Funding an Expensive Music Education.
This blog is for people who want to study guitar and who have the ambition to make music their profession, but who are worried about the financial aspect of funding an expensive top-school music education.
First off; there are 2 different kinds of debt: good debt and bad debt.
These 2 kinds of debt are tied to the concepts:
Investments & Expenses.
- Bad debt:
Expenses: things that you buy on a credit card, that you would like to have, but that don’t contribute very much to your goals, plans, etc.
This is money you spend, but that doesn’t bring you long-term joy or long-term gains.
- Good debt:
This is debt you incur due to money spend on things that will grow your business, bring you closer to achieving goals, and so on.
An added perk, is that those are very often tax-deductible expenses, and even the interest you pay on the debt is a tax deduction or at least a partial tax deduction.
Some examples of good debt:
- Spending money to make money. i.e. Buying products that you will resell at a higher value. Money spend on marketing or advertising.
- Investments in your education. The more of an expert you are in your field, the more you can charge your clients.
- Buying issues of Billboard magazine on a credit card, because you want to break into the business starting your own publishing company.
- Hiring a developer to built your website… etc. Your website will advertise your brand, help build your reputation, which will possibly increase your revenue.
Education is An Investment.
So the good news: paying for education is an investment into succeeding in your musical goals.
The 2 main elements to consider are:
- The cost
- Value: The quality (what you get out of your money).
Many people confuse “cost” and “value”.
“Cost” is what you pay, “value” is what you get out of it.
“Cost” is what you charge your clients, “value” is what you give your clients for what you charge them.
At a school like for example MI, you’d basically be paying $8000 for about 100 lessons, to be taken in about 10 weeks of classes.
You can find top-quality private guitar instructors in LA, who only charge around $4000-4500 for 100 lessons.
At MI, you’d be paying twice as much, to share classes with 25-30 other students, where you don’t get the individualized attention or monitoring that you get in private lessons. Part of that tuition also goes towards required ensemble classes, where you don’t learn as much as in a private instruction class. I personally never liked paying for ensemble classes, because I always felt I could take care of that for free, just jamming with friends outside of school time.
One could of course argue: “Sure, but at a school like Musician’s Institute you eventually get a degree after x number of quarters”.
True indeed, if you go for their Degree program.
However: one needs to ask oneself whether one first and foremost goes to college for the degree, or to acquire as much knowledge and skills as possible.
The reason why this is an important point to ponder, is that in my many years as a pro musician teaching, playing sessions and performing internationally, not once was I ever asked if I had earned degrees in this field, neither do I think anybody ever cared.
After all: the entertainment industry is not like for example the fields of science, law, medical or mental health, where you wouldn’t get anywhere professionally without a degree of some sort.
It makes one ponder if paying twice as much just for the degree, is worth the expense.
I am by no means trying to dissuade anyone from pursuing degrees in music of course. I’m merely sharing other points of view to ponder or consider.
Using Credit Cards.
Well ideally, you would never want to pay for a music school tuition using credit cards of course.
The interest rates are just to high. Instead you would aim for:
- Saving ahead ofr time in a 529 educational savings account.
- Apply for Scholarships
- Apply for Student loans
- Work a student job
Which leads us right away to the big advantage a school can offer that a private instructor can’t: financial aid.
This is one of the big advantages you can get out of studying at a larger school: they can offer scholarships.
On the downside: you also really need the scholarships more at a bigger school, because the larger schools are so much more expensive than private instructors who teach from their private studio.
In addition: private instructors usually offer packages with discounts.
Some Info About What Credit Cards Are
Skip this next paragraph if you know what credit cards are and how they work. This is for the rare individual or younger person who has questions about funding music education with credit cards.
I can imagine this might seem odd that I am including info about how credit cards work here.
Yet, believe this or not: I actually didn’t know myself what credit cards were till I moved to the US in 1998 at age 27.
And I think it wasn’t till a couple of semesters into my Berklee education, somewhere around end of 1999, that I first learned about credit cards.
I still now remember my complete suprise and confusion when a teller in Boston at some store or bank back then asked me: “Debit or credit?”
I froze, blanked out, and had no idea what was asked of me.
Up till age 28, I had never owned or used a credit card before.
So this might not be as “odd” as many might think. I’ve actually, in recent years, occasionally been asked for info about credit cards by younger students who wanted to buy large packages upfront. So here it goes:
- A credit card is basically like a mini-loan, where you get a card that allows you to buy stuff with, and that you pay off later.
After you bought something on the card, you then get monthly statements from the issuing bank who issued the credit card, and you will have a certain monthly payment you will be required to make.
- Just like a loan basically, you make monthly payments to pay off what you owe on the card.
You will know on a monthly basis what the amount is that you have to pay each month, because it says so in the statement you get sent every month.
- You apply for it online or with a bank, and based on your credit history (Investopedia on Credit History), you will get a card with a certain credit limit if you get approved.
- If you haven’t built any credit history yet, the card you get approved for might only be for a low credit limit (the amount you can borrow on the card), but at least you’re building your credit history, which is good.
- If you need more money than the credit limit you got on the card, you can always apply for 2 different cards so the combined total credit limit adds up to the amount you need. Or, you can always talk to parents, who might have built credit history (if they have/use credit cards) and apply for a card through them, which might give you higher limit if your parents have a good credit history.
- One of the issues with credit cards, is that, especially if you don’t have any credit history yet, your monthly interest rate might be high.
“Interest rate” is the percentage the bank charges you, for using/borrowing their money.
- If you apply for an actual loan, your interest rate would be significantly lower than the rate charged on a credit card. If you choose to study at an accredited college, you could apply for a subsidized student loan. My wife Tiannah had such loans in the past to pay for her college education. The interest rate was 2.4%. This is way lower than even the best interest rates you can get on a credit card.
- Credit card as a means of payment, only really makes sense for people who have a job, and who intend to pay upfront for a package of 1 hour lessons, with the intent to meet once a week with a private instructor or a weekly class.
Students who want to meet 5+ times a week
For the more ambitious students who would like to meet 4-5x or more hours a week for lessons, unless they earn a lot of money at their job, credit card as a form of payment doesn’t make sense. The interest rates are just too high.
I’m not sure if there are financial institutions that would allow such students to get a student loan to study with a non-accreditted school, like for example a top-name private guitar coach.
Studying with a name private guitar teacher, might be worth it researching and looking into if your focus is more directed towards the acquisition of knowledge and growth rather than on earning an actual degree. In that case your education would also cost significantly less than what you’d pay studying at the accredited institution or college.
In case studying with a private guitar teacher makes you ineligible for student loans, you could also apply to get a personal loan, or maybe through the help of parents get a personal loan, instead of a “subsidized student loan”.
That is how I paid for Berklee College of Music btw.
In addition to scholarships that brought my tuition down, I paid for most of my Berklee education with a personal loan.
While being a Berklee student, I could probably have applied for student loans, but the application process as an international student, seemed more complex and time consuming than the application process for a personal loan in my country of citizenship.
As an extra service to my students who would love to take advantage of the significant savings they get on larger packages, I give my students the option to pay in installments, spread out over whichever number of months that is comfortable for them.
Spreading out the payments takes away the financial pressure.
Bankrate and Investopedia
There are a number of fantastic resources out there for anyone who would like to learn more about 529 accounts, student loans, or anything financial.
Bankrate and Investopedia are considered THE most reliable, trustworthy and safest websites for all credit card, banking and loan info.
Bankrate Credit Card info
Bankrate and Investopedia are resources that every book on financial topics strongly recommend.
Investopedia is a great website to know about if you want to live a financially free life and find the finances to accomplish and fund all your dreams and goals.
The more you know about how to make money and how to save… the easier life gets.
I know the prospect of getting a loan, is always scary and raises lots of doubts, uncertainties and fears.
After all, it comes across as a scary responsibility.
But that is also how you move forward in life.
Again: a loan for financing higher quality education, is an investment, not an expense.
More importantly: if your goal is to pursue music as a profession, then all your expenses, AND the interest you pay on your loan, are ALL TAX DEDUCTIBLE.
Meaning: the IRS pays you back those expenses.
You would want to research this too with maybe a company like HR Block, or maybe you have accountant friends who can help you with that.
I think, you would want to start your own music company (which is easy to do), and then write off all those expenses as expenses of your company.
That is what I did with my company ZOT Zin Music: I could write off all my paid interest as business deductions on the loan that I paid my Berklee tuition with.
But again.. I’m not a tax or IRS professional: you would want to research this with people who do this for a living.
Hit me up anytime at [email protected] if you have any questions, or if you would like to book a lesson.
You’re on your way to becoming a great guitar player.
Have fun! 🙂
Keep me informed on your progress. You can hit me up in the comments section below.
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I believe everything can always be improved. I’d gladly implement your suggestions and ideas in this blog or the next.
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