Working Your Way Through College vs Student Loans

Don and Peggy are both students in marketing at the local state college.    Tuition plus books and fees at their college runs a pretty reasonable $10,000 per year.    Room and board cost another $8000.   The total cost is $18,000 per year.  

Don works part time during school at a car lot and gets whatever work he can in the summer.   Don's work income covers about $8000 of his costs plus he gets a grant for $3000 a year.    That leaves $7000 that he pays for with student loans.    Don will graduate with his marketing bachelors in 4 years and he'll have $28,000 in debt.   Thats a pretty average sum of debt for a new graduate nowadays.

Peggy on the other hand hates the idea of student loan debt and has worked 30-40 hours a week as a secretary most of the time and only takes part time classes most semesters.   She is paying for all of the school costs out of pocket, mostly by working more.  Peggy also gets a $3000 grant but she has no student loans and pays the remaining $15,000 from her wages.    Peggy averages 2/3 credit load and will take 6 years to graduate but she'll have no student debt afterwards.

Don and Peggy are both very talented and get great grades.   Peggy has to work harder due to her work schedule and Don has more time to study but they both do pretty well in school.   Upon graduation they both can look forward to decent paying jobs starting at $45,000 per year.   Don graduates two years before Peggy and he fixes himself a budget of $25,000 a year to live off of and then puts the rest of his money after taxes towards repaying his student loans.  In two years Don has his student loans paid off in full at the same time that Peggy graduates with no debt.  

At age 24 Don and Peggy are both employed full time with no outstanding student loans.   However Don has two full years experience and he's had a higher standard of living for those two years while working.

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