Did you buy a flat screen TV recently? A smart phone? An exercise bike? A lawn mower? If so, you probably spent quite a bit of time online researching prices and features, reading product reviews, and generally looking for the biggest bang for your buck.
"Buying" a college education should be no different: You need to carefully compare the value of each of your options against their cost and — when you buy — strike the best possible balance between the two.
But trying to determine if a specific college or degree program is "worth the price" can be tricky. You can comparison shop online for lots of "big-ticket" purchases — it's not so easy for college. For parents and students alike, choosing a college can be pretty unscientific — unfortunate, considering that, for most people, a college education will be one of the two or three most expensive purchases they make in a lifetime.
Consider also that attending one's "dream college" could demand incurring a debt burden that hamstrings a graduate's financial well being for years to come — and you'll see that a cost/value analysis of prospective colleges makes sense.
I couldn't believe more in college's value, for a fulfilling life as well as a rewarding career. But I also believe the primary goal of your college decision making process should be purchasing the best affordable education you can — for the sake of your undergrad's future financial stability, as well as your own. And don't forget that the price includes the "up-front" cost as well as any future debt cost.
There are no "boilerplate" college cost/value calculators that will work for everyone. But there are some smart steps you can take to achieve a college cost and value balance that works for you.
Give Yourself Some Choices. First — lose the notion that the best educations are available only at the most expensive schools. In fact, there are terrific college options all up and down the cost scale, both public and private institutions. (Some publications, notably the Princeton Review, have lately been offering lists of "best value colleges.") For parents and students, what's key is to identify what's really important for them in a school. Is it size? Locale? Overall reputation? Quality of a specific degree program? Track record of recent grads? Positioning of its alumni in certain professions? Only you can decide. But having decided, it's critical to develop — through your own research, discussion with school counselors, and input from friends and family — a list of colleges that generally match your criteria at lots of different prices.
Understand the Cost — Short and Long Term. Next, take a close look at the "qualities" of all of your options, compared with the likely costs — tuition, room, board, and associated expenses like travel or a car. Be frank with your student about your likely financial contribution. After taking some level of financial aid into account, estimate what he/she might need to borrow to "purchase" any given option. Use the estimate to plot out your student's prospective loan payments, month by month, post-graduation. If a loan can be paid off within 10 years and the monthly payment won't exceed 10 to 15 percent of likely net income, the debt portion of the price should be manageable. But if the obligation will be longer or bigger, consider your less costly options more closely.
Motivation Counts. What if your student really has their heart set on a particular school — and substantial debt is the only way to get there?
To my mind, a student on the verge of college is, essentially, an adult — and ready to begin grappling with some adult-level financial decisions. Avoid the temptation to dictate your student's college decision purely based on the amount of debt he/she might incur. Educate your student about debt's realities — but ultimately the decision should be one you and your student make together, considering every factor.
If your student is strongly attracted toward a particular college — even one involving heavy borrowing – factor that into your cost/value calculations. Help your student decide if their motivation is solid—and take comfort from the fact that if your student embraces the requisite financial obligation to get there, they're probably well motivated to succeed there, and beyond.
Other Ways to Manage Cost. There are lots of ways to manage both your immediate as well as future cost, for a more favorable cost/value balance. For example, you and your student can consider:
- Putting admission off for just one year, and building college funds in the intervening year through employment
- Attending college part time, at least initially
- Living at home, if any of your school options are local
- Enrolling in a two-year school initially, and then transferring to the four-year school of your choice (public two-year colleges now enroll 32 percent of all full time students, at an average annual tuition/fee cost of $2,402)
As you and your student sift through a pile of appealing college choices, it's critical not to lose sight of the cost consequences of your decisions. But keep in mind too that, as concerned as you might be about costs, chances are your student is concerned about the same thing — and perhaps worried about the burden college will place on you and your finances.
Don't let the money issue darken one of the most exciting decisions your student will make in their lifetime. Make no mistake — with thoughtful planning, diligent homework and honest discussion, you and your student can realize a college dream at a price you both can handle.