In my last few columns I have discussed step 2 of Dave Ramsey's Seven Baby Steps (see http://www.daveramsey.com/new/baby-steps/). This week I will answer the question, “how it is possible to get an education without student loans?” Believe it or not, it is possible to get a good education without student loans. For some, student loans are avoidable because of parents or full-ride scholarships. For the rest of us, they can be avoided through hard work, discipline, and sacrifice.
One of the best ways to pay for an education is to work part-time while going to school and full-time during the summer. Studies have shown that students who work up to 20 hours per week while going to school full-time actually get better grades than those who don't work. If you have a part-time job, you will be forced to make your study time focused and effective. If you have all day to study, it's easy to put off studying and find more fun ways to fill your time.
There are many side benefits to working while going to school, such as learning good time management skills and gaining real world experience. I strongly suggest finding work related to your area of study. Those who work during school will find it much easier to find a job after graduating because employers will look for experience in addition to education.
It is also important to work hard for scholarships, which involves getting good grades and applying for every possible scholarship. Getting good grades has a lot to do with hard work and little to do with natural brains. Many schools give full tuition scholarships based mainly on grades, and depending on the school, this could save you $15,000 to $30,000 or more over 4 years.
Do you want to earn several hundred dollars per hour? There is a good chance that the time you spend searching, applying, and writing essays for scholarships will pay off that much. There are many scholarships based on criteria other than grades, and many scholarships even go to those who don't quite meet the criteria because they are the only ones who apply! For two years I received $750 each semester because I found an obscure scholarship for those working for entrepreneurial companies. No one else applied, so I got it every time!
In addition to earning money through work and scholarships, it is also important to conserve money by following a strict budget. The danger of student loans, like any debt, is that they can take the place of creativity and sacrifice. There's nothing wrong with the character-building process of being a starving student. Figure out a budget for the bare minimum you need to survive, and stick to it. If you work hard and sacrifice, chances are you will be able to get through school without student loans. The reward of graduating debt-free will be well worth the effort!
If you have any questions you want me to address in my next column about avoiding student loans or about any personal finance topic, please email me!
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