A 5-Step Method for Saving 6 Figures Plus on a College Education

6 min read

Newsflash (sarcasm alert): a college education is expensive!

Even after accounting for inflation, higher education has become increasingly more expensive over the last several decades. According to EducationData.org,

The average cost of 4 years as an in-state student at a public university was nearly $89k as of the 2019/2020 school year, according to EducationData.org. That’s more than the $78.5k estimated median family income as of 2020, per the US Department of Housing and Urban Development.

Worse yet, this is still a screaming bargain compared to the $199.5k price tag for 4 years at the average private nonprofit school.

The problem is even worse than the above numbers imply, since nearly 60% of undergraduate students take 6 years to complete the so-called “4-year degree.” Since schools don’t stop charging tuition and fees after the end of your 4th year at school, and neither grocery stores nor landlord offer free food and lodging during your 5th and 6th year in college, the real price tag for most students is likely 50% higher than the above numbers.

In the following, I offer advice on how to save a large chunk of these costs.

Save Money by Skipping College? Perhaps Not…

Unless you’re as talented and fortunate as famous outliers who dropped out of school and proceeded to build extraordinary businesses (e.g., Microsoft, Apple, Facebook, Dell, etc.), a college degree is still incredibly helpful to your lifetime earnings.

According to the Bureau of Labor Statistics (BLS), the pre-COVID unemployment rate for holders of a bachelor’s degree was 40% lower than for high-school graduates, while a doctorate reduced the unemployment rate by nearly 70%!

The BLS data also show that those with a bachelor’s degree earn 67% more than high-school graduates (median usual weekly earnings), while those with a doctoral degree earned more than 2.5x as much as high-school graduates!

This combination of factors explains why young people continue to seek a 4-year degree, even if they have to take on a heavy burden in the form of 5-figure or even 6-figure student loan debt.

Save Money by Choosing Wisely

There are five choices you need to make regarding college, and each offers an opportunity for saving a ton of money and/or getting much higher return for your college-cost investment.

  1. In-State Public School vs. Out-of-State and/or Private School

As mentioned above, you can save an average of between $66k and $98k (depending on how many years you need to graduate) by choosing to go to a public school in your state instead of a public school in another date.

The savings are even higher compared to a private nonprofit school. There, you’d save an average of between $112k and $168k!

You may object that choosing a highly selective college enhances your career outcomes. I’m sure this position would be heartily supported by the administrations of such schools.

However, it’s not supported by the data!

According to the National Bureau of Economic Research, while the differences in results observed for students at different school selectivity levels is substantial, “…when we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero.


Let’s parse that.

Since highly selective schools generally attract and accept students with higher SAT scores, those students have greater intrinsic talents than the average student applying to non-selective schools. When you account for that difference in talent, the benefit provided by schools’ selectivity is “…generally indistinguishable from zero.

This means you can safely go to your state’s public school, save over $60k, and on average get the same results as you would from the most selective and prestigious university!

  1. Start at Community College and Transfer vs. Start at 4-Year School

If paying $22k a year for 4 or more years is too heavy a financial burden, here’s an idea that could save you a lot, with close to zero impact on your career results.

Go to your community college for 2 years, then transfer to your state’s public school.

In Maryland at least, getting into the flagship University of Maryland College Park is increasingly difficult, but by law you can transfer from a community college into UMD if you maintained a 2.0 GPA. According to the Maryland Higher Education Commission:

  • Maryland community college students who have completed the associate degree or students who have completed 56 semester hours of credit with a cumulative grade point average (GPA) of 2.0 or higher on a scale of 4.0 shall not be denied direct transfer to a Maryland public four-year institution, unless the number of students seeking admission exceeds the number that can be accommodated.
  • Courses taken at a Maryland community college as part of a recommended transfer program will ordinarily be applicable to related programs at a Maryland public institution granting the baccalaureate degree.

Since the cost of attending a community college are significantly lower than that of a 4-year school, this can save you more than $18k. If you continue living with your parents, your savings could climb as high as $30k. This because you’d not have to pay room and board, so your costs over 2 years would be about $12k, even after accounting for the costs of commuting and having a daily meal at school.

And best of all, your degree will be awarded by the 4-year school you graduated from, not by the community college where you studied for your first 2 years.

  1. Choose Your Major with the Future in Mind

Especially when you’re young, it’s hard to make the tough choices.

Throughout our childhoods, we’re encouraged to pursue our dreams, to try as many activities as we can stuff into our bulging schedules, and to do so with little or no regard to how likely we are to pursue those things in adulthood.

My kids, between the three of them, played varsity and travel soccer, volleyball, lacrosse, and rugby; participated in their schools’ marching band, drama club, chess club, jazz band, chorus, etc.; studied karate and Tae Kwon Do up to black belt; and much more.

Needless to say, none of those activities bear any relationship to their ultimate careers.

When it’s time to choose a major for college, so many of us have a hard time. We’ve pursued many passions in high school, and feel drawn to continue those paths.

If your passion is drama, getting a degree in dramaturgy seems like a natural next step. If you love music, majoring in music may inspire you. Love art? Perhaps you want to get a BFA – a bachelor’s degree in fine arts.

However, for good or bad, your lifetime earnings potential will be driven by your career choice.

According to CareerExplorer.com, the average bachelor-level musician in the US earns $57k. Art teacher? $34k. Lyricist? $25k. Compare those to IT manager at $78k, biochemical engineer at $99k, or aerospace engineer at $109k!

A difference of $50k a year, over a 45-year career can translate to well over $1.5 million, even after accounting for progressive taxation.

  1. Limit Your Student Debt Load

Student loan debt has exploded in recent years. As of 2020, Forbes reports it has reached $1.56 trillion!

That’s an average of over $32k and median of $17k per borrower, with an average monthly payment of $393 and median of $222.

Bankrate.com reports the median income in the US between the ages of 25 and 34 was $62k (as of 2018). If we assume an annual increase of 3%, that implies about $54k/year at graduation.

This would make the $222/month median student loan payment about 5% of annual income, assuming you get a job right out of college. The $393 average payment would be about 9% of annual income!

This may not seem too bad, until you consider how hard it is for recent graduates to even finish the month without borrowing more money. Then you realize that adding a 5-9% load on top of that turns the merely difficult into nearly impossible.

Then there’s the fact that these are median and average figures.

If you make an unwise choice and borrow significantly more than most, your situation becomes far more dire. If you do it in pursuit of a low-earning career, even worse.

What you need to consider regarding student loans is how confident you are that you’ll get a job straight out of college, and how easily you’ll be able to cover the expected student loan payments you’re planning to incur from the typical wages of that job.

Ask yourself if those payments won’t force you to put off important milestones for many years or even decades.

Things like getting married, buying your first home, and/or having children.

Consider also that student loan debt can’t be discharged, even if you declare bankruptcy.

If you keep your student loans to no more than $20k instead of $100k+ that many students borrow, you’ll save over $125k over a 10-year repayment term.

  1. When in School, Concentrate on Your Studies

The data show that nearly 3 in 5 college students take 6 years to graduate from their nominally 4-year program.

Only 39% actually graduate in 4 years.

This is not an inescapable divine punishment. Your choices in college can tilt the odds for or against your graduating in 4 years.

Anyone arguing that it’s too hard to graduate with a bachelor’s degree in 4 years will have a hard time convincing me, since I personally graduated with a double major in math and physics, not the easiest majors out there, in 3 years.

What it takes is being committed to your studies, taking advantage of any support you need in the form of professors’ and/or teaching assistants’ office hours, asking for extra-credit projects when that might push your grade just over a letter-grade cutoff, carefully building your class schedule to take more classes when you can, and fewer when you must, etc.

Let others party away their days and weeks in college (even during the current pandemic, we hear far too many stories of massive college student parties). Your main focus needs to be your studies. As a student, that’s your full-time job!

If you keep your college career to 4 years, you’ll save an average of between $44k and $100k compared to taking 6 years to graduate.

The Bottom Line

Despite its high cost and many assertions to the contrary, getting a college degree is still a great investment in your lifetime earning potential. This isn’t to say that there are no other valid career paths that can lead to a successful life. However, becoming a plumber or electrician isn’t for everyone.

If you do decide that college needs to be part of your future, making wise choices in the above 5 aspects can save you on average nearly $200k over your college career, another $100k plus in a decade or more of debt payments, and bring in over $1.5 million more over your lifetime.

That’s a total difference of nearly $2 million!


This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

Opher Ganel My main business is as a NASA consultant supporting the Physics of the Cosmos and Cosmic Origins Program Offices. Along my professional path, I learned a lot about personal finance and about starting and running solo and small-group expert businesses. I then started an additional passion business as a Financial Strategist for Independent Professionals. Here, I help professionals with their own solo or small-group practice articulate their personal financial goals, quantify those goals, and craft and execute a plan to optimize how they run their business to ensure they can accomplish those goals.

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