A Pivotal Decision

4 minute read

We have a heritage of higher education with all four of our parents possessing at least an undergraduate degree. That’s a bunch of expensive framed paper nailed to the wall. We all worked hard for those achievements. Those degrees represent a lot of time spent pursuing academics. This post is not intended to offend anyone or minimize education. The purpose is to inform the next generation so they can make wise education decisions.

Tradition. My wife’s family has a great tradition of attending a private university in Texas: Baylor. Both of her parents graduated from there in the 1970s. They met at Baylor, married and began a great family raising 3 awesome kids. My wife grew up rooting for her parent’s alma mater, attending camps there, listening to stories about university life and planning to attend one day. She comes from a strong Baptist home and Sarah’s parents wanted her to achieve a bachelor’s degree from Baylor.

My higher education path was less scripted. During my high school years my Mom was completing her degree so that she could begin a teaching career. She did this by attending the local community college and then transferring credit to University of North Texas. Very impressive stuff for someone raising 3 kids through adolescence. My Dad was working to provide for our family. Thus, I was an independent dude in my high school years. My higher education decisions were my own without much outside guidance. I had always planned to attend college, my grades were ok and I was academically smart. Academically, because I made some really dumb decisions in those years, including working too many hours to the detriment of my grades, taking basic high school classes (when I could have done Advanced Placement for college credit), getting slightly above average grades and applying for no scholarships. In spite of all this, I somehow managed to take the SAT, apply for FAFSA (federal financial aid), apply to the University of North Texas, get accepted and make my way there in the Fall of 2000. My parents did not do these things for me, I did. I remember asking them for their credit card for application fees and SAT registration fees. But, all the application legwork was on me. I didn’t apply anywhere else. I got my loans and went to school. I do remember my parents contributing some, but they did not have a lot of money at the time.

There is a much longer story about how I ended up at Baylor University two years later and met my future wife. But, I’ll go with the short answer, my Dad got a position as an adjunct professor at Baylor, which enabled me to attend tuition-free. I got a Baylor Bear hat, flipped it around backwards and became a Hankamer School of Business student on the banks of the Brazos.

Let’s dig into some present day numbers for Baylor (private university) and North Texas (public university):

Below is Cost of Attendance (COA) factoring in average scholarship and financial aid (not loans). 91% of Baylor students receive scholarships and/or financial aid and 51% of University of North Texas (UNT) students do. Rather than use the full sticker price, I felt it was a fairer comparison to use data after factoring in average financial aid awards.

Baylor COA:

University of North Texas COA:

Source: College Tuition Compare

Now to apply these numbers hypothetically:


Here’s how much the student can borrow under the more advantageous Stafford loan program. Subsidized = no interest accrues during college, unsubsidized = interest accrues during college.

Source: Stafford Student Loans: Unsubsidized vs. Subsidized Loans (debt.org)

My analysis:

Stafford and private loans:

Stafford monthly payments – 10 year term (current rate is 2.75% – much lower than historical rates):

Private student loan payments – 10 year term (6.5% rate assumed – varies based on many factors):

Additional monthly loan payments ($1359) for private school graduate invested for 10 years and then compounded until retirement (with no additional contributions after 10 years):

Personal finance is not science. There are many variables at play for this hypothetical calculation. After all, we are examining people’s lives, not textbooks. Below are a few possible questions:

  • Would the prospective student choose the private school knowing the difference in annual cost? Kids make strange decisions all the time, especially if they lack all the data.
  • What is their planned degree in?
  • Are there vastly different graduation rates between the schools?
  • Would the 22-year old graduate invest the $1379 per month? Or would they spend it on happy hours, travel and new cars?
  • Would they buy a home instead with the savings?
  • Would they stick to a 10 year repayment schedule or would they be forced into financing the private loans for a longer term (20 or 30 years?). 
  • Would the private school connections a young person might make be more valuable than public school connections?
  • Would they stand a better chance of getting a job with a private school degree vs. public school degree?
  • Would their income be higher coming out of a private school than public? If so, how much higher?

The point of this post is to analyze data with respect to a huge financial decision in a young person’s life. Often, we don’t take the time to analyze our decisions, we just let life happen to us. Own your choices and live your life. And if you have influence over an adolescence, help them make an informed pivotal decision.

I want to provide some resources to start your own research. I found the team over at ChooseFI has put together a comprehensive guide to get you started:

The Ultimate Guide To College Hacking | ChooseFI

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