It's Easy To Pay A Semester's Tuition If You Just Amass Thousands Of Dollars In Mail-Rebates

File this one under “Why didn’t I think of that?”: A student attending Auburn University to get his PhD figured out a way to cut way down on his tuition expenses by amassing thousands of dollars in rebate checks and prepaid debit cards. After punching in the numbers on anywhere from 200 to 250 debit cards he received as rebate payments along with $1,000 in rebate checks, he’ll only have to pay $450 out of pocket for this semester’s $4,500 tuition.

It all started when his dad took him shopping on Black Friday for video games, reports Business Insider.

“My dad kind of got me hooked,” he said. “We stood in line early in the morning and I found out then I could get the games I wanted for either really cheap or for free [with mail-in-rebates].”

From then on, he’s basically refused to buy something without getting a rebate — and there are plenty of opportunities where a product is free after the mail-in rebate. He’s even paid his $95 cell phone bill each month with such offers.

In this case, slow and steady definitely wins the race, as the rebate game takes awhile to pull off. There’s the buying of the item, then filling out the forms and mailing them in, followed by waiting for the money to show up. He also uses a cash-back credit card to amp up the effectiveness of his scheme.

Here’s how it works:

“My average rebate takes 11 minutes to fill out and cash, and is for $40. My envelopes and pens were free after rebate, so their cost is negligible. For this $40 rebate, I use a 2% cash-back credit card to purchase the item ($0.80 profit) and receive anywhere from 0-5% using FatCash from Fatwallet or a similar service. Stamp price is $0.45. Then, I turn around and sell the item on eBay for an average profit of $11.91 after shipping and taxes per item.”

Now he’s just got to get to work saving up enough rebates for next semester. We wonder when he has time to actually study and go to school what with all that rebating going on.

Genius PhD Student Paid His Tuition With Mail-In-Rebates [Business Insider]

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  1. Blueskylaw says:

    Auburn University student for president?

    • Oh_No84 says:

      Alot of people do this.

    • Oh_No84 says:

      The only reason this works is because people are stupid enough to overpay for things through ebay. Ebay is great for sellers and sucks for buyers. When you bid usually the price goes over what you can just go to the store to buy it thus making ebay useless for bidding.
      Crazy stay at home moms spending their husbands money have ruined ebay.

      • MMD says:

        Wow, not only are you sexist, you’ve apparently never sold anything on eBay. See just about every Consumerist article about eBay to learn just how badly it sucks for sellers.

  2. grillin_man says:

    Great – you’ve just given TLC an idea for a new series “Extreme Rebaters”

  3. TuxthePenguin says:

    I hope he realizes that he’s now operating a business and has to pay taxes on that profit…

    And yes, rebates do count as income when operating a business.

    • TuxthePenguin says:

      Actually, let me clarify that last statement. They are not “income” in the sense of the money he gets from selling them, but really a contra-expense that lowers the cost of goods sold.

      And don’t forget he has to pay both sides of payroll taxes as well as income tax. And possibly some state and local taxes.

      • benson304 says:

        As a CPA I approve this message.

        Technically this guy has entered into the enterprise of buying and reselling and the cost of the goods he buys to resell are lowered directly by rebates. All of this should be reported somehow as income.

        • RandomHookup says:

          I realize that you are supposed to report self-employment income and pay SS on it. Would he really have much of a tax liability if his only income were $4k net?

          • benson304 says:

            Probably not if that was it, but it’s still not free. If all he had was the $4,000 of income then he’d have zero tax liability because of his standard deduction.

            • AcctbyDay says:

              You know better then that, he would owe self employment taxes of approximately 500$ on 4,000 of self employment income.

      • AcctbyDay says:

        He should receive a 1099 from paypal for the merchant payments they make to him.

        • Chuft-Captain says:

          Paypal only issues, and is only required to issue, a 1099 if you are A) Pulling in more than $20k per year, and B) receiving more than 200 payments in the process. If you do not meet both of those conditions, they don’t file or send a 1099. So if you’re making 500 transactions but only $8k, no 1099.

      • Chuft-Captain says:

        He does not have to pay payroll taxes if it’s just him operating in the capacity of a sole proprietor. In that situation, there are no employees and no paychecks, therefore no payroll.

        • AtlantaCPA says:

          Not sure if you’re being cheeky – A sole proprietor still owes payroll taxes on their own income, except we usually call it “self employment tax” but it’s really the same thing. Actually it’s the payroll tax that you would pay both as an employee and employer.

          So maybe you were being cheeky b/c we call it self employment tax and not usually payroll tax? Either that or you were just wrong.

          • Chuft-Captain says:

            I should have been clearer. That depends on whether you are actually paying yourself in the form of pay or living expenses. If you are, then yes, technically you’d pay a self-employment tax. If you are not, however, and all money you make as a business remains in the business’s coffers, then there would be no payroll tax equivilent, only the normal taxes on your profits. It’s quite legal for an owner not to pay themself if they have another job that supports them.

            • AtlantaCPA says:

              I’d say “very dark grey area” rather than “quite legal” with that whole not-paying-yourself-a-salary thing. The IRS frowns on the idea that you’re working for free, even if you have a second job. Just because you know someone who got away with it doesn’t mean it’s legal.

  4. Loias supports harsher punishments against corporations says:

    Oh buy none of those things and use that money to pay for college.

    WTF?

    • Hi_Hello says:

      that’s what I’m thinking… maybe I read something wrong.
      He is either losing money or break even with the rebates in exchange for items. The rewards from credit card or whatever is small.

      Then I read the ebay part… that’s a lot of work. Make sense if you have the time and patient to do this.

      • RandomHookup says:

        The eBay part is the moneymaker. He buys items where he can make some spread after the rebate. I used to do a lot of this when the rebates for free stuff were easier to come by. Lots of people were doing this in the 2001-2003 period when jobs were not easy to come by.

        • who? says:

          On my first reading, I missed where he was reselling everything. It makes more sense now.

          Although, looking at the amount of time he’s spending on the whole thing, he might be better off just getting a job somewhere. I’ve done my share of buying crap cheap and reselling it on ebay, and it’s more work than he’s letting on. Add to it the amount of work to chase all those rebates, and he’s probably not making minimum wage.

          • RandomHookup says:

            That’s quite possible, but he’s able to fit it into his schedule. As a PhD student, he may have limited options on his predictable availability.

    • AcctbyDay says:

      Buy item for 10$, get 9$ in rebates. Sell for 9$, make 8 dollars of profit less postage and other expenses.

      He’s not buying items just for the rebate, he’s buying to resell.

  5. Xboxer says:

    I just don’t get the extreme rebaters and extreme coupon people. I could get a part-time job at minimum wage and make $4000 in 6 months. It sounds like a lot of effort and time just to save a few bucks here and there. I mean how much is your time really worth to you? It’s like the guy that drives 10 miles out of the way to fill up at the gas station that’s 2 cents per gallon cheaper. When you break it down you really are losing. The best idea is to find a way to make more money instead of wasting your life pinching pennies.

    • raydeebug says:

      it sounds like the fellow has made a business around buying items, collecting the rebates so essentially getting them “free” and then selling them on the internet for pure profit. It seems like he enjoys it and considers it an effective use of his time.

      It’s clever because it allows him to earn an income on an extremely flexible schedule, and so avoid the bulk of student debt. When he finishes his education and getsa “grown up job,” he doesn’t even have to “go out of business,” he just needs to stop buying extra things to rebate and resell.

    • RandomHookup says:

      Depends on what else he would do with that time (and it’s not like all time is created equally — having a half hour free isn’t terribly useful to an employer). Lots of it is watching TV time … easy enough to clip coupons and watch a ball game. And you are going shopping anyway.

  6. RandomHookup says:

    You can really make a lot of pocket money on a college campus, especially if they have an active psych department or med school. MRI/EEGs are pretty common and you can do computer studies for $15-20 per hour, depending on the difficulty of finding subjects. If you show you are reliable, the researchers will contact you first and get you in ahead of the general public.

  7. JustJayce says:

    Master Rebater!

  8. jeepguy57 says:

    Hey, now we know what this guy does while all is college buddies are getting drunk and laid.

  9. MuleHeadJoe says:

    I’m just as mystified about this as I am about “extreme couponers” … in order to get a rebate, you have to buy a product in the first place. I sincerely doubt that he makes “profit” reselling junk on ebay which he aquired for the rebates … people won’t pay a premium price for second hand items on ebay, and ebay themselves take a substantial chunk of the transaction.

    I honestly doubt the veracity of the story.

    Just like extreme couponers, I think he’s either lying or gaming the system (covertly yet intentionally violating the rules of the program). Extreme couponers get their thang on my cheating … they find a retailer that allows them to improperly redeem multiple coupons per item or otherwise improperly redeems coupons in contravention of the clear and specific “rules” specified by the manufacturers / coupon suppliers.

    I call shenanigans on this one.

    • MuleHeadJoe says:

      O Edit button, where art thou? … sheesh … change “mystified” to “suspicious” … and
      “get their thang on *by cheating” (not “my cheating”) …

    • RandomHookup says:

      I used to net about $300 per month doing almost exactly this by getting things “free after rebate” and then selling on eBay or Amazon or Craigslist. Ever heard of FatWallet or SlickDeals? Those folks put a lot of effort into finding and sharing these deals.

      It’s harder than it used to be and he’s not making a ton per item, but he’s figured out the market. He might be using his parent’s address to double the ability to get rebates, but it’s certainly doable if you put the effort into it.

      • Xboxer says:

        I haven’t used ebay in a long time so I can speak from experience but my experience with Craigslist is it’s very hard to sell items unless they are very hot, like say iPhones, iPads. I recently tried to sell a brand new video game that was just released. Nobody wanted to buy it even though I had deeply discounted it. A week later Craigslist is flooded with this popular video game so if I wanted to sell it now I would have to sell it for at least half what I purchased it for. At that point I might as well take it to GameStop and just trade it in. The other problem is nobody wants to drive anywhere to buy something small. A used car maybe. A $40 video game? Why bother? At the end of the day you have to sift out all the low ballers, and people playing games. You never get a serious offer close to what you are looking for. If you’re just trying to get rid of junk, then Craiglist is the way to go. Make a profit? No. It’s just one big garage sale unless you have a unique item and someone is looking for that item or you have a very hot item to sell.

        • RandomHookup says:

          He is on a college campus. Lot more people available for those types of deals. He didn’t mention CL, but it can be a better option than some of the crap that goes on with eBay.

    • chatterboxwriter says:

      Your comment just shows your ignorance of couponing. Just like anything else, there are people who game the system, but there are also people who get free/cheap things legitimately. Rite-Aid marks a tube of mascara down to $1.09 and I’ve got a $1.00 coupon for that brand? I get it for 9 cents. CVS has Chapstick on clearance for 74 cents and the package has a 50 cent manufacturer coupon on it? I get it for 24 cents. That is not gaming the system at all. I don’t coupon for food items, but I won’t have to shop for shampoo, razors, toothpaste, deodorant, or mouthwash for the next two years.

      • MuleHeadJoe says:

        No no no … you’re misunderstanding what I’m talkin aboot. Your process as you describe is absolutely viable and realistic. However you are NOT describing “extreme” couponing. The eXtreme Kooponer’s CLAIM to get “$200 worth of groceries for free!!!!!!!!!111!!1″ every week using coupons. CANNOT happen unless you commit some form of fraud.

        Back in the late 70′s / early 80′s there was the predecessor fad but back then they were called “Coupon Queens” … I remember seeing the stories on TV and in magazines showing pictures of these ladies marching into their local grocery store with a full-size shoebox FULL of paper coupons. The stores were redeeming ALL the coupons at at least face value if not more, even when the “CQ” was presenting multiple coupons for the same product (against the rules). These stores were ALSO redeeming coupons at face value for products which the couponers were NOT buying. I.e., the CQ handed over $5.00 worth of coupons for, say, canned vegetables, but were buying milk and bread. I don’t know if that activity qualifies as illegal but it is definitely against the rules specified by the coupon producers. One coupon per item. Not subject to doubling. Read the fine print on the coupon itself, you’ll see what I’m talkin aboot.

        The other thing about XKers is that even though you *can* find $1.00 off coupons for various kinds of stuff (typically name-brand non-food items), and then find that same stuff on sale in a store for the same or less than the coupon’s value, why would you put so much time and effort to aquire several years supply of “shampoo, razors, toothpaste, deodorant, or mouthwash”?

        I mean, you kinda sound more like a hoarder than a smart shopper when you put it like that. And bear in mind that even sundries like toothpaste and make-up have expiration dates. Did you realize that often times when a product goes on deep discount at your local store it’s *because* it’s at or near it’s sell-by/expiration date? I certainly would not want to be using toothpaste or mouthwash that’s been sitting in storage for the past couple years. Who knows what kind of chemical decomposition occurs in these things?

        • chatterboxwriter says:

          I guess until you do it, you don’t get it. How much effort do you think it takes to go to the store and buy stuff? I spent maybe 45 minutes clipping my coupons and writing out my list (to match sales with coupons and rebates). When my husband lost his job and things were extremely tight for months, I didn’t have to worry because I had razors (Gillette and Shick brand, which are typically $6 to $10/pack), deodorant, shampoo, toilet paper, paper towels, etc. And where are you getting that I buy from discount stores? I would NEVER buy toothpaste or edibles from a discount store. I’m perfectly capable of checking the expiration dates on the products I buy, and everything I currently have expires in 2014. If I think I am not going to use something, I donate it to the domestic violence shelter or to another charity (like when we had a flood last year). You just have it in your head that this is time-consuming/silly and nothing anyone says will change that.

    • who? says:

      I don’t call shenanigans, but if he’s making $11.91 profit per item, he’s working awfully hard for his money. It may only take him “11 minutes” to fill out the rebate form, but then there’s another 11 minutes to fill out the ebay listing, another 11 minutes to monitor the auction and answer questions, 11 minutes to package up the item for shipping to the winner, and 11 minutes to go to the post office and stand in line. He’s probably making about minimum wage.

      • Dirk Daring says:

        Sorry, I don’t buy it. It takes months to get money back from a rebate, and just as long to get fatcash back. I don’t see how he can be buying these expensive items and be able to pay them off before the end of the month and have credit interest hit.

  10. shinseiromeo says:

    I hope the OP enjoys his spam. The whole point of rebates is to sell your info. It’s why I boycott any product that even offers a MiR.

    • elangomatt says:

      I’ve always thought the point of the rebate was that stores got you in the door to buy an item and then a certain percentage of people never send in the rebate and the store gets the full purchase price. I guess they probably do sell your info after you apply for the rebate too probably, just never really thought of it before.

  11. sparc says:

    i don’t even get the point of this article. He spent $4000 in rebate items and he’s getting back $4000 in rebate checks. He probably makes enough profit reselling the items to offset taxes.

    In the end, he ends up with the same amount of money he invested. Lots of time wasted selling stuff for $12 and filling out rebate forms for maybe a few hundred in profit at best.

    Let’s retitle this to “Auburn University student figures out how to recycle his own money and waste a lot of time.”

  12. cactus jack says:

    Slickdeals rebate flippers. Not exactly newsworthy and the hassle is a bit much. Rebates are fun until you have to fight to get paid. Tiger Direct and Best Buy have both soured me on any rebate deal.

    Common excuses:
    We didn’t get it.
    You didn’t follow the directions.

    Ahh, but you made a photocopy!
    “Sorry, your photocopied “proof” of what you sent us means nothing.”

  13. dush says:

    Wow, he’s a master rebater!

  14. mechteach1 says:

    I don’t understand, though, why he needs to pay tuition. Most science and engineering fields pay the students to get a PhD, not vice versa.