November 5, 2008 - While standing at the chip bowl (my favorite location) at a family party recently, I overheard a discussion that intrigued me – it’s a conversation I hear more and more, both at work and just about everywhere else I go.
It went something like this… (just an excerpt)
(Parent A)- “Johnny” is applying to colleges and I’ve started to take a look at how much some of them can cost – did you know that XYZ colleges is $50,000 a year?
(Parent B)- Yah, our daughter, “Cindy”, was slated to finish last year at XYZ college, but she didn’t have all of the credits for her double major so she has another semester to go. It’s going to cost an extra $20,000?
(Parent A)- The thing is, I don’t know how to engage “Johnny” in this conversation. He’s not sure if he wants to go to medical school or he’s been talking about being a teacher too. Medical school can cost as much as another $50,000 per year. I was doing some quick calculations on how much all of this could cost and …
Instead of just finding the dip and moving on, I couldn’t help myself … I jumped into the discussion.
Never before has it been more important for families to address the college decision making process with a firm grasp of the financial tradeoffs. And, never before has it been more critical for students to understand the relationship between the debt that they will incur by comparison to the median salary of the career (or careers) that they might desire to pursue.
The transition to college has never required more foresight than it does now. Will a biology major at the regional university lead to a good medical school? On a starting teacher’s salary, will Johnny be able to repay the hefty debt burden after earning an education degree from a private four year college? And, will Johnny need to go back to school to get a master’s degree in order to fully maximize his earning potential in his teaching career? Or, would two years of community college and then transferring to a more expensive college be a more cost-effective option? Can we make the numbers work?
While in decades past, many of us like Johnny’s parents attended college to figure out what we wanted to do after graduation. We had the wiggle room to try things out, change majors, test the waters so to speak – of course all at an expense far less than the cost of a college credit today. Now, with an education becoming one of life’s most significant expenses, knowing the direction prior to enrolling in college just makes the most sense.
Additionally, families need to consider that the average duration to graduation in the United States is over 5 years. (In fact, I was on the 5 year plan myself) And, that when you are calculating your family expenses, there is no reason to plan that your child will out-perform the national average. And, ideally, you should probably plan for the worst … that is to say, plan, from a financial perspective, that your child might take a little longer than 5 years. Stranger things have happened.