Calibrating and Circumventing the Cost of College

It's a common refrain that today's college graduates are entering into the worst job market and economy since Hoover was around. We're told that an undergraduate degree means less than what a high school diploma once was, yet we're investing more in school than ever before. Post college debt is a major emotional weight on the backs of this newest generation, and colleges encourage debt with ease — don't worry about it; you don't have to pay it off until after you've graduated and have a well-paying job.

We're sold on it and it's a hard sell, not only by schools, but by the banks' ad dollars, as well. Previous generations didn't start life with so much debt, and in the middle of a job-killing recession no less. You probably aren't going to pay off that kind of debt waiting tables. Realize that college debt most likely means postponing life goals such as mortgage, car, marriage, and maybe even children.

Good-to-know facts about college debt
How big of a problem is the cost of college? Consider the following:

  • The amount America owes in student loans exceeds the nation's credit card debt.
  • According to FinAid.org, average student debt has increased nearly threefold in the past two decades, from $9,320 after graduating to $27,204.
  • In the year 2000, the nation owed $198.32 billion. In 2010, the number rose to $832.99 billion, more than four times what it was only a decade ago.
  • Declaring bankruptcy can free you of your mortgage, car loan, and consumer debt, but not your college loans.

Finally, unlike most other debts, many college loans survive your death.

How much college debt is too much?
So let's get this out of the way first — whether you're a parent or a student, college debt is not something to worry about later. Don't take out excessive amounts of loans unless you know your first steps to getting it paid off. What's excessive amounts of debt? The advice I received was making sure that debt didn't amount to more than a year's salary in my chosen field. Don't take out $10,000 a year in loans if you're looking to work for a non-profit after graduating.

Scholarship essays
I knew I didn't want to spend time in a 500-person lecture hall. That was a huge priority for me. But with smaller class sizes comes larger tuition costs. This was the first time I had to start closing doors. I always did well in math and science classes, but I knew that I didn't want 50 years of them in my future. I had fulfilled the math and science requirements for most of the programs that piqued my interest during preliminary research. I dropped my AP statistics class and used the period to enroll in an independent study in essay writing with an English teacher I had had earlier in my high school career.

Every week, I sat alone for four days and wrote essays. At the end of the week, the teacher and I would get together and review them. Yes, it did help to prepare me for the incredible amount of writing I would do in college, but perhaps more importantly, every single week, I chose one to three scholarship application essays and applied. The essays ranged from reviews of classics to thoughts on racial reconciliation, from 400-word essays about how I'd fix the AIDS crisis in Africa (Fix it in 400 words? Really?) to why I use Gillette for all my shaving needs. I knew that every dollar I received was an interest-free dollar I wouldn't have to pay back later.

Yes, $250 might be a small amount off the thousands in loans, but that's one month after graduating I wouldn't have to pay, and if I earned 10 scholarships suddenly I've got my first year of debt paid off. That said, scholarships be can be in excess of $10,000 for your first year on the higher end. Check out websites like Fastweb and FinAid! to find scholarship essays and contests that work for you. Most high schools have listings of local organizations that offer scholarships, whether it be a rotary club or a local arts foundation. The money is out there. And scholarships shouldn't stop with your first year. Some listings are for current college students. Research, write, and go claim it.

Colleges invest in their upperclassmen
Most universities, even ones that claim to not offer any merit-based scholarships, offer more and more need-based financial help as students increase in seniority. At my alma mater, Sarah Lawrence College, despite the shocking initial sticker price being among the most expensive schools in the country (if not the top of the list), Sarah Lawrence gets increasingly generous with her in-house aid. By my senior year, I was paying less than a third out-of-pocket than what I paid my freshman year.

With fewer and fewer college freshman graduating in a timely process, it makes sense that schools would want to invest in those looking to actually complete the program. Inquire about averages from your potential school's financial aid department.

So what now?
Unfortunately, most articles you read about staggering college debt offer little in the way of solutions and often end up concentrating on the bigger problem of the higher education system. That's great, and should definitely be addressed, but what do we do now?

  • Parents, if you just had a child, put money in a college fund. Get the cheaper crib and invest the rest toward college. Also, do everything you can to learn the ins and outs of the FAFSA. If you're interested, we can cover this in a later post. Okay, onto us kids…
  • If you've just graduated, you're used to things like roommates and a rather low cost-of-living. Stick with it. No need to upgrade yet. For a $20,000, the minimum to pay off monthly is $200 over 10 years. Find the roommate, pay an extra $100 a month toward your loan, and you're debt free in six years instead of 10. Find a loan calculator online to see how long it'll take you to pay off your debt with different monthly payments.
  • Get someone else to pay for it. Join AmeriCorps or Teach for America if you can be eligible for grants to help pay off your loans.
  • Use any bonuses, raises, and gift money to pay a little more on a monthly payment. It'll keep the interest in check.
  • Delay the real world. There are masters programs that offer grants for tuition and yearly stipends (many will equal the salary of an entry level job) . I'm not recommending taking out more money for grad school, but rather, find a grad school that will help you defer the interest on your loans while you still save to pay for them.
  • Get creative. After graduating, I worked as an au pair (childcare provider) for a year. I didn't pay for housing or food, had to clean up a lot of peanut butter, and got to study algebra while receiving a small weekly stipend. I took on a second job while the kids were at school. I had two incomes and zero expenses. There's no reason you can't get creative and most employers are excited by a little life experience before entering into the job field.

Whichever college you end up choosing, truly choose it. We can argue about whether or not college is a necessity. We can argue if the high sticker prices at many schools are worth it. That said, at the point you decide that the investment is worth it, treat it as such.

Some people have the impression of liberal arts students lounging around talking about old books and goofing off for four years, coming out with a degree that is not economically viable. If you're looking to pay off college loans into your 40s, go ahead and do that. Or, put your passion, intelligence, and unfaltering work-ethic into everything you pursue, and your degree will prepare you to navigate an ever changing world. With a liberal arts degree, you won't be able to make, design, or build widgets for your given company, but you'll be able to think critically about where the widget's place is in society, the future of the widget, and the direction in which the widget maker needs to go. Ultimately, that's the work of CEOs.

In a society where we're sold on the fact that college is essential whatever the cost, it makes sense that those who don't consciously choose their education would be resentful of the package of goods sold and the debt to follow. College degrees no longer directly equate dollar signs and zeros at the end of salaries, but instead can account for the x-factors — the intangibles of life fulfillment and the ability to do a job and not just get a job. Stand behind your investment. Put a lot of time, research, and perhaps money into your education, and it will pay you back.

What are some of your stories, good or bad, about college debt? What are some helpful hints you've come across?
More about...Debt, Education

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
116 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Kat
Kat
9 years ago

I just paid off one of my student loans not 30 minutes ago. Bye bye 2k of debt.

I kept my college costs down by working for the school in a tech support position that paid R&B (half the cost, effectively).

If your priority is to not go massively into debt, look at your public school options. Also, consider investing in a double major if you love the liberal arts with something more technical. After all, the purpose of the liberal arts education is to expand your horizons.

getagrip
getagrip
9 years ago

I give my kids the following choices: Two years community college, two years in-state school, on me. Four years in-state school at the dorms, you graduate with an expensive new car payment on something that you’ll never drive and assuming you get a job will likely pay off by the time you’re thirty (oh my God I’ll be so old!). Four years out of state or most private schools (without aid, both had offers equivalent to in-state with aid they considered), you graduate with a home mortgage for a house that will never provide you a place to sleep, which… Read more »

Cassie
Cassie
9 years ago

Sorry, this was just driving me crazy and I had a hard time concentrating on the rest of the article.

Piqued not peaked.

http://public.wsu.edu/~brians/errors/peaked.html

J.D. Roth
J.D. Roth
9 years ago
Reply to  Cassie

I corrected this and the “chose/choose” error. I’ll be back to editing later today. In La Paz now and will fly to Lima in the late afternoon. In theory, my hand will be on articles starting with tomorrow. (In theory!)

But April has done a great job in my absence, and I’m truly grateful for her help. It’s made my life so much easier. 🙂

Marsha
Marsha
9 years ago
Reply to  J.D. Roth

You also missed this one:

“Sarah Lawrence gets increasingly generous with her in-house aide.” Umm, shouldn’t this be “aid?”

Wow, I didn’t realize this was a perk of going to Sarah Lawrence! Made me laugh.

LA
LA
9 years ago

By the time I finished my Master’s degree, I had paid $2,000 for my college degrees. Total. No student loans. My methods won’t work for everyone, but I would encourage people to look at 2-year community college/technical programs (my experience has been in healthcare). In particular, programs that are sponsored by hospitals (although these are a dying breed) are very inexpensive. For instance, even though I received scholarships to pay for my first two years, it would have only cost me $3000 (books, tuition, and fees) because the hospital paid for 80% of the education. Then my employers paid for… Read more »

LA
LA
9 years ago
Reply to  LA
Jane
Jane
9 years ago

Good article. I will say, though, that sometimes small scholarships don’t help much. For instance, I received a $250 one from my high school. Guess what that meant? Basically my private university just reduced their grant to me by $250, so in essence it didn’t really mean any less money that my parents had to pay. I graduated from college over ten years ago, and I’m still kind of bitter by how the FAFSA calculated how much my parents could pay. I don’t believe my dad ever made more than $60,000 a year, and I think we only received a… Read more »

Holly
Holly
9 years ago
Reply to  Jane

Jane, I understand how you feel. I had a conversation with someone just yesterday about this.

However as a parent, I’m loathe to blow my money on vacations now if there is a possibility I may end up sticking my kids with giant college loans later. OTOH, I am definitely planning to lay out the options and consequences before they make a choice of college.

Jen
Jen
9 years ago
Reply to  Jane

Yup. My husband and I were just talking about this, since our second child is doing applications right now. We’ve saved all along for both retirement and college (3 kids, but youngest one is 8 years younger than the HS senior). And now, it’s bitten us in the butt. Looking at various financial calculations that colleges show, it feels like we’d have been better off taking extravagant vacations and paying for all sorts of glamorous activities for the kids. Not that we could have stood the anxiety. But it is annoying to see a breakdown for someone making tens of… Read more »

Marsha
Marsha
9 years ago
Reply to  Jen

We never opened accounts in our children’s names because we realized when they were little that it would be best as far as the FAFSA is concerned if they were technically broke. Instead, we stuffed every possible penny into retirement accounts, which are not considered assets for the FAFSA. My kids’ grandparents saved money too, but kept it under their own names. Since our retirement account is very healthy, we can lower the amount we’re socking away for retirement and pay some college bills out of current income. Fortunately, our older son got a large merit scholarship that covers most… Read more »

Jane
Jane
9 years ago
Reply to  Marsha

This is exactly the approach that we are taking with our two young sons. Everyone kept on urging us to open 529s, but instead we are using our Roth as a college fund for the time being. They are still very young, so we might change things as the years progress.

Dan
Dan
9 years ago
Reply to  Jane

I’m bitter too. While I was growing up (80’s and 90’s) my parents didn’t make much money — less than $40k/year. My grandfather knew it, so what did he do? He socked away $20k for me, payable over four years.

So what happened? I was disqualified from Pell Grants because of that. Grandpa just saved the government $20k, wasn’t that nice of him?

Sandy
Sandy
9 years ago
Reply to  Dan

Ok, but do you really think Pell Grants would have equaled 20k?
I make less than 20k a year and returned to college as a non traditional student and even though I did get Pell grants, I still had to take out loans.

Jaime B
Jaime B
9 years ago
Reply to  Jane

That is a good head’s up for parents – not every school structures their finaid the same way. I had a good friend in high school who was looking to go to Harvard. He’s highly intelligent and driven, so he’d managed to secure $20,000 in scholarships – then he found out that Harvard would just deduct that amount from the amount they were offering. He opted to go to a state school, won further scholarships to study in Israel and England and finally came back to the US to go to Harvard’s law school. lol, full circle. That was over… Read more »

Grace
Grace
9 years ago
Reply to  Jaime B

A decade ago, I had a similar experience in regards to the financial aid office. My state school has an excellent reputation for my field(engineering). I called the financial aid office of an Ivy I had been accepted to and asked if they could match what the state school costed. The woman on the other end was incredibly snooty and basically hinted that if I wasn’t willing to take out +50k in loans, then maybe I didn’t belong there. A friend of mine went to MIT in the same time period and said they matched what her state school costed… Read more »

imelda
imelda
9 years ago
Reply to  Jaime B

Same thing happened with my friend. Her parents were total deadbeats and wouldn’t offer her a dime for college, even though her father earned a pretty high income.

I think Barnard College’s advice was to divorce her parents.

She had already completed 1 year of college at a cheaper community college, and then worked out a program to finish her degree in 3 years total. She still graduated with a ton of debt.

Cortney
Cortney
9 years ago
Reply to  Jaime B

I had the same issue- I worked since I was 14, bought my own car, school clothes, cheerleading uniforms, the works. Worked full time all through college, didn’t get help- yet had to claim my parent’s income. I begged the financial aid office to please help me, and they said unless my parents were in an insane asylum, or charged with abuse that led to my “divorcing” them, they couldn’t do anything. Yet my young, married friends got to file “independent”, get financial aid, HUD, etc., and still get help from their (generous, wealthy) parents. The system is broken in… Read more »

Jaime+B
Jaime+B
9 years ago
Reply to  Jaime B

Whoops, I didn’t mean to imply my parents were or are deadbeats. They are wonderful, it’s just that I had already started and dropped out of college once – invalidating all of my scholarships. From then, I was on my own and was still a little flakey about staying in school. I finally got my act together, but was still too young to apply for the FAFSA on my own. That snotty lady said the same thing, unless my parents were abusive I had to claim them on the form. I was especially angry because of her snippy comment about… Read more »

Laundry Lady
Laundry Lady
9 years ago
Reply to  Jaime+B

My husband had a similar problem that forced him to delay going back to school. I understand that the system is designed to prevent circumventing by every child being declared as independent. But my 23 year old husband (then boyfriend/fiance) had to delay college for two or three more years because they wanted financial info for his Mom & step dad as well as his Dad and step-mom. (both of whom live in states on the other side of the country). He had been living on his own, paying his own bills for two years, but they still were going… Read more »

Jaime B
Jaime B
9 years ago
Reply to  Jaime+B

Blended families are a whole other issue. Since my stepdad didn’t adopt my brother and I, the cost of our care was not figured into the amounts assessed for the child support he owed for his two daughters. However, since we were his dependents we had to claim his income on the FAFSA (our birth father is dead and Mom was a SAHM). Concurrently, my stepsisters were able to choose which parent to claim on the form and chose their mom since she made less money (even though my oldest sister was a dependent on my stepdad’s taxes and lived… Read more »

Ru
Ru
9 years ago

Great article with lots of practical advice in it. I would add a few bits and bobs based on my current student experience. First off- don’t rush into university, especially if you don’t know what you really want to do. My brother was pressured into going to uni straight from school at the age of 18 (the school wanted to be able to say that X% of their students went on to higher education). He ended up choosing a BA he ultimately didn’t have the heart to do, Maths, and chose his location based on where his girlfriend studied. After… Read more »

Jean
Jean
9 years ago
Reply to  Ru

Hey, Ru, I’ve met students like you on my train to work, and I really admire your doggedness. I can barely tolerate my daily cross-London commute with my little backpack — and here you are traveling in from well outside the city lugging all your books and equipment, often not getting a seat. I hope you finish your course with flying colours and get yourself a wonderful career afterwards where you will never again have your face in some fellow commuter’s armpit.

Ru
Ru
9 years ago
Reply to  Jean

Aww, thank you!

You’re right about not getting a seat most of the time, and I also get a lot of dirty looks from commuters for having so much luggage. But I have had some lovely moments of compassion from Londoners- when I was ill with the flu I must have looked absolutely wretched because I scored a seat both ways for 3 days straight!

One day I’ll have my own studio and a commute, out of the bedroom, downstairs, and to the end of the garden 😀

Nate
Nate
9 years ago

“Whichever college you end up choosing, truly chose it. We can argue about whether or not college is a necessity. We can argue if the high sticker prices at many schools are worth it. That said, at the point you decide that the investment is worth it, treat it as such.” LOVE IT!! I agree with you 100%. One of the bigger problems is that many kids coming straight out of high school don’t treat the college experience (and costs) as a disciplined investment. Many of them don’t have parents knowledgeable enough to guide them either (or interest enough to… Read more »

Matt
Matt
9 years ago

I graduated high school in 1996, spent two years at a community college while living at home and paid cash for tuition/book by working two part-time jobs. The next three years I spent at a in-state university, living with roommates, working two part-time jobs to cover living expenses and took stafford loans out to just cover my tuition and books each semester. Yes it sucked, I had little free time, didn’t party near as much as my friends, but the $12,000 in school loans I took on was paid off three years after I graduated. My friends are still paying… Read more »

My University Money
My University Money
9 years ago

We have this talk regularly on our site. I think you made some great points. I too was a huge fan of entering my name in as many scholarships, bursaries and grants as possible. I’d put my total somewhere around $15k over two degrees, and I had only good grades, not spectacular grades! When you consider that you’ll be paying back loans with after-tax dollars, that’s a lot of money saved in the long run! I should point out that I went to school in Canada, where a lot of our education is subsidized. The end result was that I… Read more »

Eric
Eric
9 years ago

//I had fulfilled the math and science requirements for most of the programs that peaked my interest during preliminary research.//

[dictionary]The word you’re looking for there is “piqued,” not “peaked.”[/dictionary]

Kaytee
Kaytee
9 years ago
Reply to  Eric

Maybe fulfilling the math and science requirements was the high point.

Hannah
Hannah
9 years ago

I actually have to disagree with you on the “Colleges invest in upperclassmen” part. Unless you have it in writing, don’t assume that your aid (merit-based or otherwise) will increase, or even stay the same for your whole undergraduate career at the same school. Many Colleges and Universities have GPA requirements or stipulations (taking a certain number of credits, etc) in order to maintain your standing for merit scholarships. Additionally, Colleges and Universities measure much of their success in how many freshman enroll each year (obviously, it’s tuition money in the bank for them), which leads many to give large… Read more »

Nina
Nina
9 years ago
Reply to  Hannah

Yes! I was going to comment on this as well. I went to a small private liberal arts institution and when I was accepted I was offered a four year renewable scholarship that covered about a third of tuition, and a handful of other small scholarships that were not renewable and basically designed to entice me to enroll. Coupled with tuition hikes during my four years I took out thousands more in loans my junior and senior year. There are several factors that lead to this, but I think a big one is endowment size. Sarah Lawrence is well endowed… Read more »

imelda
imelda
9 years ago
Reply to  Hannah

You said it. I felt particularly betrayed by my college because I transferred there sophomore year. It was a big, difficult decision to make. If I had known that after my first year, they were going to strip me of my Pell Grant and other aid because they save those to attract incoming students, I might have reconsidered.

My parents’ expected annual contribution was about $200; believe me, I needed the aid!

Harmony
Harmony
9 years ago
Reply to  Hannah

I have to agree, the cost is more likely to go up for upperclassmen than down. Even hanging onto a merit scholorship could fall apart. I got into a College of Pharmacy after 1 year of pre-Pharmacy at the same University that only accepted GPAs 3.8 and above. Then proceeded to grade on a curve. Suddenly 4.0 students were fighting to get C’s.

Also, the “professional fee’s” that I was assured would not be a problem as a senior in high school ($1000/yr at the time) exploded to $5,000/yr by the time I graduated.

Ris
Ris
9 years ago

I would add that if you have certain types of loans (government loans, I believe) and work for a nonprofit for 10 years, at the end of those 10 years your loans will be forgiven. The 10 years don’t even have to be consecutive, they just have to occur after you’ve graduated. I’d also add that there are a lot of ways to lessen expenses while you’re in school. I was an RA in college and while I did have to live in the dorms when all my friends had their own cool, off-campus apartments, I also didn’t have to… Read more »

Tom
Tom
9 years ago
Reply to  Ris

Reidence Life! A fantastic way to shave $1000s off of your college bill (and earn a small income at many schools).

elorrie
elorrie
9 years ago
Reply to  Tom

I too was an RA and it saved me a ton of money. At the school I went to room and board was $10k+ a year. Not many other jobs you can work during college spending less than 20 hours/week and make that kind of money. Add to that the fact that you can also be an RA during the summer which allowed me to have a full-time job and zero living expenses. But you have to be careful there with financial aid as well. At my school the free room and board was basically detected from your financial aid… Read more »

imelda
imelda
9 years ago
Reply to  Ris

I’m sorry, but I found a lot of problems with this article. Namely: 1. Most universities, even ones that claim to not offer any merit-based scholarships, offer more and more need-based financial help as students increase in seniority. As others said above, this is NOT the case in my school, Barnard College, and I can’t imagine it’s the case in most. Schools offer their best aid packages to attract incoming students, and cut back on older students’ aid to afford it. 2. For $20,000, the minimum to pay it back is $200 a month. I took out about $26,000 worth… Read more »

Pamela
Pamela
9 years ago

Very great points, Jim. But the problem is that students don’t get this message when they need it and it’s too late by the time they figure it out. As a HUD-certified housing counselor in an Ivy League university town, I break the bad news to the over educated and under employed people who want to buy their first homes. Potential home buyers are shocked to find that their $150,000 student loans prevent them from qualifying for a mortgage at all. And even deferments won’t help for long (or at all if they’re guaranteed for less than 3 years). BTW,… Read more »

Dan
Dan
9 years ago
Reply to  Pamela

Heh. I borrowed $40k as an undergrad, let $15k in interest capitalize, and then borrowed another $30k for grad school. Undergrad? That was dumb. My thoughts were “I’m going to be an engineer, and engineers make good money out of school. They wouldn’t lend me money that I couldn’t pay back.” (And $40k wasn’t *that* much money.) As an adult, I came to realize that huge racket that student loans are — lend large sums of money to a group without the maturity to understand what they are commuting to, and even worse, relieving them of the escape hatch that… Read more »

The+Other+Brian
The+Other+Brian
9 years ago
Reply to  Dan

Oh, I see. If we let you hand off your *current* debt to others you would be willing to take on *new* debt to buy my house.

Yeah, that’s going to fix our economic problems…

Dan
Dan
9 years ago

The trite answer is, well, “yes” 🙂 I’m not an economist, so I can’t tell you if that is the economically correct solution. What I can tell you is that a crappy housing market is creating a huge drag on this economy. We can’t move houses or create jobs until the economy gets moving again. You can’t sell your starter house unless there is someone there to buy it. And as long as the younger generation is saddled with student loans and poor job prospects, you’re stuck too. College borrowers get a raw deal. Since student loans are guaranteed and… Read more »

The Other Brian
The Other Brian
9 years ago

I agree that the loan rates are ridiculous. Next to US treasuries, they are probably one of the safest investments because of the discharge, estate and payback rules. While I agree that forgiving these loans may have the short-term effect of stimulating house buying; in the long run, it will hurt the economy. Why? Because the cost of borrowing will either go up substantially for future buyers due to the default risk now assumed by lenders OR we will have have another FHA-type debt disaster in the making. With that being said; would you like to buy my house? It… Read more »

Ben
Ben
9 years ago

Please *do* return to the “ins and outs of the FAFSA” thread you propose could be discussed here on GRS – I bet there are plenty of us considering 429 plans and so forth who would *love* to get the lowdown on how to strategize so that we are not penalized (as Jane notes in her comment) for actually saving for college!

CNM
CNM
9 years ago

I was lucky enough to graduate college with no loans; but law school loans were a killer. Scholarships to law school are rare. However, one way I managed to minimize them was I went to a school where the cost of living in the surrounding areas was relatively inexpensive. Also, law students sometimes fall into the trap of “spending like a lawyer” before they have gainful employment. I imagine that is not too uncommon across all graduate schools.

One grammatical quibble: a person’s interest is PIQUED, not peaked.

Jean
Jean
9 years ago

Hmmm…lotta typos and other errors in this post. I assume the detail-oriented JD has not yet taken back the reins. My parents (thank you Mom and Dad! Again!) sent me to the state school of my choice, and I took it seriously. I worked a part-time job (about 20 hours per week, more during the summer and winter breaks) to pay for books/gas/food and to save up for graduate school, which I was pretty sure I wanted to attend. I also took (and paid for) summer school courses at a very inexpensive community college, getting some of my introductory level… Read more »

Kaytee
Kaytee
9 years ago

When I was in college I found websites like Fastweb and Finaid! to be completely useless to me because of choices that I made in attending college. I’m sure they’re great if you decide to attend college right out of high school. Because I didn’t know what I wanted to study, I decided to take a year off to work and save up some money before attending college. I built up a cushion and purchased a small car that was supposed to be reliable and would last me through college. Not being a high school senior disqualified me for most… Read more »

Danielle
Danielle
9 years ago

I came here to second the choice to work as an au pair. Throughout college, I worked with an alum’s family, lived with them and everything. It meant free housing, food, and that I had to be much more dedicated to my schooling as my time was limited. It’s hard, but single parents do it all the time. During the summer and on breaks, I worked even more. And if the family couldn’t offer me more hours, I picked up a second job at the grocery store. A side benefit of working for someone who had graduated from the same… Read more »

b-bo
b-bo
9 years ago

The root cause of these numbers increasing is all of these for-profit private colleges that give you sub-part education and profit off of government loans and grants and help people get those loans as fast as possible. it’s like the mortgage situation. get people into school because its probably easiest loan to get approved regardless of credit or anything and then show them flashy commercials of some guy who was a fashion designer for stars, “works on video games all day”, or is an iron chef at the local chilis… and bango you got people coming out with mostly useless… Read more »

tom
tom
9 years ago

I noticed many university students aren’t very smart with their finances. I go to school in Canada and my school has a co-op program every 4 months so I work fulltime and study during alternate terms. I do realize many students don’t have access to working full time while in school, so I’ll give some advice on how I make separate streams of income. 1. Entrepreneurial projects: I study finance, and going through the application/interview process multiple times now I can gauge what employers are looking for in a resume/interview. I started a finance resume editing service, which I currently… Read more »

Spencer
Spencer
9 years ago

I don’t know if schools in the US offer this at all but here in Canada a number of schools offer co-op programs. I’m just completing my final year and I’m graduating with ~$20 000 in the bank. These positions are generally paid (although you can take volunteer positions too which provide a different kind of benefit). In any case, these are heartily recommended if you’re trying to escape school debt-free. University of Waterloo, University of Ottawa, University of Victoria, and Carleton University all offer co-op programs as do some colleges. It’s well worth looking into. Plus, over a year… Read more »

Nate
Nate
9 years ago

“With a liberal arts degree, you won’t be able to make, design, or build widgets for your given company, but you’ll be able to think critically about where the widget’s place is in society, the future of the widget, and the direction in which the widget maker needs to go. Ultimately, that’s the work of CEOs.” A bit arrogant, considering that the top degrees for CEOs are engineering and business administration. Not to say that it isn’t done, or that the degrees have no value, but it’s disingenuous to paint the picture that running a company that designs and produces… Read more »

El Nerdo
El Nerdo
9 years ago
Reply to  Nate

The ghost of college dropout Steve Jobs disagrees:

http://www.npr.org/2011/10/06/141115121/steve-jobs-computer-science-is-a-liberal-art

http://www.youtube.com/watch?v=wNfaVImybns

Edit: okay, not exactly a direct refutation, but I didn’t have the time to make a long argument about how Tim’s point is essentially right– that the skills needed by a CEO are the skills the liberal arts provide. How to get to the CEO from a BA in liberal arts is another story (hence he said “ultimately”). But an engineer who doesn’t understand society or human psychology is not going to make CEO in a million years either.

Nate
Nate
9 years ago
Reply to  El Nerdo

Well, that’s okay, because the *facts* disagree with you. Liberal arts degrees make up somewhere between 30% and 40% of all degrees granted currently (and historically as well, except during the 1980s, when it was quite a bit lower), depending on how you interpret it [1]. 15% [2] or fewer [3] of all CEOs have only a liberal arts degree. Moreover, 60% of all Fortune 500 CEOs have graduate or higher level degrees [4]. 19, like Steve Jobs himself, received no degree at all. I never said you can’t do it. I never said it didn’t happen. I’m not even… Read more »

El Nerdo
El Nerdo
9 years ago
Reply to  Nate

That’s a brilliant refutation of an argument that was never made in the first place.

Nate
Nate
9 years ago
Reply to  Nate

El Nerdo, I obviously wasn’t explicit enough. Let me spell out what I thought was clearly implied:

The skills needed by a CEO are *NOT* the skills the liberal arts provide, because otherwise, the liberal arts would be disproportionately represented in the ranks of CEOs – and they *aren’t*.

These skills come from elsewhere.

Pamela
Pamela
9 years ago
Reply to  Nate

And the most common degree earned by college presidents and attorneys is history.

Nate
Nate
9 years ago
Reply to  Pamela

I think the most common degree for attorneys to have is a *law* degree.

Pamela
Pamela
9 years ago
Reply to  Nate

Law is a graduate degree. The most common undergraduate degree of attorneys is history.

Nate
Nate
9 years ago
Reply to  Nate

Pamela – I have no idea what you’re getting at. I said that CEOs with liberal arts degrees *alone* are disproportionately underrepresented. Very few college presidents and attorneys (which, by the way, aren’t CEOs) achieve their goals without getting advanced degrees. So were you agreeing with me?

Tina
Tina
9 years ago
Reply to  Pamela

In this case Pamela but EVERYONE on GRS: If you’re going to make these statements PLEASE PLEASE PLEASE Cite your sources! Making broad statements with no way to back up what your saying is just not acceptable in my opinion, especially when your statement is NOT something that is a matter of opinion. You can say: “You can major in history and become a lawyer.” But from all indications from simply googling it EVERYONE seems to say the most commonly held degree is Political Science. The next most common seems to be Business. The only information I could find that… Read more »

Tom
Tom
9 years ago

I’d like to throw this thought out there, anyone who has taken out Federal Loans since 2006 has an interest rate in the ballpark of rate of 6.8% FIXED, whereas borrowers prior to 2006 took variable-rate loans based on the 91-day treasury, and currently the interest is about 2.4 – 3.1% on their loans. I graduated in 2007 and feel lucky that the majority of my loans were variable and I’ve now “consolidated” to fixed 3%. I say “consolidated” in quotes because I only ever had one lender, so it was essentially a refinance for me. That 3.5+ point spread… Read more »

Steve S
Steve S
9 years ago

I think the debt / starting salary ratio is a good idea. With loans and credit card debt my initial ratio was about 1:1. After a series of raises the first year on the job and a cheap living situation the credit card debt was gone and the remaining ratio was about 0.4:1. I had all of my loans paid off in two years and ten months. – Good choices I made: I worked 20+ hours per week during two years of college (first and last years were too intense to manage that), I lived with my parents (NOT rent/food… Read more »

Jaime+B
Jaime+B
9 years ago
Reply to  Steve S

You bought a guitar, I paid off the last few thousand of my truck note. At the time, I was thinking that the interest on the student loans was so much better than the car loan that it made perfect financial sense. (was still in school at the time, so not even making payments) What I neglected to consider was the fact that I would have finished paying off that car note years ago, but I’m still paying off my student loans today. Luckily, my interest rate is only 2.5% (maybe 2.1, I forget at the moment) so I may… Read more »

PB
PB
9 years ago

One little known benefit of having a parent working at some colleges: free tuition for your spouse and children. The spouse or child must still go through the acceptance process and be qualified to attend the college, but this is usually available for any full-time employee, from janitor to tenured professor. There is usually a time limit for children (age 24 here) and it obviously does not cover food, housing or books, but can be an enormous help.

Think about this when you choose your employer.

Cindy
Cindy
9 years ago
Reply to  PB

This is so true with most state universities! But make sure you check out the details. I currently work at a state university part time, so this covers no tuition. However, once fulltime, (keeping my fingers crossed) it will cover tutition for myself, spouse, dependant child for an associates or masters degree. Unfornately my son is in his senior year at another college and my daughter is only in elementary school. Getting hired by our local university is very hard. One being they usually hire graduating students and two once an individual is hired they are usually there until retirement.… Read more »

Cara
Cara
9 years ago
Reply to  PB

Even if this is an option, it’s not a good idea to depend on it. My father taught at a commuter school that offered maybe eight majors, five of which were engineering (and electrical engineering being the ONLY acceptable major in his eyes). His entire “plan” consisted of assuming I’d be going there and living at home even though I would’ve never voluntarily chosen that school or that major. Looking back, I should’ve pushed back harder to go to my first choice school (the local state university) and found a way to make it happen despite strong parental disapproval and… Read more »

PB
PB
9 years ago
Reply to  Cara

I know this doesn’t always work out. Of my three kids, our first did two years here and then transferred to art school, where she did another 3 1/2. The second joined the army out of high school, did two tours in Iraq, and now is back going through on the GI bill. Our youngest is here and looks to be dropping out for the second time, or possibly transferring to a two year business school. Kids are all different. And when this works, it works really well.

Brit
Brit
9 years ago

I absolutely loved this article! I dont think I’ve read anything on this website that was as relevant to me as this was. Thank you! I’m excited to read more in the future…also, waiting tables is EXACTLY how I’m going to pay off my student loans. Full time non-profit job, plus Cheesecake Factory on the nights and weekends equals debt gone in two years =)

Michael+Moore
Michael+Moore
9 years ago

If you get married while you’re in college your parents finances no longer count in your FAFSA applications and suddenly you can actually qualify for real money.

My wife and I got married our sophomore year and FAFSA covered the rest of our tuition. We paid for books/rent by working part time.

Kaytee
Kaytee
9 years ago
Reply to  Michael+Moore

This works sometimes. My husband and I got married before I started grad school, all it really did was qualify me to take out more federal loans.

Dawn
Dawn
9 years ago

As mentioned before, what really bothers me is that most kids treat college like a given rather than an opportunity, and it never seems to occur to them just how much their education costs their parents. But anyway, here’s how my husband and I are getting out of college with NO DEBT! My husband and I have just started school as transfer students at UC Berkeley. We graduated from high school and got into a good amount of state schools but decided to go to community college to save money. We went to community college for three years while working… Read more »

cw90
cw90
9 years ago

A lot of articles on student loans don’t offer much in the way of how to deal with student loans that hasn’t already been mentioned….I would like to see more options on how to pay them off that doesn’t involve volunteering (Americorps, Peacecorps, etc.) in a third world country or teaching in the ghetto to do so.

Then there is always the direct approach…get a second or third job and dedicate the next few months or years to paying those bad boys off.

Sorry for being dramatic, it’s just been that kinda morning.

Laundry Lady
Laundry Lady
9 years ago

When I read articles like this and others that point out how much college is likely to cost by the time my 2 year-old gets there, I’m left with one thought: something has to change. I would need to invest a minimum of $500 a month for my daughter to be able to afford college tuition and all related expenses. That assumes a reasonable market return and that I only have one child. So if we have the two or three we plan then we have to save $1,500 a month for college? (Not likely give that our monthly take… Read more »

Rebecca
Rebecca
9 years ago
Reply to  Laundry Lady

Don’t panic! Check out if your state has something like New Jersey’s Star program where kids in the top 15% of their class get free tuition to community college, and then get free tuition at 4 year state schools if they keep their grades up. There are lots of guidebooks such as Debt Free U to give you savings tips, but keep updating your planning, as these things change all the time. Just don’t assume it can’t be done without massive loans!

Linden
Linden
9 years ago

I’d like to see that follow-up article about the FAFSA. As a parent of two young children, it would really help to know now what will determine our expected contribution in years to come… Thanks.

Reggie
Reggie
9 years ago

I know most GRS readers are of the belief that all debt is evil, but I believe student loan debt can be a major exception. In order to see the benefit, however, you may have to look at it over a long time horizon – such as over an entire career. Over an entire career, if you averaged only a $10,000 per year salary increase (averaged over the entire career, NOT starting salary) versus not having a degree, you’d come out $300,000 – $400,000 better in lifetime earnings (30-40 yr career). Is that worth taking out $20,000 – 30,000 in… Read more »

BIGSeth
BIGSeth
9 years ago

Who knew that our desire for stuff is only matched by our desire for education? Hooray America!

lost-in-translation
lost-in-translation
9 years ago

In the 20+ years since my daughter was born I was told to save for college, save for college, save for college… So I did was I was told and ended up with ~$15K in a 529 college savings account. So now I’m paying for her state college with this nest egg. Perfect scenario, right? Except many kids my daughter’s age are getting a free ride because their parents didn’t bother to save a dime and they’re in debt up to their eyeballs. I make $60K/year and pay off all my monthly debt except for the mortgage; they carry monthly… Read more »

Tom
Tom
9 years ago

I believe that your 529 distributions aren’t held against you on the FAFSA. Plus all that earning over the last 20 years is now going to be income tax free! Assets in the parent’s name are assessed at 5.64% maximum. A student’s assets are what kills your chances on the FAFSA.

Don’t be surprised if this anecdotal “free ride” isn’t just eligibility to take out unsubsidized federal loans. Being eligible for loans is not the same thing as a free ride to college.

Jenne
Jenne
9 years ago

Depending on what your college requirements are to graduate– and the cost per credit– dropping that AP credit may not have paid off. When I was in high school, I took 3 college classes in the summers, and also took 5 AP classes. At 4 credits per AP class, I ended up with TWO SEMESTERS already completed. I matriculated as a sophmore. Sometimes I wish I hadn’t, since I could have gotten (GOOD!) financial aid for the last year– but financially it saved me a lot. Work study turned out to be somewhat of a bust for me because I… Read more »

Cindy
Cindy
9 years ago

Would love to see article on FAFSA completion.

Christy
Christy
9 years ago

I live in Oregon and the state has a program called College Now where high school students can earn college credits while attending high school. In my area high school students pay a one-time fee of $25.00. They can then earn as many College Now credits as their high school offers. I know one young man, who at the time of his high school graduation, had already earned 33 college credits and it cost him $25.00.

Marcus Byrd
Marcus Byrd
9 years ago

Love this article. For those who are depressed, just know that you can make it through college without being in mountains of debt! I will graduate in Dec. and will be completly debt free. However, I know some people who take the same classes I take and have $20,000 of debt. It is not a lifstyle, or a hangout. The only thing I would suggest is that instead of having your college picked out and going for it, have your major picked out and go for it. Changing majors every semester has really hurt a lot of people I know.… Read more »

Cortney
Cortney
9 years ago
Reply to  Marcus Byrd

“I say go to a 2yr college to get core classes because they are cheaper and easier, so that helps your wallet and your GPA. Then transfer to the college you would like to graduate from.” Enthusiastic co-sign with a t-rex RAWR!

Danielle L. Schultz, CFP®
Danielle L. Schultz, CFP®
9 years ago

Just a caution–don’t depend on scholarships. As a financial planner, I hear over and over, my kid is so smart, he/she will get a scholarship. For private scholarships not connected with a university, the average award is $1,982, the length is one year, and only 7% of students land them. Most scholarships are awarded through the school you’re accepted at, as part of your financial aid package, and more and more of the top schools do need-only aid–after all, most of their students would all qualify for merit. If you do land a scholarship, some colleges will take it out… Read more »

Cortney
Cortney
9 years ago

If you can get your child into an IB high school, do it. It stands for International Baccalaureate. Here in Colorado, a *high school* graduate from an IB school is allowed to enter college as a second semester SOPHOMORE. That is a year and a half of college credit given to them. And IB schools are public schools, so no, you don’t even have to pay a private school tuition. Out of the remaining 2 1/2 years, you can still take core courses at a community college while going to your university of choice. In general, I think that far… Read more »

Ian
Ian
9 years ago
Reply to  Cortney

I went to an IB high school, and received (IIRC) 36 university credits for my IB exams (and diploma) – but some schools didn’t know anything about IB, and AP classes would get the same results as IB classes. That said, I would highly recommend the IB curriculum to anyone in a public school who is talented and has the option to participate. I think the academics are much better than AP or (shudder) regular public high school classes. Heck, I have gotten more use from my IB education than my college degree. Which brings me to my other comment… Read more »

Joe
Joe
9 years ago

Good article. One comment – I wouldn’t entirely write off working for a nonprofit after college. I graduated from a Masters Degree program in 2006 and I had $121,000 in student loan debt. I began working for a nonprofit immediately after graduating and I’ve managed to repay $80,000 in principal and $30,000 in interest (so far). According to the aggressive repayment plans that I’ve prepared for myself, I should be rid of the remaining principal balance within 12 – 14 months. All of that on a nonprofit salary! Most people think of nonprofits as the local soup kitchen down the… Read more »

Honey
Honey
9 years ago

Timely considering Obama’s announcement today. My new plan is income-based repayments for 20 years and the rest will be forgiven. It’s really the only affordable option for me (I have a PhD and $100K in loan debt).

Laundry Lady
Laundry Lady
9 years ago
Reply to  Honey

I could be wrong, but I don’t think income based repayment lasts forever and the payments are adjusted upward every year if you have an increase in income. We are currently using income based repayment to pay back my husband’s student loans (normal payments would be almost 1/4 of his take home pay), but my understanding is that this is only temporary measure lasting 3 to 5 years. Though I could be mistaken. Any windfall we have gets thrown at principle payments, even though many people have told me it’s a waste of money and we should just wait for… Read more »

Cortney
Cortney
9 years ago

Wait, sorry, one more thing- a huge money suck is studying abroad. I really wanted to study abroad in college, but I worked as an RA for one of my (3) jobs that totaled about 45 hours a week, so I couldn’t go during the school year, and during the summers I didn’t want to give up my other jobs because they supported me well. My solution? I applied for a job teaching English in Japan. I knew by March that I would be leaving in August, so when I graduated in May I was all set to work my… Read more »

Rebecca
Rebecca
9 years ago
Reply to  Cortney

This goes to show how advice that might have been great a few years ago can not apply anymore. When I went to college in the early 90’s, going abroad for a year was a huge money saver for me and my parents- the cost was about 1/3 of regular tuition for my China program and I received full credit for my time there. Now my school has wised up and created their own program that you have to go through to get credit- it costs more than a regular school year. I would check out The New Global Student… Read more »

Kevin
Kevin
9 years ago

The problem is the colleges. Tuition does not have to rise every single year. It rises because colleges are run like businesses and constantly try to suck in more money to enhance their “prestige.” Colleges should not be businesses. Every policy at every college in this country should be aimed at REDUCING tuition, not increasing it. It is amazing to me that everyone in America takes it for granted and considers it acceptable that colleges in this Country raise their tuition at a rate higher than inflation every single year. The answer is not to provide more taxpayer-backed government loans… Read more »

LA
LA
9 years ago
Reply to  Kevin

Kevin,
I know what you’re saying about college tuition. BUT (at least at my institution) there are 3 ways colleges bring in revenue: 1) taxes 2) state contributions 3) tuition. Taxes, depending on the local economy, may decrease. Our state is way behind in contributions. That leaves tuition which is increased to make up for the shortfalls in the other two categories.
Colleges can’t operate at a deficit for long.
What are your thoughts?

Nicole
Nicole
9 years ago
Reply to  LA

Agree with LA. Hate rising tuition costs? Tell your state to stop cutting off funding. If you want state universities to be run like businesses, then they will cost what private universities cost. Period.

Ace
Ace
9 years ago

One very important point I’m surprised the author didn’t mention: a four-year degree should be completed in FOUR YEARS (or less). A two-year degree should be completed in TWO YEARS. Etc.

It is shocking how many students voluntarily increase the cost of their education by 25% by taking five years to complete a four-year degree. Pick a major. Stick with it. Take a full load, and finish on time.

Cortney
Cortney
9 years ago
Reply to  Ace

YES. And, especially with tuition rates going up each year, even an extra year or two can really add up.

BB
BB
9 years ago
Reply to  Ace

You know what else is shocking? A state university offering required course for several majors only every other year or even every third year. Students can’t finish in 4 years under these conditions. Average time to complete a degree become 5, 6 or more years- not due to student laziness, but due to insane school policy. One caveat about AP credits: a lot of colleges won’t give credit for AP exams, even if a student gets a 5 (perfect score). At my younger daughter’s college I learned this is because AP classes at many high schools are specially-packaged classes, with… Read more »

Chase
Chase
9 years ago
Reply to  Ace

I failed miserably in regards to this. I changed my major three times, each in an unrelated field. I am in my last year of seven (that’s right), and will be graduating in the spring with my engineering degree. There are definitely worse places I could have ended up. I’ll be graduating with an approximate 2:3 debt to income ratio from one of the best colleges in the country (I transferred). I’m extremely thankful to my parents and grandparents who saved money since I was born for college. Without that, I wouldn’t be afforded the opportunity to find something that… Read more »

SLCCOM
SLCCOM
9 years ago
Reply to  Ace

That isn’t always an option. The music program at our local university gives a lousy 1 credit for courses involving 3.5 contact hours, which means those should be 3-credit courses. So these students are working their hineys off for what looks like just 6 or 8 credit hours, and they can’t possibly finish in 4 years. Why the school lets the department get away with it I have no idea.

BB
BB
9 years ago
Reply to  SLCCOM

And the majors that require 130 credits to graduate, including 1 credit practicums that are also 3 or 4 hours per week– very hard to finish in 4 years and impossible to have a job during the school year.

Cheryl
Cheryl
9 years ago

One thing that worked out very well for my college freshman daughter was applying to a school that is known for giving great aid. Someone (may be The Princeton Review; I’m not sure) puts out a financial aid honor roll every year. My daughter’s school is not on the current list, but it was a few years ago. We used The Best Northeastern Colleges (Princeton Review) as a guide when narrowing down her choices. It gives each school a financial aid rating. We found it to be pretty accurate. Her college had a financial aid rating of 99, and the… Read more »

whoisbiggles
whoisbiggles
9 years ago

When I attended University in here in Australia our experience is a little different. If you are offered a university place our Government will lend you the money to go. The average cost of each accounting subject was $600. 24 subjects to complete the degree. If you repay the government upfront before commencing a subject the amount you payback was reduced by 25%. If you made voluntary repayments after completion of your degree the amount you paid was deemed to have been 15% more than you actually repaid. Otherwise a percentage was deducted from your take home pay once you… Read more »

BB
BB
9 years ago
Reply to  whoisbiggles

You are right that private financing caused the huge balloon in college debt.
When my husband and I went to college, students commonly paid for education through a federal program that had low interest and up to 10 years for repayment after the terminal degree (plus a 1 year grace period). Interest did not accrue while one was in school. My $10K debt had something like a 2% interest rate on it and cost us $165 a quarter for ten years.

stonalino
stonalino
9 years ago

Tim, if you really want to write a FAFSA article, get in touch with me. It’s what I do for a living, and I’ll give you all the information you need.

Nicole
Nicole
9 years ago

Agree with previous commenters that it is important not to generalize one’s own experience to all experiences.

Some schools, particularly well-endowed ones, do one thing, some schools do another. This is especially true for all aspects of student grants and loans. Students who are attractive to colleges are treated one way, and students who barely get in are treated another. Students whose parents have a certain income get different packages than students who make more or less.

So yes, talk about your own experiences, but realize that you need to do actual research for things when you’re making general statements.

Hilary
Hilary
9 years ago
Reply to  Nicole

That’s completely true. For example, I was a national merit scholar and was offered full scholarships to public universities outside of my home state. Not one university from my home state offered me a full scholarship! This was good news for me, because I desperately wanted to go to college out of state anyway. :p But I would have paid much more for tuition and housing to go in-state.

Alcie
Alcie
9 years ago

I’m late seeing this, but enjoyed the article and the examples of the application of liberal arts thinking. I wanted to point out that your choice of major affects not only how much you’ll make coming out, but also how much you have to work on your education while you are in college. There’s a difference in the workload between an electrical engineering major and an English major. It’s important to know early on in the process what you are going for, if you want to make the most of your time and dollars invested. The 2 yrs community college… Read more »

shares