I was at a high school graduation party this past weekend and the topic of paying for college came up with a woman that has a very young child. I happened to share a little bit of our method of putting our two daughters through college over 7.5 years.
In order to cash flow a portion of college using the income coming in at the time, we chose not to take on car payments during those years. We had paid off our vehicles several years before they entered college, but we chose to drive older vehicles during those years we were paying for college.
Specifically, we purchased a 2007 Honda Odyssey van in 2008. We paid off the loan in 2011, if my memory serves me correctly. We also purchased a 2007 Honda Ridgeline in 2011, which we paid off in 2013 or so. I do not remember the car payment amounts.
A car payment of $250/month is $3,000 a year. A car payment of $500/mo is $6,000 per year. There are families that spend much more on car payments. Eliminating any car payment you have by paying off car loans early or at least ahead of college tuition will allow you to use that money towards tuition or housing. By no means do I imply that only eliminating a car payment can pay for college. I point out that this cash not being put to other debt, such as a car loan, can be applied to the cost of college expenses.
Ideally, a car would be paid off six months to a year prior to the first college tuition payment, so that this money could be saved to put towards the first payments and reduce the reliance on loans. Of course, there are many other tips and ways to pay for college, but for us, not having auto loan payments and driving older vehicles while our girls were attending college helped us not take out very limited student loans.
My husband is still driving his 2007 Honda Ridgeline to work everyday. We purchased a 2023 Honda Odyssey in late 2022, just months after we paid the last of the tuition for our youngest daughter. This is the van loan I reference in my posts that will be paid off in 2025. We currently send at least $1200/month to this debt.
We did take out one small student loan for our oldest daughter, when she realized she needed to spend another part time semester to finish up classes due to scheduling conflicts. Because we had both daughter's attending school, the loan made the most sense, since we had not planned for additional time at school. She has received the money to pay it off, but is currently using it to cash flow her master's degree, and putting the student loan in deferment.
I believe I wrote quite a bit about how we paid for college along the way if you want to scroll back on previous posts. One daughter was an out of state student and attended for five years with two majors, and the other was an in state student and completed her degree in 4.5 years (she also had a minor).
Happy to answer questions on the idea of not having car payments while paying for college in the comments.
