{"id":442,"date":"2012-09-19T00:24:47","date_gmt":"2012-09-19T04:24:47","guid":{"rendered":"https:\/\/www.cashflownavigator.com\/blog\/?p=442"},"modified":"2013-07-02T20:59:47","modified_gmt":"2013-07-03T00:59:47","slug":"want-to-cut-college-costs-start-by-looking-at-the-biggest-slices","status":"publish","type":"post","link":"https:\/\/www.cashflownavigator.com\/blog\/2012\/09\/want-to-cut-college-costs-start-by-looking-at-the-biggest-slices\/","title":{"rendered":"Want to Cut College Costs? Start by Looking at the Biggest Slices."},"content":{"rendered":"

\"\"<\/a> It now costs an average of $21,447 a year to attend an in-state public college, and over $42,000 a year for a private college. \u00a0To make matters worse, these costs are rising rapidly. \u00a0During the past decade they rose 5.6% per year faster than inflation. (1)\u00a0 That\u2019s a nasty combination, particularly if you\u2019re the one paying the bill.<\/p>\n

If you\u2019re a student paying your own way this extra cost could jeopardize your ability to get ahead of debt at an early age.\u00a0\u00a0 If you\u2019re a parent paying for your children\u2019s education the additional obligation might set you back on your path to financial freedom, perhaps by years.<\/p>\n

This expense is too big to accept without looking for ways to reduce it.\u00a0 Here are a few ideas to consider.<\/p>\n

Break it down then look at the big pieces<\/strong><\/p>\n

One way to attack the problem is to break down the total cost and look for savings opportunities in some of the individual components, ideally the bigger components.\u00a0\u00a0 As shown in Table 1, college cost can be cut in half<\/span> by attending an in-state public school.\u00a0 Something to consider.<\/p>\n

Also look at housing and meals.\u00a0 Commuting to school can save thousands \u2013 even tens of thousands over four years.<\/p>\n

There are trade-offs that come with these choices of course, and you can\u2019t put a dollar value on all the considerations.\u00a0 Still, it\u2019s good to have the options at your disposal.<\/p>\n

\"\"<\/a><\/p>\n

Consider the \u201cCommunity College + 2\u201d Plan<\/strong><\/p>\n

Here\u2019s another approach for your family to consider: Attending a community college the first two years and spending the last two years at a 4-year college.\u00a0 As you can see in Table 2, the cost of community college is only about one-third<\/em> that of the cheapest 4-year college alternative (in-state public college). Over two years that adds up to a savings of about $25,000 and possibly as much as $65,000.<\/p>\n

\"\"<\/a><\/p>\n

For their value, and also because of their respectable academic standards, community colleges are now widely viewed as an important part of the higher education mix.\u00a0 Again, another option to consider.\u00a0 One caution, though: Do what you can to ensure community college course credits transfer to the subsequent college.\u00a0 Which leads us to our next consideration\u2026.<\/p>\n

Whatever you do, avoid the 5-year plan!<\/strong><\/p>\n

Did you know the average time it takes students to graduate college is now five years instead of four? (3)\u00a0 This is a bona fide trend and the average is even starting to inch toward 6 years. Adding an extra year or two to a college education carries with it a number of costs, both direct and indirect.<\/p>\n

The direct cost, of course, is additional tuition and fees.\u00a0 This amount to a 25% – 50% price increase on a $100,000+ purchase.\u00a0 Ouch!\u00a0 (Not surprisingly, colleges aren\u2019t discouraging this activity; they\u2019re more than willing to accept the additional revenue.)<\/p>\n

Indirect costs, also known as opportunity costs, include the following:<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Lost salary by delaying the start of a job by 1-2 years<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Falling a year or two behind, right at the starting gate, in the race to get ahead financially after college.<\/p>\n

So I\u2019d like to make a suggestion: If at all possible, avoid the 5-year plan!<\/p>\n

To help win this battle, parents who pay the college bill have a weapon in their arsenal.\u00a0 It\u2019s called a financial disincentive.\u00a0 It works like this: Inform your matriculating student that you will cover college costs for years one through four.\u00a0 Anything after that is their responsibility.\u00a0 That places the financial burden back on them if there are any delays.\u00a0 Five years?\u00a0 Then the last year is on them.\u00a0 Four years and 3 months?\u00a0 They pay the extra 3 months.\u00a0 That includes paying you for room and board if they\u2019re living at home.<\/p>\n

I recommend this approach based on observational research and countless discussions with other parents.\u00a0 Our findings?\u00a0\u00a0 It\u2019s remarkable how responsive our children are to achieving a goal if there is a financial cost to them should they fall short.<\/p>\n

Be advised that this weapon is most effective when used preemptively, so the arrangement should be agreed upon during their high school years, before they choose a college.\u00a0 Doing so will allow them to take it into account when making a college choice.\u00a0 Once in place, it could help to sharply reverse the \u201c5-year plan\u201d trend, at least in your household.<\/p>\n

 <\/p>\n

1)\u00a0\u00a0\u00a0\u00a0\u00a0 The College Board: \u201cTrends in College Pricing 2011\u201d\u00a0 http:\/\/trends.collegeboard.org\/downloads\/College_Pricing_2011.pdf<\/a><\/p>\n

2)\u00a0\u00a0\u00a0\u00a0\u00a0 U.S. Department of Education\u2019s Annual Review of College Affordability, 2011; \u201cAverage Price of 4 Year University Up 15%,\u201d Christine Armario, Associated Press:\u00a0 http:\/\/bigstory.ap.org\/article\/average-price-4-year-university-15-percent<\/a><\/p>\n

3)\u00a0\u00a0\u00a0\u00a0\u00a0 www.collegeparents.org<\/a>\u00a0 \u201cReasons why your college student might not graduate in four years\u201d<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

It now costs an average of $21,447 a year to attend an in-state public college, and over $42,000 a year for a private college. \u00a0To make matters worse, these costs are rising rapidly. \u00a0During the past decade they rose 5.6% per year faster than inflation. (1)\u00a0 That\u2019s a nasty combination, particularly if you\u2019re the one […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[24,92,53,97,99,25,23,91,98],"class_list":["post-442","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-cash-flow-2","tag-cash-flow-navigator","tag-cashflownavigator","tag-college-costs","tag-college-loans","tag-financial-independence-2","tag-financial-life-cycle-2","tag-keith-whelan","tag-tuition"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/442","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/comments?post=442"}],"version-history":[{"count":6,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/442\/revisions"}],"predecessor-version":[{"id":740,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/442\/revisions\/740"}],"wp:attachment":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/media?parent=442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/categories?post=442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/tags?post=442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}