Finishing college debt-free a possibility

Recently, I wrote about my daughter Olivia’s upcoming graduation. Because we started saving early, she will graduate without any loans.

A reader wanted to know: “How was [Olivia] able to achieve this accomplishment?”

By the time my husband and I had our first child, we were in our early 30s. We owned a home, and the mortgage took up less than 30 percent of our net monthly income. If you keep your housing payment at a manageable level, you can free up money to save.

We had been saving for retirement since our early 20s and have kept doing so, even while saving for college.

When we started saving for our children’s education, we were making good but not great salaries. We bought used cars that we kept long enough that we didn’t have car payments for a decade.

Before deciding how to save, we calculated how much we needed to invest on a monthly basis.

We tried a few calculators but settled on Vanguard’s “College savings planner.” Along with a little we had already saved, it estimated that we needed to invest about $210 a month to have enough for Olivia to go to a state school.

We decided to save using a tax-deferred 529 plan. We opened her account when she was 6. My husband and I chose the “age-based” investment option, which means that the younger the child, the more aggressive the investment strategy. As Olivia got closer to going to college, the money was automatically moved to more conservative positions.

We elected to invest in the 529 plan offered by the state of Maryland, where we live. Due to our contributions, the low fees and the earnings growth, we ended up with savings worth about $66,000.

Olivia took Advanced Placement courses in high school and scored high enough on the exams to earn college credit. She started at the University of Maryland College Park with a semester’s worth of credits, which reduced costs. She received $21,500 in merit-based scholarships, which covered about a fourth of the total cost of her attendance.

Maryland wasn’t her first school choice. But she ended up loving it and when she walks across the stage next month to get her diploma, she won’t have the weight of debt on her shoulders.