National Edition

No loans: How to graduate from college debt free

Published: Thursday, May 1 2014 5:00 a.m. MDT

The first, and maybe hardest, step is to pick the right college. "Choose the school you can afford," Cruze says bluntly. "Picking the right school is the key."

Cruze learned the huge difference in cost between an in-state school and an out-of-state school. She also says community colleges are a less expensive stepping stone on the way to getting a four-year degree.

Michelle Singletary's oldest daughter wanted to go to the University of Southern California. It cost about $45,000 a year.

"I told my daughter, 'We don't have that, we have enough for you to go to the University of Maryland without any scholarships,'" Singletary says. "Was she happy? No she wasn't. ... But at the end of the day, she is doing perfectly fine, having a ball and hasn't given USC a second thought."

Economides made similar rules for his children.

"It is whether they will work hard that will determine their success," he says, "not what school they attend."

Another way to save money, Economides says, is to take courses in high school that count for college credit — saving thousands of dollars over what those credits would have cost at a college.

"Only 30 percent of people who go to college pay the full retail price," he adds. "Negotiate costs with advisement people at the colleges. What college credits will they accept? Everything is negotiable."

Apply for scholarships and aid

Cruze tells the story of one mother who forced her daughter to apply for two scholarships every day as if it were her job. She didn't have great grades, but kept sending applications in — winning enough to pay for the first three years of college alone.

Cruze suggests applying for scholarships even if they are small: "If you fill out a form and write a quick essay in 30 minutes and get $200, that is not a bad part-time job for 30 minutes' work."

Rachel Wolfinbarger, who graduated with a bachelors in 2010 and a double MBA in 2013, received a full-ride scholarship to California State University, San Bernardino. This didn't stop her from applying for every scholarship she could find to help cover things like gas, housing, books and even studying abroad.

When she received a scholarship, Wolfinbarger asked the scholarship committee people why they chose her. One person told her she went above and beyond by giving more recommendation letters than the minimum required.

"Some times they have formulas to make it simple and so they will give you a point or a couple of points for every recommendation letter you have — and so if I sent twice as many as everybody else I get more points," Wolfinbarger says.

Wolfinbarger, who now works as an assistant to the founder of Logos Lifetime University, a financial education company based in Rancho Cucamonga, Calif., says while doing more than expected is great, it's also important to not go beyond other requirements like the maximum number of pages of an application essay.

Applying for financial aid is also important. Grants, like scholarships, are free money. Cruze, however, warns that "financial aid" can be a confusing and even misleading term because it includes loans. "Just be aware that obligations can be tied to grants," she says.

The parents' responsibility

The Ramsey family's stand on parental responsibility for higher education was clear. They had no responsibility to pay for college. But that didn't mean they didn't want to help their kids out.

Cruze says it is important to start saving early using an Education Savings Account or a 529 plan. "Start that plan and communicate with your children," she says. "Letting your 18-year-old dictate her future by going $100,000 into debt is not being a good parent. Step in and hold their hand through this process. They may be frustrated and mad with you, but I promise when they graduate from college and are 24 or 25 years old, they are going to be so thankful you did that."