Hang Out with the Locals
While parents may be nostalgic about their days on campus and movies glamorize the experience, let’s look at the reality for the moment.
One reason college is so expensive is because it is an emotional purchase. So colleges can and do charge whatever the market will bear in our free market system. But let’s take a cold, hard look at the numbers.
With the average student walking down the aisle picking up his or her undergraduate degree in more than four years and with more than $25,000 in personal loan debt (not to mention the debts that Mom and Dad have signed for themselves), is this really a savvy money choice?
And do parents really want the added burden of debt coupled with fewer retirement resources because of their sacrifice to send Johnny or Jane to a Big Name campus far from home just so they can have the glamorous experience of living far away from home?
It’s hard enough for students to get a fair chance at starting their lives but to add the burden of debt makes it all the more difficult. And parents who are not interested in hosting “boomerang” young adults returning home to sleep in their rooms or the basement need to avoid becoming enablers here.
One way you stop being an enabler is by being smart about what you’re buying for a college education. Heck, you probably use all sorts of mobile phone apps to compare big screen TVs that you’re looking to buy so why not use the same sort of approach to the big ticket item that is college?
Going to college is still worth it. Despite the tough job market over the past few years, a college degree can still be a ticket to jobs and careers that ultimately produce more than $1 million in lifetime earnings compared to high school graduates. Now let’s look at the numbers for some choices.
Strategy 2: Go Local
The reality is that the best bargain for a student remains the in-state public university. Look at the numbers and you’ll probably think twice about selecting an out-of-state option especially if your child is considering an out-of-state public college.
Although many state school systems are not funded by their states like they used to be, the in-state option is still way less expensive. Compare these options and decide.
UMass – Amherst:
2012 In-State Tuition: $12,797
2012 Out-of State Tuition: $25,585
Room and Board: $10,310
Total Cost of Attendance (in-state): $25,507
Total Cost of Attendance (out-of-state): $38,295
University of New Hampshire:
2012 In-State Tuition: $16,422
2012 Out-of-State Tuition: $28,882
Room and Board: $9,764
Cost of Attendance (in-state): $27,186
Cost of Attendance (out-of-state): $39,646
The difference between the in- and out-of state options here is about $13,000 to $14,000 each year. What could you do with an extra $13,000 or $14,000 each year (for four years). What would your cash flow look like if you didn’t have to spend this?
Now ask yourself, is your retirement security really worth paying extra for essentially the same quality and level of college education just to have your kid graduate from a state school in another state?
Money Saving Tips for College
- Attend a local state college as an in-state resident
- Commute, if possible, and save nearly $10,000 per year (more than $40,000 over four years when factoring in inflation)
- Attend an in-state community college for one or two years and transfer the credits
Ultimately, you need to decide what matters most. But there’s a lot to say for having the peace of mind that comes from having less personal debt (for you and your student) as well as more money to invest for your retirement.
