The pay-as-you-go route to higher education |

Dear Mary: How can a person finance her education without taking out loans? I need to get a master’s degree, as I have hit a ceiling, but I don’t have $40,000 and don’t want to take out loans. Will schools offering graduate programs allow me to move slowly and pay as I go? I just don’t feel as though there is a choice, and it’s stopping me from getting my education. — Ana

Dear Ana: Do you need a master’s degree, or do you want one? Here’s the difference:

Let’s say you are a teacher with a contract in a school district that gives an automatic pay increase once you receive your master’s degree. In that case — and provided the monthly payment on the total student debt will not exceed the net salary increase, which you easily can project — I would have no problem with you getting your degree using student loans because you have a reasonable expectation you will be able to repay that loan (which, by the way, is Rule No. 7 in my book, “7 Money Rules for Life”).

On the other hand, if you want to get a master’s degree on spec, hoping it will help you get a promotion or make you more competitive in the marketplace, I would caution you against going into debt to do it.

In these difficult times, when there are so many people vying for jobs, taking on that kind of unsecured debt could sink your finances while you wait, particularly if you were to go through a season of unemployment.

What would it take for you to save $40,000 cash? I’m serious. Why can you not do that? Or you could save enough to pay for one semester at a time, paying as you go, which could be a great option. Yes, schools will allow this.

If you say you don’t have years to wait while you save the money, let me suggest if you do it with debt, you’re going to spend 10 or even 15 years paying for that decision.

Why not save the money first and then go to school? You will cut the cost in half (or more, depending on interest rates), and once you graduate, you’ll know that you are really done — done with studies and payments.

You must change the mindset that says it is not possible to pay as you go, that the only way to go to college is to get student loans. It is possible.

Those who are doing their education that way (no spring break trips, no cable TV, no new clothes, no eating out, no cool electronic toys — living the life of a starving student) are heroes in my mind. They come out on the other end with $0 debt and more options than those who skate their way through and end up with $25,000, $75,000 or even $200,000 in student debt.

I just spoke with one of those regretful students the other day. He has more than $200,000 to pay back.

He spoke of how enjoyable it was to get his Ph.D. without having to worry about an annoying job. But soon, he will have to pay the piper, and I don’t know of an entry-level job in any field that will pay him enough to cover those huge payments plus his costs of living.

Would you like more information? Go to EverydayCheapskate.com for links and resources for recommended products and services in this column. Mary invites questions, comments and tips at EverydayCheapskate.com, “Ask Mary.” This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a lifestyle blog, and the author of the book “Debt-Proof Living.”

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