The Cost of a Dream
It's that time of year when I make the rounds of various college fairs, regional and local to talk to students about college. It is exciting to talk to so many young people and their parents who are focused on obtaining information about college, financial aid or just some words of advice and encouragement.
I am always amazed at the energy and optimism which continues to draw me back to this work every year. I also can't help but address the growing concern many families have about the cost of a college education, the growing indebtedness of college graduates and the frustration many families share around ensuring that their child can still attain the dream of a college education.
It is a complex problem at best and does not have a simple solution. This is especially true for the majority of families I speak to who have not saved or are insufficiently prepared to meet the cost of their child's education. There is nothing more frustrating than to talk with parents who have encouraged their child to study and work hard to attend college and fear that the dream of a college education may be beyond their reach.
I grew up believing in the value a college education. The fact is that a college education is the great equalizer and can open up the doors of opportunity to the poorest people in our nation as well as immigrants or anyone seeking to improve their job prospects by obtaining a college education. And in fact that has been true for millions of first generation college graduates who have gone on to obtain jobs in education, business, the health field, law, etc., We all have our own success story or can recount the story of our parents, relatives and friends. And today, these are the same dreams shared by so many parents and young people I meet.
The problem is that the times of "free college" or low tuition that could be covered by grants is over. At a college fair down in Maryland, I met with a couple who were surprised by the cost of college. Their son had wanted to attend a small private college in a neighboring state and the cost was $22,000 dollars. They had never saved for their son's education assuming that he would either receive an athletic scholarship or get enough grants to cover the cost of college. When I explained to them how financial aid is determined, they were floored. Both parents had no idea how expensive a college education is and did not have the resources to deal with it. While they understood and placed a high value on a college education, their lack of experience and knowledge about the process left them woefully unprepared to meet their Expected Family Contribution.
For the new parent, the answer is simple. Start saving early. Take advantage of any and all savings programs that allow you to put money away for college. Have a plan for not just college financing but a strategy for helping your child to be as competitive as possible for college. In the past, many parents sought athletics as a vehicle for helping their child to obtain scholarships for college. But that is not the only way. There are many more scholarships that look for talent, community service and academic achievement. Make sure your child participates in activities or opportunities that may make them eligible for scholarships, grants and internships. Find out about your employer's educational benefits. Do they offer scholarships? Be aware of the deadlines. Help your child research scholarships as they get closer to senior year. Look at the church, local service organizations, professional or social organizations you belong to. Do they offer scholarships?
Work with a financial planner to help identify ways of saving or investing, to add to your nest egg and overall financial resources. Do you have equity in your home that you can borrow against? What other resources are available to you for long term and short term finance options? By planning early, you can be much better prepared for the sticker shock that a college bill creates. And remember that there are many other costs outside of tuition, fees, room and board. Don't forget books, computers, travel/commuter expenses, laundry, spending money and telephone. Have you factored in these expenses when your child leaves home?
Sit down with your college bound child and have the talk about finances. As much as we want to encourage and support our children, this does not mean that we offer a blank check. The conversation should start early and include honest discussions about your child's career goals, the education needed, the cost of that education and a plan by both parent and child to address those costs.
- Should your child be encouraged to work and set aside part of their earnings for college?
- Are they looking for internship opportunities in their field of interest which may offer mentoring and scholarship opportunities?
- Are they taking a course of study that makes them more competitive?
- Are they taking advanced or AP courses that they can use to earn college credit?
- Are they willing to take loans for college and if so, do they understand their responsibility for paying off that debt as well as the consequences if they don't?
Out of all of the students who enroll in college, almost half will fail to graduate within 6 years. What happens to these kids? While many may eventually return to graduate, the fact is that they are leaving school without the advantage of the college degree but with the debt that was incurred while they were a student. It is one thing to graduate with 30,000 dollars in debt and repay that debt with what you hope is a good paying job. It is a very different scenario if you are struggling to pay back that same debt without the benefit of a college degree. Is your child aware of this? I spoke to a father who lamented that his college graduate daughter was waiting tables at a local restaurant with a degree in Anthropology. She had $25,000 in college debt. A broken ankle on a skiing trip forced her out of work and behind on her loan payments. These are the stories we hear about. Should she have not gone to college? Should she have not taken out loans? Should she have majored in something else? I wish I could say yes, but that is not the right answer.
A college graduate's lifelong earnings is estimated to be a million dollars more than a high school graduate. So obviously, there is monetary value in the degree. There are many doctors, lawyers, teachers, social workers, accountants and nurses who would not have been able to go to college if they had not taken out loans. And yes, there are Anthropology majors who are working as professors, teachers, writers, social workers, and a whole slew of professions.
The key is in planning. College students, research careers in your chosen profession. Take advantage of opportunities to work in fields related to the course of study. Leave employment options open. Instead of that job in “fast food”, look for internship opportunities close to your career. Even if the pay is poor, experience is often what it takes to get your foot in the door. Use loans wisely, live on a budget and look for ways to reduce college costs. Living on campus? Become a resident advisor or look into college work study. You don't eat breakfast? Skip the 3 meal a day option in your meal plan. You can save money taking the two meal option or better yet, cook your own meals. Although it seems like everyone is going, can you afford the Spring Break trips every year? And, attending a college "in state" can save you at least half the tuition you'd pay to attend a similar school "out of state". Learning to live on a budget as a student will teach valuable lessons for later.
These seem like common sense solutions and in fact that is what they are. There is no easy solution for the family that wants their child to go to college but just can't afford the price. Many families have to make harder choices. Maybe it means staying home and commuting to school to save on room and board. Maybe it means starting at a community college and transferring later. Maybe it means working and going to school part time. These are all choices that some families and young people make every day. But they make these decisions because a college education is a big investment.
So ultimately I tell parents and students that the final decision remains with them. We all know the success stories and of course we read in the paper about the failures. But each story is different and written by the individual. In my line of work, I choose to believe in happy endings.
