The cost of a college education has been, and continues to be, very much in the news today. And following closely behind are stories about college student loan debt. Obviously the two are related and both present major challenges to the majority of families with children currently in college or children who will in the next several years plan to go to college.
Why are college costs so high?
There are two principal reasons college costs are so high. First, less money is being provided by state governments. Tighter state budgets have resulted in a lower percentage of today’s college and university budgets being funded by states than a generation ago. Second, many schools have higher administrative and personnel costs on top of less state funding. So, a significant part of the shortfall is made up by raising tuition and other student-borne costs.
What to do about affording college?
Start by determining what you can afford. While doing that, factor in cost increases that are likely during the 4 year period. Oh, and are you going to have more than one child in college at the same time?
Many kids and parents may have a “first choice” school (based on the parent’s alma mater, favorite college, specific program offering). In the current cost environment “first choice” may have to give way to comparable choices that are affordable. In many cases other schools provide as good an education and as valuable a degree. Or, maybe the first year or two of college can take place at a secondary choice school before moving to the “first choice” after core work is complete or after qualifying for needed scholarships or aid at the desired school. Maybe spending big dollars or taking on significant education debt gets reserved for graduate school.
Of course, a “hard to find” degree program or attending a specialized school can make it difficult to manage college costs. But if not, consider what schools offer the best package. The costs to you, scholarships available and financial aid should be at, or near, the top of your primary considerations list.
An article in The Wall Street Journal (Dec. 22-23, 2012) notes that students and parents should work hard at getting scholarships and grants since those will not have to be paid back. Many schools are making more merit aid, grants and need-based scholarships available.
Pam Hart, mother of a current college student and a high school senior, points out that the combination of great grades and great need can result in great aid or even a free ride from top colleges with large endowments. She notes that many private schools have more aid and scholarships available than do public schools.
Consider cooperative education programs. These programs are specifically set up to allow students to work at jobs in their field of study during alternate semesters. This often means an extra year to graduate (in the same number of semesters) but provides the benefit of work experience and income.
Do NOT co-sign on student loans with your child if at all possible. If you do, you WILL be on the hook later. Whether your child successfully carries their student debt or not, it is also your debt as a co-signer.
While saving for college, maximize your 529 plan contributions. In Georgia contributions will, in most cases, qualify for a state tax deduction. Extended family members can also contribute to 529 accounts for your children. For someone that wants to help your child (or just needs to move money out of their estate) funding a 529 on your child’s behalf could fill two needs at once.
Talk to other parents who are traveling down, or have recently traveled, the “affording college” road. They can be a great resource on the ins and outs and pitfalls of trying to fund college.
So, be realistic about what you can afford and encourage your child to work hard at school on both their grades and activities.
Some web sites that may be helpful: