By William B. Kelly / November 4, 2009 --
One of the more pressing financial issues facing parents of high school age children these days is the high cost of a college education. Next to saving for retirement and the purchase of a home, a college education is now probably the third most expensive financial expense for most families. Paying for college has to be viewed as a major investment and should be treated as least as seriously as a home purchase. It then becomes essential that parents and students together devote a substantial amount of time on researching career and college choices.
Most families, when saving for college typically plan for 4 years of college expenses. However, while American high schools graduate about 75% of their students in 4 years, American colleges graduate only about 50% of their students in 6 years. Some students decide to change their major or career interest after one or two years and since many college credits cannot be applied to their new major, they must spend five or six years in school to achieve a four-year degree. As a result, many families will end up spending 25-50% more for a college education, money that could be better off being saved for retirement.
With the high cost of college, choosing a career path is one of the most important decisions that students face today. Lack of planning will force many students into a 5 or 6 year college degree or in many cases no degree at all. Many students will also find out that they end up receiving degrees in declining growth fields, or a field with a surplus of applicants, and cannot find employment after graduation. A smart career choice can lead to rewarding occupational experiences, opportunities for personal growth and the security of adequate income will also allow the family to maximize their educational investment in the student.
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Comments: 2
1. Work and save up money for school - a student can work after school for 12 to 20 hours a week, have no social life, and save everything he/she can. Working part-time in college is what I did, and I still got my BS in engineering after 4 years.
2. If the parents can, start saving early. I deposited $10,000 into an investment account each time a child was born (in TGMA). Each child would have nearly the cost of 4 year college when he/she is 18
3. Go to Jr. college. It costs about $2K to $3K a year to attend 2 year school to get an associate degree, and the amazing thing is that Uncle Sam gives you up to $1.8K free money for the first two years of college. This is a no-brainer.
Spend a summer applying for grants/scholarships - but not for student loans. You don't accumulate $30K in student loan just so you can work for $30K salary. That lacks common sense. Don't get in a habit of borrowing money until buying a house with a big down payments.