With two cousins heading back to college, several friends planning their graduate degrees, a few in programs now, and my own intentions of going back to school – the cost of higher education has been at the forefront of my thoughts.
Unfortunately for me, these costs will most likely be an out-of-pocket expense unless I can dupe someone into paying for it. And to be honest, it’s the primary reason for my hesitance in committing to the decision. Fortunately for my cousins, they are covered. One just finished his undergraduate on a full-ride and is headed to Carnegie Mellon for a PhD… also on a full-ride.
Talking about life in general, I commended him on how well he had handled his education. In true personal finance fashion, I noted the significant benefit (beyond the obvious accreditations) would be the lack of debt. Approximating the costs, we arrived at an estimated figure of $500,000.
Yikes.
And it’s not just me either. “Stop the Tuition Madness” as Money wrote about in their current issue. The article highlights different ways for students to cut back on their education bills. Out of the three students featured, only 1 of the strategies made seemed to make sense.
Money Strategy: Go to a Lower-Cost College Abroad
My Interpretation: You went to University of Where?
Of course there’s nothing wrong with other schools, but perception alone will be the limiting factor. The student even notes, “While Victoria may not be a house-hold name in the U.S., Gesten thinks it will be a net plus for employers once she explains where it is and what a good school it is”.
Let’s hope… From my own experience, this was not the case.
During a summer internship after my freshman year, I learned some colleagues were severely over-educated for their positions. Since most held Masters or PhD degree, we spoke about their frustrations with reporting to younger engineers, with engineering degrees, but less experience. All were educated in universities outside of the US, but relegated to lesser roles because their alma maters didn’t carry the same clout as US schools.
Money Strategy: Pay with Future Earnings
My Interpretation: Schools are catching Zuckie-Fever!
Can you imagine how that board’s meeting went? “As long as he is 1/100 as successful as Zuckerberg, and we own 1/10 of his business – we will never have to run a donation drive again.”
Interestingly, has the rise of Facebook has spurred a sort of venture capital outlook towards prospective students? Clarkson University was willing to bet a full tuition scholarship in return for 10% of Turcotte’s company. “The college is continually checking in on me… They see this as a long-term investment.”
Whereas his accomplishments should be recognized, the editorial decision by Money to include this strategy was still a poor one. This is something not easily replicable and therefore not generally applicable. It would be more likely to receive an academic or athletic scholarship than create a angel-investor type of partnership with the school.
Money Strategy: Start at Community College
My Interpretation: No Issues – Financially Sound Decision…
Not much to discuss here. As identified in the article, many community colleges have admittance agreements with four-year institutions. Can’t beat that – same degree for half the price?
BUT THERE ARE OTHER STRATEGIES OUT THERE!
It is absolutely worth your time to research the benefits of online classes. Right off the bat, you save money on commuting as well as room and board. Furthermore, the flexible nature of online classes lets you balance education with employment. This ensures that you learn at your own pace and on your own time. Best of all, almost every online school offers free information online. It only takes a few moments to look into this new form of education, and it could end up saving you thousands in the long run.
What amazed me went beyond the obscure examples Money selected, but the relatively simple and accessible options they failed to mention.
For example: ROTC
Depending on the branch and agreement, students can get a full ride. They may also be eligible for a living stipend. Plus, guaranteed employment after matriculation. Sounds like a pretty sweet deal. Don’t forget about veteran status afterward. Beyond the inherent dangers, there is a laundry list of benefits.
If the military doesn’t quite jive with your personality, there are similar work-study type programs. Many nurses could get full rides if they agreed to work at a specific hospital or within a specific field following graduation. The point is – Money should have focused on strategies which the majority of high school students (or their parents reading the article) could actually employ in reducing the staggering costs of higher education.
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University costs are definitely becoming prohibitive. I am glad that in Canada we have fairly low cost education available. Even with that caveat, it is getting to be a serious drain on peoples’ future. We do have a neat savings program up here though called the Registered Education Savings Plan (RESP), where parents can save $2500 a year in an investable tax-advantaged account, and the government will even kick in 20% more (an additional 500) each year that you can also invest. I think this is a great idea and makes parents semi-responsible for helping with their children’s education.
That is a neat little savings program you have in Canada. Being a tax-advantaged account AND contributing to the plan? So long as education costs continue to outpace future earnings, it will continue to be a drain on peoples’ futures.