Testing Out: How to "Moneyball" Your Way to a Debt-Free College Degree

Editor's Note: This is a guest post from Jay Cross. This appears on The Art of Manliness webpage. Hyperlinks are available there.

I don't know about you, but I'm fed up with the ancient "college savings tips" so-called experts keep force-feeding us:

• "Fill out the FAFSA before senior year to maximize aid eligibility!"
• "Buy used textbooks, you'll save hundreds!"
• "Apply for scholarships. Try FastWeb.com!"

If you follow this advice, you will be thoroughly and totally prepared for college...in 1995. (You know, just in case that year ever comes back.) But in 2013, these strategies will get you slaughtered by the "Student Loan Industrial Complex."

The Stark Truth About Yesterday's College Tips

• Many students don't fill out the FAFSA at all, nevermind early. I didn't. It's long, tedious, and confusing. Even if you do, the skyrocketing cost of college makes student loans a "lose/lose" proposition. Either you don't qualify (in which case you can'tget aid) or you do qualify (in which case you probably shouldn't take it.) Today's loans are causing some graduates to commit ACTUAL suicide after committing financial suicide.
• Textbooks, while 812% pricier than 30 years ago, are a tiny portion of your total college costs. Every penny helps...but buying used books doesn't pay for college any more than clipping coupons pays for a mansion.
• Most people who apply for scholarships get nothing. It's a near-universal waste of time.

Continuing to preach this outdated advice is worse than useless: it's condescending. It actually patronizes how challenging it is to finance your education. Today's students don't need the marginal cost reducers of the past. They need to completely rethink their strategy and beat colleges at their own game.

In this post, I am going to share an uncommon approach that can help you graduate faster, avoid student debt, and jump into the job market with both feet beneath you.

Testing Out: The Best Kept Secret in Higher Education

Let's say you're just starting college and you need to earn all of those major-independent "general education" credits (i.e., English 101) that every student takes.

What do you do?

• Option #1: Take a standard English course. You know what that means: classes, homework, tests, quizzes, projects, group assignments...ugh. 95% of students assume this is their only option.

          Time:Cost: 4 months                               $3,000+

• Option #2: Take CLEP tests instead. These multiple-choice exams cover a full semester of material...and if you pass, you get the same credits you would have spent months in a classroom for.

          Time:Cost: 2-3 hours                                  $80

     CLEP offers 33 exams in five subject areas, is accepted for credit by 2,900 colleges and universities, and is proctored in over 1,800 test centers nationwide. Developed by College Board - the same organization behind AP courses and the SAT - CLEP measures your knowledge regardless of how you obtained it: independent study, internships, and work experience included.

     CLEP is the most popular exam option, but not the only. Other formats include DSST, Excelsior/UExcel, and Thomas Edison State College (TECEP) exams. Every school decides for itself which tests to offer and how much of your degree you can test out of. At some schools, it's 30 credits. At others, it might be 45. Still others, 60 or 90 or even the full 120 credits of a bachelor's degree.

Regardless of the exact number of exam credits your school lets you earn, the savings potential is massive. And you don't need to pray for scholarships or nebulous "aid" to get it. Testing out is completely within your locus of control: you just need to plan, prioritize and study like a gentleman scholar.

     Even if your school only allows 30 exam credits, that's still a quarter of your degree. You will save nearly $30,000 and graduate faster by not earning those credits in the classroom. I completed the final 30 credits of my degree via test-out and was the only person I know to graduate 100% debt-free. (Here's my story, if you're interested.)

Some people have heard of testing out, but most haven't. Schools don't shout from the rooftops about their test-out allowances. Why would they? Higher education is a business: the longer they can "keep you in the store" with costly courses, the more money they make. But this information is buried in your academic handbook under "alternative credit policies" or "transfer credit allowances." Look for it.

     Sadly, even students who have heard of testing out tend to use it for just one or two courses, not the majority of their degrees.

I believe students owe it to themselves to figure out the fastest and most affordable graduation path at their disposal, even if they don't test out of absolutely everything.

Case Study: Earning a $139K degree for $47K at SacredHeartUniversity

Enough theory. Here's a real analysis I created to illustrate how powerful your test-out savings can be. In this example, we'll assume you want a bachelor's degree in psychology from SacredHeartUniversity, a small, expensive, highly-ranked private university in Connecticut.

     Here is the research necessary to calculate how much time and money you can save by testing out:

1. Determine the "full sticker price" tuition of a four-year degree at SHU (roughly $139,000)
2. Determine which exam formats SHU offers (CLEP, DSST, Excelsior/UExcel)
3. Determine how many exam credits SHU allows students to earn (90)
4. Determine the course requirements of a psych degree at SHU (degree chart)
5. Determine how many of those required courses have CLEP, DSST, or Excelsior/UExcel exams for you to take instead (25)
6. Determine the costs of each of those exams ($80/each for CLEP and DSST, $100/each for Excelsior/UExcel)
7. Assume you can study for and pass a new test every 2-3 weeks

     I'm building an app to crunch this data automatically, but it can all be done by hand. If you wanted to test out of as much of a psychology degree as Sacred Heart will allow, here are your potential savings:

      Every school should post an analysis like this on their website. Since they never will, you need to perform the analysis yourself.

Again: nothing says that you HAVE to test out of every subject a school will allow. There are valid reasons for taking a course in person: class discussions, mentorship from a professor, or simply not feeling comfortable studying for a tough subject on your own (I'm looking at you, fellow non-math people!)  Rather, the point of running an analysis like this is to figure out your options. With college being as costly as it is today, there is no excuse for not giving yourself the opportunity to say "yes" or "no."

THE ARTICLE CONTINUES NEXT WEEK or go to the NPO Website for the entire article.  Under Resources/Forms/links. 

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