Money Mic: I Graduated College With No Debt—and a $10,000 Refund

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graduate debt freeIn our Money Mic series, we hand over the podium to people with controversial views about money. These are their views, not ours, but we welcome your responses.

Today, one woman shares how she amassed enough scholarships to graduate from college debt-free.

The first time I ever heard about student loan debt was in 2007. I was a high school senior in Upper Marlboro, Maryland, who was in the midst of applying for colleges.

My cousin, who had graduated with a business degree six months earlier, had come over to visit and was complaining about someone named Sallie Mae. Since getting her degree, she hadn’t been able to find a job—and was struggling to make payments on her $9,000 of student debt.

I wondered: Who in the world is Sallie Mae?

After hearing my cousin’s explanation—that Sallie Mae was a company that gives students money to attend college—I was shocked, worried and confused.

I’d never thought critically about the costs associated with going to college. Everyone—family, teachers, friends and even my guidance counselors—just told me I needed to attend in order to secure a better future, which I could do by choosing the school that offered the best education. But it hadn’t occurred to me that I’d have to pay for that privilege.

My mind started racing: How would I ever be able to afford college? The housing bubble had just burst, and I knew my mom, a real estate agent, wouldn’t be able to contribute. What would happen if I couldn’t come up with the money? Would I still be able to get a good job?

I knew I had to come up with a plan—quick.

RELATED: 10 Ways to Reduce Those Steep College Costs

  • Marisa

    That’s great that she was able to do this, however, this is not the case for many students. Many students are not Pell eligible which immediately cuts out a major funding source so all they have is student loans. Let’s be honest, Fastweb spouts about how it has so many scholarships, but it is rare that I have actually seen anyone win anything from them. I work for a state institution and the cost of attendance isn’t exactly cheap so even going to a public institution doesn’t always help. So while I applaud her ability to get through college without being debt, this story is more of an exception than a rule these days.

    • kgal1298

      FastWeb is probably the most horrible site to check for scholarships on they need a better search method because half the ones they will recommend you can’t even qualify for.

      • http://www.collegemoneyman.com JR

        I have to agree, I wrote for them before and they have gone downhill. Better off with Cappex or Chegg/Zinch

    • http://mauishopgirl.com/ Tania

      I read it as she didn’t get much from Fastweb but rather from other various choices like local scholarships.

      • http://www.collegemoneyman.com JR

        That is the number one way to boost up your scholarship winnings: Local scholarships. Less competition and better yields.

  • Court

    I also applaud her for the effort that went into securing these scholarships. However those funds come from donations and are meant to pay for schooling, not for a down payment on a home. Why not take the $10,000 and donate it to a scholarship fund to help others realize that same dream?

    • IAT in NYC

      I agree 100% with Court. If the money was awarded for the intended use of tuition, it should have been returned to help others that could also use the funds. I was awarded $250 in text book money when I graduated high school and just a few weeks ago I paid it forward by donating $500 to a student graduating from my high school We have to continue to pay it forward. But I certainly also applaud the author’s incredible efforts and dedication. Well done!

    • Christen

      Here’s the thing. The cost to attend college is a lot more than just the tuition which is all needed in order to attend. There is the cost of books, housing, fees, etc. If you are going to a college on the opposite side of the state you can’t expect to commute to college. There’s a cost. Taking classes requires books and often other fees. There’s another cost. Having a meal plan is yet another cost that is more than just tuition. You can’t expect them to not eat. All of these costs are part of attending college and they all add up. As nice as it would have been to donate it’s more likely she used the money on costs associated with going to college that are not covered by scholarships

      • 2cents

        She states that she walked away with $10k from the scholarships and she used as a downpayment on a house 3 months after gtraduation.

      • http://www.collegemoneyman.com JR

        As long as she paid the taxes on the money, its not illegal, just unethical.

  • Guest

    I’m surprised that the author was able to do this. Most scholarships I have seen include some fine print about only covering the “cost of attendance” (which would include room, board, books, etc., but certainly not $5000/year in overage). I also find it a little suspect that UMBC accepted such an overage in scholarship monies to then refund to her. This should be reported as taxable income. This is particularly worrisome that taxpayers are supporting programs such as the Pell Grant, which in this case was going to someone who didn’t “need” it to cover her cost of attendance.

    • http://www.collegemoneyman.com JR

      This often occurs when schools return excess funds back to the student. The idea is that they will use it for living and misc expenses associated with attending school. Doesnt matter where the funds come from, only matters that there is leftover cash.

  • Gina

    This is very impressive! I’m inspired by her story and wish I would have sought out more scholarships earlier. (I’m saddled with quite a lot of debt). However, I’m pretty sure it’s against the legal terms of the scholarship/grant award to use the money for anything except educational costs. I’m pretty sure she could get in some big trouble for that.

    • http://www.collegemoneyman.com JR

      Actually, its not illegal, just unethical. If she paid taxes on the excess, she is in compliance unless the scholarship specifically spells out the uses of the funds.

      • Gina

        Thanks, JR!

  • Janet

    This fall I will have 3 in college, plus myself finishing up a Master’s degree. We do not get Pell grants and our state schools are 25K/year with room and board. We’ve tried the scholarship websites. I’ve called the schools only to be told our options for paying are either Parent Plus Loans or private loans. We saved for college. That fund has already been exhausted. I applaud the author for getting through college with no debt. That is not the norm. I also don’t understand how she actually made money through the process. The student debt crisis will be much bigger than the housing market collapse. What will the effects be on the economy when this generation doesn’t buy homes or start families because of their debt. Not to mention the debt their parents may have taken on into their retirement years. It’s a bad situation all around

    • kgal1298

      Have you checked out a site called SoFi they do loans, but in a much different way than what Sallie Mae is. Also, I’d suggest really looking into community college choices get the pre-reqs out of the way, but just make sure your kids understand this because after 18 you may not get a lot of say in what choices they make. Don’t get caught in those loans especially if the interest rates go up. However, if you are going back for your masters I don’t suppose you can avoid it, but their are alternative options popping up in case you need loans you should totally check them out.

      • starlitnyc

        I caution recommending private loans, for undergrads especially. Many do not understand that they are not eligible for the same programs as the federal loans such as public service loan forgiveness and income based repayment plans. Deferments and forbearances for hardship are usually harder to come by and for less time than federal loans. SoFi has a new and interesting model that time will test, but for student loan products it is only available for refinancing or select MBA programs. I mostly recommend private loans for those who have great credit and can qualify for a much lower rate than federal loans, high risk tolerance, and expect to be able to pay the loan back quickly should rates go up, if the rate is variable. Federal loans are not perfect by any means, but they do offer a lot of protections not afforded by private loans so definitely read the fine print!

        • kgal1298

          True, but federal loans are about to get an interest increase as well if you are someone who has final issues it’s good to remember that with private loans you can always negotiate smaller payments or settle for a lump sum with federal loans they can garnish your wages. I’ve had both and experienced pitfalls with both sides of the coins. Lucky my private loan was able to get settled you can’t guarantee what emergencies you will have in the future also Sallie Mae can basically screw you on the percentage you pay back. You can make 30K a year and they’ll recommend you pay 600 a month back no matter where you may live this is a pain in the ass if you live in a more expensive city. It easy to get forebearance, but even in those cases you’re still charged interest on top. At most if you go with federal loans make sure you get the subsidized loans many people don’t look up the difference, but at least during periods of deferment you don’t get racked with interest. Granted you have to qualify. Also, with SoFi it may be a private loan, but eventually they will expand they’re still very small, but their payment terms are often times better for people more so than any of the federal loans which still have many flaws.

          • starlitnyc

            Sallie Mae is both a private lender and a federal loan servicer, so I’m not sure in which capacity you dealt with them but I will be the first to admit their customer service is sorely lacking in either case. I have often dealt with them giving students misinformation. SoFi will be a private lender no matter how big they get. The option is private or federal loans. Eligibility for subsidized loans is determined by the result of a FAFSA and it is mandatory you take these before any of the other federal loans, if eligible. If you choose to take a private loan only students are required to acknowledge that they understand their federal options first, per the SLATE act of 2007. So it’s next to impossible to not take the subsidized loan, if eligible. There are multiple repayment plans for federal loans, many more than private lenders offer. Income based repayment can even allow you to have a $0 payment and still be in good standing, if you meet the earning requirements. Wage garnishment is a last resort and can happen with private loans as well (but with a court judgement necessary). Some of these changes are recent and if you went to school before 2006 you may have experienced different options. I just want to make sure people have correct information. Both federal and private loans can be right for people in various situations. Ideally, we wouldn’t have to have them at all, but if we do, we should all be as informed as possible. You are correct that many people don’t look up what they have and don’t understand what they are getting into!

          • kgal1298

            Yes and Sallie Mae actually handles all federal student loans now. I think they changed that back in 2012? I’m not sure, but that’s when I was given notice that they’d be handling all the loans, but yes they do still handle private as well. As well you can get judgement against you on private loan repayments, but that’s state to state I went to school in Colorado and now I live in California they couldn’t get a ruling against me. This starts to get into the territory away from student loans of course because this can be the case of just about any loan or credit card you have and most of the time the private loans wont be able to get a ruling against you so in that case it’s best to know what your state laws are. I went to school from 2003 to 2008 and the laws are still changing constantly. It’s a tad bit annoying for new people incoming as well because even if their parents think they understand the laws it could very much be different in just a span of 3 years. Then again the issue with many student loans is the same thing that happened in the housing crash too many people were given loans they don’t qualify for which is why non-repayment is so high right now. As well colleges are raising costs at way too high of a rate which is also an issue. Their are things pending in the house and senate to help appease a lot of this, but it’s also not the most talked about area of the financial sector at least not right now. Until then we’re kind of all just going to have to figure out what works for us even if it means taking a private loan out.

          • starlitnyc

            There are 12 federal loan servicers, Sallie Mae is just one of them. You may be thinking of when the FFELP loan program was disbanded in 2010.

          • kgal1298

            Perhaps that may be as well they may very well be the largest as . I just know a lot of people who have to pay back to Sallie Mae, which sucks because they really have one of the most horrible pay back experiences ever. You try to do auto debit with them and they will mess it up somehow. I just pay by phone now so much easier.

    • http://www.collegemoneyman.com JR

      Janet,

      I know it can be hard to finance an education. I am curious, did your financial circumstances change in the prior year? If so let the financial aid office know so they can do a reassessment. Be aggressive in pursuit of the additional aid.

  • alba

    I think the writer should be commended for her effort (applying for scholarships is awful) but I don’t think she should have gotten to keep money she was given for paying for her education if she didn’t need it for those purposes. With the number of students who can’t get enough money it seems unfair that money earmarked for education paid for a home deposit. The author milked the system very cleverly but robbed deserving students of money they needed for their education.

    • Anyone

      I have to agree with you. A scholarship is for your education, not intended to be money you can keep. I applaud the author for finishing college with no student debt, but I have a problem with the “refunds.”

  • Robyn

    Awesome job! Very proactive. As my nieces and nephews are getting older, paying for college is definitely something we think about all the time. We will definitely use some of your strategies.

  • kgal1298

    See this girl in a way got lucky. When I was in High School I didn’t think much about paying for it because I knew most of it would be aid. However, if I re-did it or had to give someone else advice I’d tell them go to community college and get the pre-reqs done just make sure the credits will transfer, since they don’t always transfer, then stay in-state (that was my error going out of state) since they often offer you more help than going out of state and look for scholarships (which I never lacked in that was always in my good grace) however, because of my knowledge at the time I spent a total of 7 semesters in school and was unable to abtain my degree due to financial issues that had risen up during my time in college. I still have regrets over the finances, but I also don’t really regret not having my degree as I’ve been able to clear a very good income working full time and pulling in freelance work in social media. Overall you can go far in life without the education, unless it’s a specialized field, but is it necessary? Not exactly.

  • anthonysmom

    I’m happy to see that the author was able to graduate without debt, but like so many others have commented, it seems wrong on so many levels for her to have profited $10,000 from those scholarships & grants. Our youngest will be going to college in 2 years and we’ve been counseling him to utilized our community college’s FREE tuition plan for the first 60 credits (the only requirements are to graduate from a high school or home school in our county and have a C average). Once he’s completed those FREE 60 credits, while living at home and working part time to save as much as possible, then he can go on to finish his bachlor’s at the private, Christian university he has his heart set on and that costs $40,000/year…if he can figure out a way to pay for it, that is.

  • Dane J

    Wow you are a terrible person. Can you please clarify “refunds”?

  • btelford

    I had 67K after two degrees. I’m not done yet, but most of it is gone. Send in those extra payments when you can.

  • starlitnyc

    Here’s how the refund thing works (as a former financial aid counselor): Students are given a maximum budget known as a COA (cost of attendance). This includes tuition, books, and living expenses such as room and board, books, transportation, food, etc. A student may receive as much aid as that student budget in any combination of grants, scholarships, and student loans. Therefore, if her scholarships did not specifically state that they had to be used for tuition only, it is possible that she got refunds for living expenses that were legitimate. Hopefully she reported all her outside scholarships to the school so that she was not over-awarded above her COA and really entitled to keep as much as she received.

    • Robyn

      Thank you for posting this. I felt other comments were judging without knowing how it “works.”

    • 2cents

      I still don’t understand since she wasn’t using the money for living expenses while in school.

      • lauren

        would it have been better if she just spent more money on books? or food? or extracurriculars? Letting the student keep the overages may actually encourage them to practice saving versus knowing that they have to spend it or lose it.

  • DAB in MN

    I admire the author for her determination, hard work, making good use of opportunities and ability to graduate without debt. It was quite painful, but I did the same back in 1988. My net worth now confirms that it was a great strategy. Way to go, girl! Teach others…which you’re doing by writing about it. Good job!