. But sometimes we just get mom or dad or both. If you're serious about saving for college, it may be time to cut out cable, stop eating out, and find some other short term sacrifices in your budget. But sometimes you can't financially help your kid go to college and that doesn't make you a bad parent. The key is to get on the same page and manage expectations. Rachel Cruz explains, parents should approach the.

B (42:57)

College conversation with their kids with openness and honesty, be truthful about the situation. One of the most harmful things a parent could do is not talk about this subject until graduation day when their student is graduating high school. And suddenly it's just like, oh, yeah, by the way, this and this and this. There's been such lack of communication and that's lack of planning. And so the biggest blessing you can do early on in your child's life is talk about the subject and talk about what you have prepared and what's going to be the reality. That way, if the student does have to go and pay for their own college, which is fine, that's not child abuse, you can do that, but they have the time and the resources to make a plan and make it effective. Instead of being in this moment of crisis not knowing what to do when it comes to the responsibility of paying for college, at the end of the day, it's on the student because it's their choice that they're going to college. I do not want parents to feel like it is their sole responsibility because the student has options. There are options of what they can do to go debt free. So parents, hear me say, you are not a bad parent if you're not able to financially provide your student to go to college, you're not a bad parent. You're not. Because a lot of parents are not in that situation. In fact, some parents are harming their own situation, thinking that they're helping their kids, but they're harming themselves. And so we have all the order backwards. We have to figure out parents. You have to get yourself on a solid financial ground. And if that means not being able to help your student pay for college, that's okay. Students have multiple ways they can pay for college scholarships and grants. Choosing a school they can afford, working, the list goes on. There are ways to do it. But if that student decides that college is the best route for them, then it is their responsibility. At the end of the day, According.

A (44:35)

To a 2018 study by Fidelity Investments, 49% of parents feel the financial pressure to cover the entire cost of college. Dave Ramsey believes 0% should feel guilty about it.

F (44:48)

Sending your kid to the. The dream school might be a nightmare. You might be opening up a nightmare for your kids. So I wouldn't feel guilty at all about not being able to send my kid to the dream school, the school they've always dreamed about. Why did they always dream about it? What was the dream? To get a degree from Princeton, to get a degree from Harvard, to get a degree from Wharton. To get a degree from mit. Why was that dream there? Why were you dreaming that? What were you going to get at the end of this dream? Because if it's not a nightmare, you wake up from the dream with a pleasant outcome. So what's the pleasant outcome that this kid thinks they're gonna get? A guaranteed free ride, A guaranteed life of success with no bumps. Where are they gonna get this life where you go to school doesn't do that. Somehow, as a parent, if you've allowed your child to have a dream school, then that implies that where they go to school is gonna solve all their problems. I. I think we probably ought to go ahead and wreck their dreams early and let them know that this is not how life works. Your dream is going to turn into a nightmare. If you can't afford it. You're going to be carrying around the weight of this thing for decades. It's going to affect your bride, your groom, it's going to affect your children. It might even affect your grandchildren if you make these decisions poorly. So you've done nothing wrong as a parent if you've not been able to save the money. I was talking to a single mom the other day who was all down in the dumps and she's like, I feel so bad because I'm not going to be able to pay for my kids college and they want to go to the school that's $50,000 a year. I said, hey, those children ought to rise up and call you blessed for feeding them. You're a single mom. Feeding them was a big deal. And if you can show them how to survive the way you've survived, you've given them a better gift than they'll ever get from a college. So you are not a child abuser if you do not pay for your child's college. As a matter of fact, if you do not pay for your child's college and you lead them into a bunch of debt, you're probably wrecking their future. You're participating in stupidity that's going to bring harm to your child. So you've done nothing wrong. Mom and dad, single mom. If you haven't got money saved, you've just been trying to eat and survive yourself, maybe get out of your own student loan debt. Now can you help them? Yeah, you can help them. You can cheer them on, work your tail off, kiddo. I can throw in a little bit of money here and help you. You throw in a little money from working and let's pick a school we can all afford. When we do that together, we together can create a plan so you can help your kid get through school instead of sitting around going, well, I'm a failure as a parent. You're not a failure as a parent. Going to school is not an entitlement. Taking care of your child and giving your child shoes and clothing and food and a safe place to live, that's not a toxic environment. That is an obligation. As a parent, paying for your child's college education is not an obligation. It is a luxury.

A (47:34)

A lot of parents opt into financially stupid choices to pay for college, including robbing from their own retirement. A 2018 study done by Tyro Price revealed that 74% of parents say that saving for their kids college is a higher priority than saving for their own retirement. That means three out of four parents are delaying retirement savings in order to to send their kid to school. And that's bad for a thousand reasons Chris Hogan of the Chris Hogan show has a warning for every parent out there.

D (48:05)

Well, there are a lot of mistakes parents are making out there, but they have this mindset that they want to help their young people, especially when it comes to college. Some of the big mistakes are people cashing out 401ks. This is not something you want to do because what's happening is because that money went in pre tax, you're now going to have all kinds of penalties and fees associated with it. You're going to lose up to 40 to 50% of that money. Another big mistake that I'm seeing is parents feeling like that they have to fix this alone, that they have to figure out some way to go about this. And it's not. It's really something that should be discussed as a family. Start to brainstorm options, go meet with a guidance counselor. Start to really understand the nuts and bolts and the costs of school. Another big mistake that, that I'm seeing is people are pulling equity out of their home. They're going for HELOC accounts. They're called home equity lines of credit. It's like a large credit card that's attached to your home. People are pulling out equity to be able to pay for college. This is a big no, no. Your home is your largest monetary asset. The last thing you want to do is take money out. You want to pay the home down and eventually pay it off. But the last thing I want parents to do is to feel some obligation that they have to pay for college. There are ways out there for this young person to look at this opportunity. Again, working while going to school, delaying going to school while you save up money to be able to pay cash for it. Even looking at a community college as a way to start your education as you make money. So it's not anyone's right, it's simply an opportunity. But what we have to do is put ourselves in a position to win. We've got to put ourselves in a position to be able to make better choices. And I think this starts with parents, parents talking to young people that hate. We've got to understand how much this is going to cost, how much we have and what they can afford to do. Helping young people have this conversation is vital. And I don't mean one conversation. You see a lot of parents out there will have one conversation with a young person and expect them to get it. One conversation is an introduction. I want this to be something that we have. Ongoing conversations help young people to understand how money works. There's no such Thing as a free lunch, there is no free money. And I think if we help young people see these threats for what they are, they can start to avoid them in their lives and really start to build a solid financial future.

A (50:23)

The conversation about college needs to happen early and often. And parents have a lot of influence when it comes to their kids mindset around money. Here's Anthony o' Neal to walk us through what that looks like.

C (50:36)

Parents, I max this a lot. When should I start the conversation with my kids? When it comes to money, when it comes to college, when it comes to life, when it comes to debt, I say do it as early as you can. As soon as they can start talking. It may not make sense. Today when my dad made me wake up at 12 o' clock in the morning to give me the six P's proper prior planning prevents poor performances. I had no idea what that meant, especially at 10 years old. But because he put that in my mind and he kept hitting that as I was growing up, it stuck with me. You need to start having the conversation with your child early, early, early, early. So by the time they get to that eighth grade year, they know. Hey listen, when you get into the ninth grade year, everything counts. From your ninth grade through your twelfth grade. And it all depends on you son. It all depends on your daughter. But if you've been drilling this into them from elementary, throughout middle school, that you're going to go to college debt free. And a huge part of us doing this debt free is you. Your grace, your actions, your character, your integrity, your work ethic, your study habits, your goals, your passion. It all depends on you child. And if you do the right things, your mom and I, your dad and I, your parents, your guardians, we have your back. And we're going to help you get into college and go after your dreams the way that it will not hurt. You have this conversation early, as early as you can. It may not make sense. Why am I talking to my fifth grader about this? But when they turn 18, they will get it. When they turn 35, they will be thanking you. In my book, the debt free degree, I thanked my father for teaching me something that didn't make sense to me almost 20 something years ago. But today it's the intro of my new book because he knew one day this will make sense to my son.

A (52:45)

Learning how to avoid debt before, during and after college is hard, but it's totally doable regardless of how much money you have or how many scholarships you get. I talked to Mladin, a Croatian Immigrant who overcame all of the odds. He came to the United States under tough circumstances with $200 to his name. He took debt off the table for his education and worked his way to a debt free master's degree. Now he's a multi millionaire. Here's his story. Now tell me the story of how you came to America. Why did you leave Croatia?

E (53:22)

I came as a refugee to this country from the civil war in foreign Yugoslavia. So the war broke in 91 and I fled Croatia in 95 and then ended up in Kosovo. And there was a civil war in Kosovo in 99 and 2000. And I became a refugee from that war for the second time and came to the US As a refugee as a result of that.

A (53:44)

So how old were you at the time you left?

E (53:46)

When I came to the country, I was 24.

A (53:48)

So 24 years old and all of a sudden you're a refugee. What was your life like before all this happened? How quickly did all this kind of transpire?

E (53:57)

We basically had a limited time to escape, so it was in a matter of 24 hours. We left the house where we lived since I was born and never again returned to that house. So yes, it was under the pressure.

C (54:09)

Right.

E (54:10)

And we had no choice than to leave.

A (54:12)

Describe those first few months in America. What were the circumstances when you arrived here? What did you have with you and what was kind of the. The first few weeks like?

E (54:20)

I came with, you know, two bags, $200, no English, no family, no friends. That was really my beginning. Because of my background and the way that I was raised, I had a natural tendency not to take a loan, get the loan, not to buy a car. Right. And have a payment. So I never, I never bought a new car. Right. Even to this date.

A (54:41)

Yeah. So tell me about your education as you were growing up. What made you want to further your education once you come to America and you want to explore a master's degree?

E (54:50)

First of all, I do believe in the value of education. So I felt early on that it's an obligation to myself, to my parents, to my family to further my education. And that's why I decided to pursue education once I got here.

A (55:05)

Now, how did you go about paying for the education? Because you're talking about your family. You know, you guys don't really go into debt. How did you pursue your master's degree in America?

E (55:13)

My bachelor's degree was paid for as a refugee in Kosovo. But when I came here, I didn't simply have an option of not working because I'm a provider. For the family at that time, me and my wife. So I can't not work because I have to pay rent and all bills. So the only option for me to pursue the education is to get help, which I did through my company who offer tuition assistance and to work extra and pay it that way.

A (55:45)

So you never even considered getting a student loan? That wasn't on the table.

E (55:48)

That absolutely was not on the table for me. Even if it takes longer because I can only afford X number of credits, then that would be my plan B. But there was no plan C of applying for a student loan.

A (56:00)

So tell me about your work life while you're going through school. What did that look like?

E (56:05)

I worked full time, 40 hours a week. I went to school four nights a week and I worked part time job on weekends.

A (56:15)

So you're working all day long straight into school every night and then weekends you're picking up a second job with the tuition assistance to kind of cash flow this?

E (56:24)

That's correct.

A (56:25)

Wow, was that taxing at times. How did that affect your life?

E (56:29)

Well, I think what helped me get through it is the fact that I had a kind of clear vision of what I wanted. We all go as human beings through ups and downs, but I would say just a long term vision that I can get the education, provide better life for me and my family was what kept me going and made it work for me.

A (56:48)

Now you're speaking to a lot of students here as we're doing this and if you had any advice for them on how to go to school debt free, what would you tell them?

E (56:58)

I think that there are so many different options out there and I would challenge this as a part of academic development for every single individual out there, there's always more than one way to get to the objective, to accomplish the objective. So I would encourage all of the young people out there to look for alternatives, get creative and ask for help, ask for support in pace yourself so that way that you don't end up with a huge student loan burden.

A (57:24)

How did it set you up for success not having that debt to begin with once you got your master's degree?

E (57:30)

I would say that I wasn't probably aware of that at the time as I was going through that. How much is it going to benefit me in long term? Because in effect when I got my education and as I got advanced at my job, it just simply set me free in so many different ways, which in effect set the stage for other objectives and goals that I was able to pursue if I had that student loan I simply wouldn't be able to do so. So I guess what I'm saying at the end is that even if you don't see the clear benefits, it is going to be even more opportunistic for you if you end up with a nice education, good degree, and know that.

A (58:08)

So tell us what your net worth is now and kind of what that change generally made up of.

E (58:12)

My net worth currently is at 2.1 million and I have eight rental units. They are fully paid for and that represents probably 60 to 70% of the net worth.

A (58:24)

What is it about immigrants that creates success when they come to America?

E (58:29)

I would say that all of the immigrants, regardless of the country of the origin, they get really excited with the opportunities that, that this country has to offer. And this is a tremendous opportunity for every young person out there. And so I would say that we have probably a level of appreciation for what this country has to offer than people that are born in this country.

A (58:52)

In your opinion, what is wrong with debt? What's so bad about going into debt?

E (58:57)

Not having the debt sets you free. And your decision making process is way, way different. To me, it's simple as that. And when you're free, you're able to make better decisions.

C (59:13)

I want you to plan for your future by creating a vision. And no matter what, I do not want you to give up on that vision. And how do we successfully accomplish that vision? We create daily habits, daily systems that we do every single day to get to that vision. If we want to graduate 100% debt free, that's the vision, then this means every single day. We need to be working, we need to be avoiding debt, we need to be saving, we need to be looking for ways to save and invest. If your vision is to be the top of your class, you want to graduate the number one person of this college. And this means every single day, you need to be studying, you need to be showing up to class, you need to be getting in groups and learning more and stretching yourself. You see, when you have a vision, you have daily habits that get you to the success that you desire. Some of you all may be saying, Anthony, right now, I really want to go to college. And I hear you, I really want to do it the right way. But Anthony, my parents don't have nothing saved. My grades may not be the absolute best right now. I don't see how I can go to college without debt. And you guys, I see this and I hear this all the time from students. All you have to do is focus on starting you're gonna set the vision of, hey, I wanna go to college debt free, then you wanna take action. Write down what do I need to be doing every single day to work towards going to college debt free. This means you're gonna have to sit here and say, you know what, I'm gonna look up grants, I'm gonna look up scholarships, I'm gonna come home, I'm get a part time job, I'm gonna start a small business, I'm gonna start cutting grass. So once you learn on what are the action steps that you need to be taken towards your vision, you're going to be always working hard towards that vision. Every single day you're going to be coming home and aggressively, aggressively, and I mean this aggressively, looking up scholarships, getting out there, cutting as much grass as you can, getting out there and applying for as many part time jobs as you can until you nail one, and going to be coming home every single day working towards your future. If I'm sticking to my vision, if I'm taking action steps every single day towards that vision, I'm going to trust that process. I'm not going to listen to the world and saying, oh, you're working too hard, just get a student loan or oh, be normal, it's okay to do this. No, I'm going to trust the process of what it takes to go to college 100% debt free. Because I'm telling you, you can do it. I don't come from wealth, I don't come from famous families. I come from a family of what we were taught. Just work hard. And at the age of 35 years old right now, I'm so grateful I didn't come from wealth. I'm so grateful that my parents taught me how to work, how to sweat. Because everything that I have now and everything that I've earned now, it's mine. And it's mine because of me. I worked hard and if I can do it, so can you. Here's the advantage that you have over me. You're young, you're 18, you're 20. I didn't get this knowledge until my mid-20s. You can do it, I know you can. So go do it.

A (62:28)

From research and prep to choosing an affordable college, there's a lot of decisions to be made when it comes to the future. But one decision you don't need to make is going into student loan debt. In the next episode, we'll talk about how to make it through college debt free and graduate ready to tackle your future.

B (62:45)

I would rather you live like a college student while you're in college than try to live like a 25 year old and then graduate and have to go back to live like a college student because you have no money and so much debt.

A (62:54)

Join me. You've been listening to Borrowed Future. Thank you for listening to Borrowed Future. If you like what you've heard, do us a favor and rate and review us on Apple Podcasts. It helps. You can find more information about this and other Ramsey network podcasts@borrowedfuture.com or on your favorite podcast app. Tell us about your student loan experience by emailing storyborrowedfuture.com Our show is produced by Chris Wright, Eric Chapman, Eva Daniel and Kevin Weimer. Music has been curated by James Childs. Will Rutter is our engineer. Our editor is Tim Hull. Blake Thompson is our Executive producer. I'm George Camel. And remember, the only thing better than scholarships are friendships. Unless it's like a five hundred thousand dollar scholarship that might be better than a friendship.