Paying For College For Dummies - Eric Tyson

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including some plumbers, landscapers, dental hygienists, MRI technologists, commercial pilots, physical therapist assistants, respiratory therapists, air traffic controllers, transportation inspectors, diagnostic medical sonographers, electricians, construction managers, licensed practical nurses, web developers, elevator installers, radiation therapists, massage therapists, medical assistants, firemen and police officers. I chose to highlight some of these occupations because they are populated with relatively high numbers of people without a college degree.

      Now, this is not in any way to suggest that the majority of people or your kids should bypass college! Each person’s situation is unique and different. But the point is that there are many paths to career success and some of those paths include going to college whereas others do not.

In Part 3 and especially in Chapter 8, I discuss the increasing numbers of shorter term and lower cost alternatives to traditional four-year colleges such as bootcamps, apprenticeships, trade schools, last mile programs, etc. The best of those programs have well-documented and impressive track records for the employment and compensation of their graduates.

      Mushrooming student debt and its underlying causes

      Why does college cost so darn much?

      Don’t plenty of schools pack a few hundred students into a lecture hall? That can’t be too expensive, right?

      Well, not so fast! Look at the course offerings at most schools and you will be surprised at how many courses they do offer and the fact that most don’t have a large number of students enrolled. Also, only $0.21 out of every college tuition dollar is actually spent on teaching.

      So where are colleges and universities spending their money? On administrators, the number of whom has grown twice as fast as the number of students, on facilities and athletics, and schools prioritizing research over teaching.

      Colleges and universities have increased tuition prices at twice the rate of inflation while jacking up room, board, and student fees at four times the rate of overall inflation. Ouch!

      Student debt is a major problem for many college students. The total amount of student loans outstanding in the U.S. has surpassed $1.5 trillion, making it the second largest form of debt outstanding by consumers, exceeded only by mortgage debt. And, more than one million student loan borrowers default annually on their loans and only 57 percent are current on their payments.

      According to LendEDU’s analysis of student loan debt figures at nearly 1,000 four-year private and public higher education institutions across the United States, the average graduating borrower received their diploma and left campus with $28,565 in student loan debt. That’s a pretty hefty number.

      According to the National Association of Colleges and Employers (NACE), the average starting annual salary for college graduates is about $50,000. These averages can be deceiving and not super relevant to individual situations. For example, some college grads complete their degree with more debt than the amount of their starting annual salary. Conversely, some have little to no debt and a salary a good deal higher than average.

      Now, time for some better news. Despite having dropped a bunch of respected college names on you earlier in this chapter that most people believe are “top” or “premier” colleges, I’m not suggesting that you need to attend a brand-name college and spend hundreds of thousands of dollars for your child to get a great higher education. You and they don’t have to do that in order to find a fulfilling job or career with good compensation.

      Even if you do aspire to a costly private college for your offspring, you should know that the average price that colleges typically charge and collect from each family equals about half of the stated full cost of attendance. So, for example, with private colleges charging around $60K per year the average family is actually paying about half of that or $30K. This happens due to “financial aid,” which is another way of saying that a college or university will charge you and your family less the less able they deem you to pay the full retail price. High-income and affluent families generally pay full price or near full price unless their son or daughter qualifies for some sort of athletic or merit-type scholarship (price reduction). Some colleges, for example, Ivy League colleges, don’t offer these types of scholarships and only offer so-called need-based scholarships (price reductions). Check out Chapter 11 for more on scholarships.

      How colleges see you

      Of course, first and foremost, colleges will evaluate your child’s academic record including high school grades, standardized test scores, and so on. College applications also ask students to document what they’ve done outside of the classroom.

      Parents, students, and even some well-intentioned high school personnel have all sorts of misconceptions and misperceptions as to how colleges evaluate applicants. Chapters 4 and 5 pull back the curtain on that process and provide you with the information you need to know.

      College pricing and associated “financial aid” is even more poorly understood and for good reason. You will have to answer scores of questions about your financial and family situation and then submit that information in order for the college, through their own black box process, to tell you the price they will charge your family. See Chapter 6 for a thorough overview of that process.

      Saving now and later

      You should be in the habit of saving money towards your financial and personal goals. Helping to pay college or other higher education expenses is likely one of your goals.

      You need to be careful, though, as to how and where you save your money if you plan to apply for financial aid, get favorable pricing, and want to minimize your income tax bills. Chapters 2 and 9 will help get you off on the right foot financially.

      Somebody give me some money!

      Financial aid is a misnomer. When your kids apply to college, you will need to complete various financial aid forms. The information you provide on those forms will be used by colleges to determine how much to charge you. I explain in Chapter 10 how to best complete that process.

      Borrowing money and seeking grants and scholarships helps close the gap between what a family can afford and a college’s full sticker price. Chapter 11 covers how those things work.

      Increasingly, surveys show that students’ biggest objective for their college education is not surprisingly for their job, career and income prospects. And for good reason — a four-year college

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