# The Coffee Machine that can Pay for a University Education

## By Mr. Money Mustache

## Thu, 12 May 2011 14:24:49 +0000

Now that readers are starting to fantasize about getting a little bit of this early retirement action for themselves, Mr. Money Mustache is getting many questions about the typical expenses people imagine in their future. One of these is “How will I pay for the University* education of my children”?

I must admit, even as the Dad of a 5-year-old, I don’t do much thinking about how I’ll pay for his education. And I don’t think you need to worry too much either. Why? Because once you grow your Money Mustache a bit, this will seem like a tiny amount of money to you. And as with every other expense in your life, it is in YOUR CONTROL.

How much does a College education cost? Some people get big spirals of fear in their eyes and cry out “Two hundred thousand dollars!!!” Yeah, in the worst case if you pack your kid off to the most prestigious and expensive private university in the country, he never gets a job or scholarship and no financial aid, and you pay for all his rent, clothes, beer, tuition, and books, it is possible to spend this much or more on an education.

But I just looked up some real numbers for my local University of Colorado at Boulder, apparently a pretty fine institution.

> University of Colorado at Boulder – ANNUAL COSTS
> City: | Boulder
> State: | CO
> In-district tuition: | N/A
> In-state (out-of-district) tuition: | $6,446
> Out-of-state tuition: | $26,700
> Fees: | $1,486
> Room and board: | $10,378

Hmm.. What I see is $7932 per year for tuition and fees. If your kid is like I was, and is willing to pay for his own education with no loans, and live at home with the parents for free rent and food to achieve this, he can accomplish this with only 528 hours of paid work (3 months at 15 bucks an hour) per year. In other words, working during the summer as a landscaper or painter already pays for your whole education, debt-free.

That’s the minimum-cost scenario. Now let’s take the maximum cost: out-of-state tuition PLUS room and board. $148,000 for four years.

Let’s say you have a baby right now. You’d like to pay her way in full to Colorado University even though you live in another state. And you don’t want her to ever have to work, or get any scholarships between now and graduation at her 21st birthday. No, you don’t think this will make her grow up to be a spoiled brat with no work ethic, because look, she’s just a cute little baby right now!

You currently work and you and your spouse both like the local Starbucks a bit too much. In fact, you each stop in at the drive-through every day for a coffee and small treat on the way to work. You also stop in on the weekends too. In total, you average $7 each per day** for fancy coffees and the occasional lunch here and there.

You can probably guess how this adds up. This habit, compounded at 7%, adds up to about $148,000 over the 17.5 years from your baby’s birth until she starts university***.

So, just switching to brewing good coffee at home, which I just calculated costs about 10-15 cents per cup if you buy your Organic Fair Trade Espresso roast in 2.5lb bags from your local Costco, will pay for pretty much the whole worst-case education.

And as an MMM reader, you will NOT be incurring a worst-case education cost. Your kid will be a school whiz because you will have time to be home and read with her. She’ll earn money throughout high school, perhaps even doing some advanced assistant work for your own part-time consulting career. And she’ll probably have a Money Mustache of her own going on by age 17, so she will find ways to spend less than the maximum possible amount on her own education. She’ll graduate debt-free and be financially independent before she even has kids of her own at age 30. A permanent repeating family dynasty of happiness and wealth will be born.

At this point, you’ll invite Mr. Money Mustache out for a decadent sushi meal to thank him for changing your lives.

* I’m always torn as to whether to call it “University” as we did in Canada and the rest of the world, or “College” as it tends to be called in the US. I’ll say “College” in this article just since most of the readers are in the US right now and thus it will show up in the search engines more readily.

** I admit that having two people each wasting 7 bucks a day is a bit extreme for me to imagine. But to pay for the in-state tuition equivalent, and still the full ridiculous room-and-board, it’s less than $3.50 a day.

*** Let’s assume that the 7% return is the after-inflation number, as described in “Dude, where’s my 7% investment return“. This accounts for the fact that university tuition will rise with inflation as well… unless we eventually start taking education seriously as a country and bring the cost back down as other advanced countries do.