As expensive as college is, conversations about it seem to be limited to pretty much the debt aspect of it. Students who graduate with too much debt are delaying marriage, can’t afford to buy a car, or don’t have the down payment for a house. Or how about parents who take out PLUS loans and are jeopardizing their retirements! The thing about these warnings, while all true, they lack a sense of immediacy that actually gets peoples’ attention.
But here’s the deal. Eighteen year olds can’t take out private loans, the kind that generate media headlines, without a cosigner. That means that parents, well, need to parent. This isn’t just about paying for college while still having some hope of a decent retirement. It’s also about more immediate options that your teen hasn’t considered but are part of the financial calculations. Even though you could afford a college doesn’t mean you should pay for it.
Let’s face it, as your kids were growing up, you made these decisions about financial trade-offs all the time. Maybe on a family vacation you chose a cheaper hotel to pay for an extra day at the amusement park. Maybe you chose to buy a smaller house to be in a better school district. Maybe your kids didn’t have as big of birthday parties so that you could spend more on music or pitching lessons.
Well before you decide to commit to a high cost college, take a few minutes to consider what you won’t be able to provide your teen if you do so. I’m talking about choosing a school that costs $10,000 a year more than another. What does a difference of $40,000 over 4 years look like?
Yup, let’ start with the obvious. $40K can get you started at graduate school. Given the number of jobs today where a Master’s has become the entry level degree, this is a very legitimate concern. Since there is a lot less merit money available for graduate students, especially in Master and Professional level programs, borrowing is very likely.
The fact is that if you have been borrowing already to help pay for an undergraduate degree, you won’t be in any position to borrow more for grad school. And if you did manage to get the undergraduate degree without borrowing, will you be in any sort of financial position to continue to do so through graduate school?
Enhanced Undergraduate Experience
Just what the heck does that mean? Well, what can an extra $10,000 a year pay for while pursuing an undergraduate degree? How about study abroad? Yes, while most schools assure students that they’ll still pay the same tuition rate, there are the transportation and living costs to consider that might not fit into a tight budget. Plus, there’s the fact that they won’t be earning anything from a part-time or summer job while they’re doing it.
Maybe there will be the opportunity to do an internship in New York, Silicon Valley, or Washington DC. Theoretically, they might even be paid but do you think it would really cover all of the expenses? And if you’re considering the Liberal Arts, you might need to start with an unpaid internship, some might call it volunteering, to get your foot in the door. How much easier would it be to support that with an extra $10,000 a year?
Don’t forget social activities. Maybe your teen is interested in Greek life which can rack up some serious fees. Or who knows, maybe your kid will become involved in the campus outdoors club and wants to go on monthly rock climbing trips. Or just maybe you might want to visit on a parent’s weekend and take in a football game.
How different will your perspective be on any of these activities knowing your spending or saving an extra $10,000 a year?
This category includes the obvious such as, “if we don’t spend the money on college, we can buy you a new car when you graduate.” Substitute down payment on a house, pay for wedding, European trip, etc. as you see fit.
But it also includes money for traveling for job interviews and the clothes in which to do them in. Possibly moving cross country and putting down first and last month’s rent. Buying some furniture so you don’t have to sleep on an air mattress when you come and visit.
It could also include direct financial support. Maybe since neither you nor your kid has staggering student loans, he decides on a profession that is lower paying or takes a while to get established in. Or maybe your daughter has entrepreneurial tendencies and you can help stake her some start-up money.
Of course, it could be that you still sit down as a family and decide that ultimately your student would rather go to the more expensive school. Hopefully, this is done with the understanding of the things you won’t be providing because of the extra costs. But it’s critical for families to understand the comparison isn’t just about the majors, dorms, cafeterias, and climbing walls at each school. It will also be about financial resources to get the most out of the experience during and after.
I hope this information helps you! However it’s only one part of a bigger system, which is why I’ve decided to reveal the whole MATCH Method to getting free funding for college education on a free live webinar over the next few days. You can learn more and register for it on this page.