Becoming Debt Free in 2009

October 29, 2008

What Dave Ramsey Taught Me About Student Loans

Filed under: School Loans — ambercouric @ 10:53 am
Tags: ,

Up until a few years ago, I had no idea about Sallie Mae. I remember listening to Dave Ramsey on the internet once in a while and would hear the discussion about student loans. I’ll say up front that both DH and I went to college on full scholarship. Graduated with no debt. That was a little more than 20 years ago. So the truth is I knew some people received loans but had no idea of the impact on their lives. We were blessed with a free education.

Once I started listening to Dave, I was shocked to hear the totals of student loans. Many people had student loans that were more than $50,000 and even some over $100,000. Did I already say I was shocked? This seemed like such a huge amount that I just couldn’t believe it. Now let me say that my reaction wasn’t to do with the fact that people had loans it was just that I had never heard such large amounts in student loans. I thought school loan payments were like $50 – $100 a month. On Dave’s show I was hearing $600 or more.

The reason I never heard of it was because I lived in a vaccum. Well, not really but I was out of college and of course 40 year olds with children aren’t usually hanging out on a college campus. Then my friends’ children began going off to college. At that point I would hear about how much they had to pay and that they were either refinancing their houses or taking out school loans.

We had a small college fund but no where near enough to pay for 4 years of school. Four years would be at least $100,000. At this point my son was two years away from college – a year away from applying. Panic struck. I had heard the horror stories. I began searching on the web and found even more things that would put me in a frenzy. I didn’t tell my son that we couldn’t pay for his entire education. I didn’t want him to worry. I knew I could cover the first year no problem. There was only one school my son wanted to attend. He had decided that was the only school he would apply to. We encouraged (read MADE) him to visit other schools. Not so much because of finances but we felt he needed to see several college campuses.

While he was in the process of visiting schools, I began to research and find the out what types loans and scholarships were available. At some point in the middle of all of this I read and article about SAT scores. At most schools, SAT score is one of the most important factors when receiving scholarships. The reason being SAT is a uniformed test so no matter how your school grades, the SAT gives a better indicator of where you stand against others.

My son had taken the SAT and his score was a guarantee that he would be accepted to any of the schools we visited. But were they good enough to be part of the elite? The “elite” at each college is different. Unless you are looking at Ivy League which we were not. Since we were still in the process of visiting schools, I suggested he take the SAT one more time -“Just for the fun of it.” Actually, I signed him up and told him to be there. Teenagers sometimes have to be told “because I’m the parent”. A couple of weeks later he visited the school that he thought would be his second choice. When he got there he loved it. He left there that day and made up his mind. The school was smaller. He would have more contact with his professors. It was a perfect match.

Between the time of the second SAT and receiving the scores he sent all of his applications off. He was accepted to all of the schools. But the school that eventually became his first choice offered him a full scholarship. The scholarship money also includes his books, parking decal, and all the extra fees. If he hadn’t taken the SAT a second time – the school would have offered him some money but nowhere near the package he received.

How does this apply to Dave Ramsey? He scared me to death about student loans. He caused me to do the research necessary to make sure that my son wasn’t one of his callers in 20 years saying he just paid off his student loan.

For anyone who has junior high to high school children, I encourage you to begin planning for the SAT. I have some great resources I’ll be glad to share. For anyone with student loans, I encourage you to find a high school student that you can encourage to look for alternatives. I heard over and over that scholarships weren’t available. My son is proof that they are available if you search.

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8 Comments »

  1. Wow, your son is off to a great start with your help. Mom saves the day!

    Comment by MadeMistakes — October 29, 2008 @ 1:21 pm

  2. Nicely done! I graduated from college without any debt. I got scholarships to cover tuition and fees and some of my room and board (once I moved off campus, I got a check back from the school each semester that I was able to use towards rent). I also worked part time from my sophomore year onward, to pay for anything else I needed. I remember spending my senior year of high school applying for every scholarship we could find (motivated mainly by my mother, who sounds a lot like you). I have three younger siblings, and with each one my family learned more about scholarships. By the time my youngest sister went to college, she had a free ride, with everything covered and then some (the school gave her money back even when she lived on campus – she literally got paid to go to school).
    I had a roommate in college who hadn’t applied for a single scholarship. She was a smart girl with good grades, but she just never got around to applying. She took out a $10,000 loan each year, and graduated with $40,000 in debt (this was in the 90s).
    Good for you and your son – taking the money worries out of college is a great way to make the whole experience better for the student and the parents!

    Comment by Frugal Babe — October 29, 2008 @ 2:15 pm

  3. Hi there-a fantastic post and well done for all your thorough research and hard work!!

    Comment by sharon rose — October 29, 2008 @ 2:24 pm

  4. Thanks for the great post. I was lucky enough that my parents paid for all my college costs. My oldest daughter is in the 6th grade and I am starting to panic about college costs and if we can save enough in time. Thanks for all the info on scholarships – definitely something to look into. Hopefully we’ll have enough saved and the scholarships will be like winning the lottery!

    Comment by Jennifer — October 29, 2008 @ 8:17 pm

  5. the cost of college is truly amazing — I have a 5 yr old dd & I can’t imagine what college will be when it is time for her to go… I almost don’t want to keep saving now because like you had mentioned – we may only have enough for the first year! The bonus is that she is so young that I can make sure starting in Kindergarten that she takes every year seriously & dh & I are there to make sure that she does her best — good luck to you

    Comment by jpkittie — October 30, 2008 @ 7:34 am

  6. Okay, I am officially panicing. 😉

    My son is in 9th grade and we have not planned for college. Of course, he wants to go to USC. Eeks! So please, pass the SAT resources along. Question he asked the other day: what grade do you have to be in to take the SATs?

    For me, I did the student loan stuff and owe $30K. I didn’t play it the right way. I am hoping to instill in my children to get a part time job, do whatever it takes not to use any student loans. Our family debt will be paid off in 3 years…just in time for his college. 😉

    Comment by moneyfunk — October 30, 2008 @ 2:53 pm

  7. Thanks guys. My son worked very hard in highschool and with the great SAT score the smaller school “begged” for him. Well not really “beg” but they did make quite a few phone calls and invites to meet with the president of the school. What was great was that he had decided on this school before the money.

    Comment by ambercouric — October 31, 2008 @ 8:15 am

  8. @MoneyFunk – is USC Southern Cal? I live in the south and we call USC -South Carolina. I know no comparison. Anyway, I will get a list of the resources we used and e-mail you. You can start online by searching SAT most common words. There is a list of about 300. Also, now is the time to start preparing for the SAT. Here, kids that the SAT at the end of 10th grade and then once or twice in the 11th grade.

    Comment by ambercouric — October 31, 2008 @ 8:26 am


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