If you are a parent and planning on sending a child to college soon, you are going to be very happy once you read this post. That’s because there have been some very cool trends taking shape that will help you spend a lot less for a quality education.
Side note: Keep in mind that not every kid needs to go to college. There are a number of good jobs your children can get without spending 4 years earning a degree . Talk about saving money. You can’t beat that approach!
According to Financial Advisor Magazine, more and more people are just saying “no” to insane college spending. This is a great trend and here’s why .
Even though 67% of us started saving for our children’s college years ago, the typical family is only going to accumulate 16% of the total cost by the time the kids go to school. This unhappy statistic was provided by Fidelity Investments College Savings study. Looking for details?
The study indicates that even wealthy families (those with incomes over $150,000) usually only save about $70,000 by the time their oldest child is 18. With private school clocking in at $50,000 a year you can see that there is a problem.
How are people dealing with this?
That’s the good news. College trends indicate that college spending patterns are in your favor. Almost half the people in the Fidelity study are sending their children to public, two-year schools before they complete their Bachelor’s Degree at a 4-year school.
On top of that, moms and dads all over the USA are telling their kids to get off their butts and graduate school in fewer years. Nice. The number of parents using that tactic is up about 300% – to 44%. And fewer kids are accepting admissions to fancy pants expensive elite schools and opting for the less expensive public schools.
This is all very important. In the past there was a great deal of peer pressure to attend and send kids to expensive private schools. Parents found work-around methods to find the cash. Those included:
- Refinancing
- Home equity loans
- Saddling the children with student loans.
Make sure you resist these measures. You don’t need to mortgage your future or your children’s future. Use peer pressure to “convince” your little angel to take it easy on the college spending.
Of course financial aid officers at colleges will try to talk you into looking at the three alternatives I outlined above but please resist. Schools can and do provide big bucks for grants. If your student can tap into that resource, you should go for it by all means. But you should not go for student loans, decimate your retirement or refinance your home for this no matter how low the interest rates are. Financial aid should only be relied upon as a last resort. Teach your children how ugly and “uncool” it is to take out loans for college.
Grants made easy.
The best way to belly up to the grant bar is to apply to less-competitive colleges. These schools have cash to loan but since fewer top-notch students are applying, it will be easier for your student to win an award.
What are you doing differently when regards to college savings/spending? Do you think it is absolutely critical that your child attend the most expensive undergraduate school you can’t afford? If so, why?
Karyn says
June 14, 2012 at 1:25 PMWell, that would be a relief! Do you have any opinion about doing the first two years at community college and then switching to a four year for the end? I have heard differing opinions on that one, though your diploma would ultimately have the name of the university you graduated from, so I don’t know why it would matter where you started…
Neal Frankle says
June 14, 2012 at 1:31 PMThat is an excellent strategy. I can see no downside to this at all. The student may throw a fit because he/she wants more of a “college experience”. But I don’t buy that argument anyway.
Neal Frankle says
June 14, 2012 at 1:13 PMKaryn, The research I did suggested that it doesn’t really matter for MOST disciplines long-term. One study looked at earnings 10 years after the student graduated and found no correlation (as I said – for most fields).
My sense is that grad school is far more important for law or medicine and possibly engineering. That said, it may be easier to get into a good grad school if your child goes to a prestigious undergrad school. Of course, if you spend all your money on undergrad school, the point will be moot.
All things being equal, I’d go with the state schools for most situations.
Karyn says
June 14, 2012 at 11:48 AMWe’re still a decade away from college, however, doesn’t it matter in some fields where you graduate from; that is, doesn’t the reputation of your school affect your career? I graduated from a public university but I went into teaching – so where I graduated from didn’t matter too much. But if you want to go into law or politics, wouldn’t a degree from a public school count for less? Or if you’re an engineer with a degree from MIT versus the state university, wouldn’t you be more likely to land the job?
Mary Fletcher says
June 14, 2012 at 10:59 AMOn-line school, at least my daughter’s costs less than $3,000 per 6 months, with no parking, activity, food, etc fees. She can take as many classes as she can complete in 6 months for the same fee. She lives at home and the on-line school provides the flexibility of her working part-time in retail as well. It’s working for us and save lots of money!
Neal Frankle says
June 15, 2012 at 6:51 AMI love this idea! Fantastic…..thanks for bringing it up. I am going to do some more research on it.
One question – does your daughter complain about the lack of interaction with other students? That seems to be the major drawback.