Help Your Teen Graduate from College Debt Free (Even If You Can't Pay)

An Interview with Rachel Cruze

Rachel Cruze advises teens to graduate from college without taking out any student loans. Image courtesy of

College is the first major investment most teens will make. Deciding where to go to school and what to major in can be stressful. But for most families, the real stress is how they’re going to pay for school.

Many teens anticipate taking out large student loans to cover their expenses. And some parents are willing to take loans as well to help finance a child’s education. But, according to Rachel Cruze, your child can go to college without taking a single student loan.

Cruze is passionate about helping young people develop sound money habits. She helps parents learn how to help their kids discover how to spend and invest money wisely. Cruze and her father, Dave Ramsey, are the co-authors of “Smart Money Smart Kids.” I interviewed Cruze to learn more about her ideas on how teens can go to college without student loans.

Why is it important for students to graduate debt free?

Rachel Cruze: “When you graduate debt free you have the world at your fingertips. So many college graduates can’t do what they want because they have to pay back student loans. I had a friend who was offered her dream job but she couldn’t afford to take it because she had to pay back student loans.”

How do you recommend parents save for college?

Cruze: “Parents of younger kids can use an ESA or a 529 plan. It’s important for parents to speak with an investing professional about saving.”

How should parents decide whether or not they can afford to fund a child’s college?

Cruze: “Parents should be completely debt free besides their house.

They should have an emergency fund of 3 to 6 months set aside and should be putting 15% of their money into retirement before they consider helping a child out with college. College isn’t an entitlement and it’s not a requirement for parents to pay. Don’t feel guilt or shame if you can’t help your child.

Fund your retirement first.”

What can teens do if their parents can’t afford to help them pay for college?

Cruze: “Make a plan and be as intentional as possible. Compare costs and look at the values of schools. Understand grants and scholarships. Pick a school you can afford. The number one thing is to go in state. You can even start at a community college and then transfer to a state school. The biggest mistake people make is going to an expensive private college. Just stepping over the state line costs three times as much. Even though my parents could have written a check for us to go to school out of state, my sister, my brother and I all went to state colleges.”

What advice do you have for parents if a teen insists on going to an expensive college?

Cruze: “Sit down and have a healthy conversation. Parents are either overbearing or give kids too little guidance about this stuff sometimes. Hold your child’s hand because it’s a 20 year investment. Study and think it through because it’s a major purchase. Even if they don’t like it and they complain, they’ll be thankful when they graduate from college debt free.”

Will it matter to future employers where a student went to college?

Cruze: “That’s the biggest myth about college.

Your pedigree doesn’t matter. Most employers won’t care whether you went to a state school or some private college nobody’s ever heard of. Instead, employers want someone with a good work ethic and someone who is coachable and teachable. Most employers are more impressed by students who worked hard and graduated debt-free.”

Many parents worry about students getting a part-time job in college to help fund their education. What would you say to them?

Cruze: “Parents shouldn’t believe that students are spending all their time in the library when they’re not in class.

Students working an average of 20 hours per week can pay their way through state school. Studies show that students who work 10 to 19 hours per week have higher GPAs than students who don’t work. Working sets students up for future opportunities and helps them learn time management skills.”

What about scholarships and grants?

Cruze: “I encourage students to apply for every scholarship. They can even make it like a full-time job. I also encourage them to apply for small scholarships. If you earn $200 for taking 30 minutes to fill out a scholarship application, that’s an incredible part-time job. I met a girl who applied for two scholarships a day for three years because her mother made her. Her first three years of college were completely paid for and she cash flowed the fourth year.”

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