Since about-to-be college families will have to wrestle with these financial factors, I thought it might help to take a look through both ends of the telescope, so to speak. Taking a peek into the present, I thought it might be prudent to examine some misconceptions about college costs. A quick search located a helpful article that claims to explode some common myths about paying for college. The other end of the telescope allows us to gaze into the past, for an almost unbelievable glimpse of what higher education–even at the highest levels–cost a half-century ago. Playing “Remember When?" can be fun, but it can also prove to be frustrating. Most importantly, it can help us detect macro-trends. Unfortunately, the main macro-trend these days when it comes to college costs is not a positive one.
I saw an apt cartoon the other day. It showed what looked like a college freshman pondering a piece of paper. The title of the piece of paper was “Future?" Below the title were two check boxes. The first was labeled “Debt." The second, “Homelessness." I don't think things are quite that negatively black and white these days, at least not yet, but I'm having a hard time deciding which box I would choose.
Anyway, here are some highlights about those myths I mentioned.
Penelope Wang, writing, in CNNMoney, addresses Busting the 5 myths of college costs and prefaces her wisdom with these words:
You've pored through financial aid forms, knocked the priciest schools off your list, reviewed borrowing options, and nudged your kid to think more about engineering and less about English lit.
So you figure you've got this college thing under control. Not quite. Those expensive schools you ruled out? They might actually cost you less in the long run than some cheaper private or public institutions.
Let's look at the five myths and extract some highlights from Penelope's “busting" advice:
MYTH NO. 1
Saving for college will hurt your chances of getting financial aid.
The reality: Any money you're able to save probably won't appreciably affect your chances for aid. Here's why: Under the federal financial aid formula, what matters most is your income, which is assessed up to 47% …
One of several things you can do:
… Make friends with a 529. Only about one in four parents who save for college uses a 529 plan, says student lender Sallie Mae. Big mistake …
MYTH NO. 2
You can't afford a private college.
The reality: Don't confuse the eye-popping sticker prices at private schools — $39,500 a year on average vs. $18,000 for the typical public college — with the price you'd actually pay. Discounting by private colleges, especially for good students, has become the norm …
One of several “busting" solutions:
… Look for largesse. As your child begins to evaluate colleges, you'll want to assess how generous each is with handouts. To find the percentage of students who get merit money, go to collegedata.com. For details about a specific college's grants, check MeritAid.com …
MYTH NO. 3
A liberal arts degree won't pay the bills.
The reality: Sure, grads with business or STEM (science, technology, engineering, and math) degrees tend to earn above-average salaries. But many liberal arts majors do as well or better.
Case in point: The top-earning 25% of history majors earned a median annual lifetime income of $85,000 vs. $82,000 for computer-programming majors, per a recent analysis by the Georgetown Center on Education and the Workforce …
… Focus on practical help. When comparing colleges, see what each offers to assist your child in developing work skills, says Andy Chan, VP of career development at Wake Forest University. Find out if the career office reaches out to freshmen, offers courses in résumé building, and helps students land paid internships …
MYTH NO. 4
Student loans will cripple your child financially.
The reality: You've heard the horror stories about college grads hobbled by debt, and the facts can indeed be scary: The typical student at schools such as American University and NYU leaves with over $35,000 in loans; 2% of all student borrowers owe more than $50,000 …
What can be done?
… See PLUS as a minus. Parent borrowers should just say no to federal loans. PLUS loans let you borrow the full cost of college regardless of income, at expected rates of about 6.4% (plus fees of at least 4%), which can rise to 10.5% for future borrowers under the new rate formula …
MYTH NO. 5
Starting at community college, then transferring, is a great way to cut the cost of a BA.
The reality: Sure, community college is a lot cheaper than a four-year school, but students who start there are less likely to earn their bachelor's degree …
… Talk to the target. Ask the admissions office at the four-year school your child wants to attend about the transfer requirements and how many two-year college students it accepts …
So, myths can be busted, but you can't go back in time to when things were a lot simpler … and also a lot cheaper. Addressing the nostalgia aspect of my article here involves linking to an another article that I wrote back in 2011: College Costs 50 Years Ago. From that text, here's an amusing, if not saddening, bit of rear-view-mirror remembrance:
A while back, when I was changing residences, I found an old college admissions-related book that I bought when I was a high school freshman. (This is where I usually insert some ageist remark about “when dinosaurs walked the earth," which I will eschew here.) Anyway, I thought it might be fun to take a quick look at what a book like that had to say back then and compare it to the, some say, “frightful" situation today.
The title of the book is How to Be Accepted by the College of Your Choice (Completely Revised 1961-1962 Edition), by Benjamin Fine (Paperback – 419 pages, (March 1960), Popular Library – Out of Print [obviously]) …
… A quick tour of the table of contents reveals a book not all that different from those of the same genre today. We find chapters on high school grades, the SAT, ACT, high school curricula, extracurriculars, recommendations, college visits, applications, an in-depth college profile (Connecticut College), money matters, and an application timetable. The usual fare. One chapter did catch my eye, though: Quota Systems. In it, I found this amazing statement from the author:
“I asked the country's accredited colleges to tell me frankly if they employed quota systems. The 16% replying affirmatively were for the most part Southern institutions that either barred or discouraged Negroes from attending. No Northern universities admitted to quotas against the colored races, and yet it is common knowledge that such barriers exist in Vermont as well as in Virginia. No West Coast universities told me that students of Mexican or Japanese ancestry were denied entry-but surveys show that they are. An atmosphere of hush-hush and shame pervades when quotas are formulated on the basis of faith, nationality, or skin pigmentation; and it is particularly ironic that institutions of higher learning, which might be expected to lead the fight against discrimination, sometimes tend to foster it, in class, on the campus, and in fraternities and sororities." …
… Here's the fun part. The book includes a large section called “The Fact Finder" that lists 976 colleges along with the weighted importance of such admission factors as grades, test scores, recommendations, interviews, legacy connections, and so forth. Most interestingly for me, though, is the posting of each school's costs-tuition, room and board, and living expenses. Just for fun, here's a sampling.
For each school listed here (in no particular order), the 1960-1961 total-school-year costs represent roughly the entire student budget of tuition, room and board, plus sundry living expenses. Even when adjusted for inflation, these figures are breathtaking:
Penn State University
Penn State University
Michigan State University
Michigan State University
University of Texas
University of Texas
University of Chicago
I don't have to tell those of you well-informed parents and students out there what the costs are today. Take the Ivy League, for instance. The total student budget for Princeton University for the current school year (2010-2011) is $48,580 [the estimated student budget for the 2014-2015 school year is $58,820]. Compare that to $2,260 Princeton charged 50 years ago …
Amazing, isn't it? Anyway, keep in mind those myths and bust them, if you can. Also, don't look back in time too far. There are a few things about modern-day life that are, indeed, better than the so-called Good Ol' Days. Let me think about that for a while, though. Maybe there's a good article in there somewhere.
Be sure to check out all my college-related articles at College Confidential.