I had an insightful chat with a friend who is a successful small business owner. His daughter just turned 17. They are currently in discussion about her college options. This girl is very lucky that my friend has set aside $150,000 college fund for her. He has been saving aggressively since she was born. Instead of talking about which college she should go to, they changed the conversation to what is the best way to use the $150,000 for her. Here are several of the options they discussed:

OptionsProsCons
Go to an Ivy League schoolIt’s her dream to go to an Ivy League school.Without scholarship, she will graduate with $60-80K loans.
Go to an in-state schoolShe will likely graduate with $30K in her pocket.No Ivy League experience.
Go to in-state school for 2 years, then transfer to an Ivy League schoolShe still gets the experience (partially).She will graduate with $0-$15K loans depending on how she manages her expenses.
Go to community college for the first year, then in-state schoolShe can live at home for the first year. She will graduate with $50K in her pocket.She misses out the opportunity to be a true freshman. No Ivy League experience.
Use the money to pay off a house. Rent it out. Use the rental income for her in-state tuition.At the age of 18, she already owns a house.She will need to work to cover the remaining in-state tuition. She may need to get low-interest student loans or negotiate cash in advance with her parents. It may take longer than 4 years to graduate, since she will be working. May need to manage the property herself.
Use the money to start her own businessShe has a distinctive idea that she wants to try. Maybe it’s time to start her business with her dad’s guidance.Delay or skip college education. She may end up losing all $150K.

When I had a conversation with my friend, I was amazed how he helped his daughter think outside the box. He is not against college education. He believes college education has its value. Like a successful business owner and a caring dad, he wants his daughter to see various options. Going to college is not the only option. Even if she decides to go to college, there are multiple ways to control the expenses. The conversation did get his daughter to think about college education in a completely different way. She is no longer so adamant about going to an Ivy League school. My husband and I are also debating the return on investment of college education. We had similar conversations with our sons regarding college costs and career choices, but not as extensive as my friend’s conversation with his daughter. It may be nice to have a prestigious schools’ diploma and enjoy the unique college campus experience, but the ultimate goal is about learning. Going to college is not the only way to learn anymore. Check out on-line learning options such as edX, MIT, Stanford, Open Course Ware Consortium and more. Learning should not stop there either. If you have a strong desire to learn, you will learn wherever you go. As the ancient Chinese said: 活到老, 學到老 (Live until old, learn until old.)

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