Dear College Kid: Choose the Cheapest School

Dear College Kid is a series I write to my younger self. I would send them too, if I could somehow teleport myself via time machine to my late teens and early twenties. I hope other college kids find these letters, and garner some foresight that I myself had lacked. It’s not finance advice by any means, but rather, personal anecdote. Still. I hope it changes lives.

Dear College Kid,

Specifically the college undergrad hoping to enter grad school. (I am also addressing my past self.) I beg you, choose the grad school that costs the least amount of money. It doesn’t matter how well known they are, it doesn’t matter if your parents or friends went there, it doesn’t even matter if you like it. It matters most that it’s the cheapest.

At the end of your grad school career, you will walk away, diploma in hand regardless. You may also walk away with a large student debt. If you choose the cheapest school you can possibly go to, you will have an advantage over your peers. You will be starting your life at a better starting point.

I would love to teach all college students to choose grad schools based on price. If more kids opted for cheaper schools, perhaps elite schools wouldn’t charge so much. A decrease in their applications will certainly give them pause. What if no one applied to the most expensive schools in the country? Trust me, those private institutions will start to wonder why. Let’s not feed them our young.

Starting a career with less debt is equally as good as starting a marriage with less debt. You want the foundation of your life to be on solid ground. If you begin life in the red, then you will encounter more struggles than the people around you. There will be more restrictions with what you can do.

This isn’t to say you can’t live a flashy and glamorous life. You certainly can, but you are restricted to a loan forgiveness program. Or you have to work more hours. Or you may be tied to a job that you hate in order to pay the bills.

But if you start your life with less debt, you will have more freedom to choose how that debt is repaid. You can be ahead of the curve and have a higher savings rate. With more savings, you will reach your financial goals quicker. You can work less hours, leaving time to learn about investments instead. Or you can focus on building careers around your passions rather than your degree.

There are so many benefits to having less student debt. I really implore you to consider the following:

Choose the college that will cost you the least amount of money, because that may also be the path of least resistance to financial success for new grads.

At least, that’s what I would tell my past self. I hope she listens.

If you’d like to speak to a professional, I have a recommendation! Speak to Travis Hornsby and his team at Student Loan Planner. They are knowledgeable and give great advice.

10 Steps to Financial Success for New Grads

This post is sponsored by SoFi. SoFI recently created a Work Dashboard that you can use to keep track of your goals. This includes a Student Loan Debt Navigator. And if you decide to pay off loans aggressively, SoFI can also refinance your loans (here’s my affiliate link). Please see Step 5 before doing so.

First and foremost, Congrats! You’ve made it out alive (barely, perhaps?). Now that school is out, it’s time to make money in. Whether you’ve started your first job or are just figuring out your next move, it’s important to start thinking about your finances from the get-go and to act intentionally about money. In an effort to get you closer to a life of financial independence (or at least just enough to quit a job you don’t like and have the freedom to pick-and-choose), let’s review 10 steps you can start to take for success. If it all sounds too overwhelming, no worries. Take it one easy step at a time. I recommend breaking them down over a few weekends to ensure steady, solid progress over time.

10 Steps to Financial Success

1. Review Habits

You want to know where you stand with your money. More specifically, you want to know where the money is going. Whether you’re aware of it or not, the way you handle money is centered around the habits you’ve formed over time. The best way to find that out is to create a budget. That is the very first step we took towards our path to financial independence.

I would start by creating a budgeting tool. If you don’t know how to do that, I created a FREEBIE that teaches you how to Create a Budgeting Tool That Works for you and your family here.

Without tracking where your money goes, you cannot ever analyze your habits or learn from your mistakes. You don’t know where to improve. This step is so important to our financial journey that I even wrote an entire course around it: How to Master Your Budget. You can access my course for FREE. After the course, I would highly recommend signing up for a budgeting tool, to streamline the process. It makes it more fun rather than feeling like a chore. The one we use is YNAB (You Need A Budget)! Find out how YNAB helped me pay off $84,000 in student debt within my first year of loan repayment.

2. Build Credit Score

If you’re like me, I had a whole slew of debt when I graduated college. I decided to tackle all of my credit card debt and improve my credit score. Graduating from school is a great time to build habit #1: Pay off all your dues in full each month. After you do that, go ahead and tackle the bigger payments like car loans and student debt. By making monthly payments on time, you’ll build your credit score in no time. Don’t forget that a poor credit score can make your life harder in the future, so avoid it at all costs. In fact, it could cost you more money too, since a low score typically lands you a higher interest rate on future loans!

If you have trouble paying off your credit card debts, you can always try The Credit Pros. They will help identify the most damaging and most helpful credit items, as well as provide advice and educational tools.

3. Pay Off High-Interest Debt First

High-interest debt increases the amount of money you lose paying off the interest. I had a lot of credit card debt when I graduated dental school because I pretty much had no money and was living off of my dreams and thin air. I tackled credit card debt first because the interest rate on those was 16-24%! YIKES. Get that high-interest debt off your plate, so that you can focus on paying off your student loans (if you have any).

4. Pick a Strategy for Your Student Debt

I am being honest when I say that it doesn’t matter what strategy you pick for paying down student debt – as long as you have one and you stick with it! I personally needed to pay off my student debt as aggressively as possible, but if your lifestyle better matches with the loan repayment and forgiveness programs, then go ahead and do it! It is important to be well-versed in the different repayment options, so do the research and choose wisely.

5. Talk to a Professional

If you have any doubts at all, I would highly recommend speaking with a professional. That’s what I did! I spent my entire first paycheck paying for a financial advisor. They aren’t cheap, but their return is ten-fold! I have two I would recommend. Travis Hornsby from Student Loan Planner saved us thousands of dollars by picking the correct plan. Andrew Paulson, from White Coat Investor, is another option. Once you’ve decided which path to take, determine if refinancing is something you should do. SoFi is a company that does student loan refinancing but there are plenty others out there, too. Shop around – I’ve listed a few in this previous post!

6. Max the Match and Other Contributions

The earlier you start saving for retirement, the better. There are plenty of options out there, but whether you choose a 401K or an IRA, if you have a company match benefit, make sure to maximize it! That is free money that not everyone has the privilege to have. I certainly don’t, but we definitely max out my husband’s match from his company.

7. Save up

I am certain future you will have wants and wishes. There are many things out there you probably plan to buy, some of which are quite big purchases. If you wish to buy a graduate degree, a car, a home, or anything else of that nature, you’ve got to learn how to save up. Remember those habits you formed at the beginning of the journey? Well now it’s time to benefit from them. For me, I don’t mess around with my savings, especially if it’s a short-term goal. I am quite conservative in that way. I stash my savings in a high yield savings account like Marcus, where I can gain interest on my savings at a higher rate than a traditional savings account, without risking losing money (as opposed to investing my savings in a brokerage account). Find out how a Marcus High Yield Savings Account can help you reach your short term goals. If you’d like to sign up, my referral link here will give you a 0.2% APY increase on the current rate.

8. Invest With Your Head – Not With Your Heart

I consider investing an advanced finance skill. However, I can’t argue with the fact that the sooner you start, the better you become. Like any other skill, it takes practice. However, if you haven’t learned how to control your spending, get rid of debt, maximize your retirement opportunities and save money for your future goals, then there’s a chance you’ll lose the investing game – and bad! Perfect Steps 1-7 first, and then remember this advice: Invest with your head, not with your heart.

9. Find Your Tribe

They say it takes a village to raise a child. Well, the same goes for being managing money. You need people in your corner who won’t tempt you to spend your hard-earned dollars. People who will understand if you would rather order pizza than go out. Friends who won’t ditch you because you said no to a few happy hours. You want someone in your corner cheerleading you on your way to financial independence. Your tribe is very important. It can be the making of your success, or the downfall. I don;t want to be elitist, but even your friend group should be an intentional choice.

10. Set A Date

All of this should be given an end date. Make a plan, then set it in a calendar. Life can get in the way – so make sure to revisit your plans, goals, credit score, and debts once every six months. Look at that date you’ve created for yourself when you lose your way. Soon enough, you will be financially free!

I don’t know about you, but navigating the post-grad world can be tough! It’s easy to feel overwhelmed by the advice out there, or worse, completely lost and with no one to turn to. I hope this guide has helped to at least start the journey. Other related posts that you may find helpful: