The costs of lack of planning and experience in college admissions
College funding – Why do so many parents wake up to this nightmare? Talking about the “taboo” subject of money with their college-bound student is just another aspect of parenthood that many adults fear that they may fail their children on. While failure can be a terrific learning experience, doing so with the numbers game with college planning is not the time or place to be “learning on the job!”
Let’s talk about some realistic numbers first …
A four year college degree (sidenote: colleges do not publish a “four” year graduation rate for the public, but rather a “SIX” year graduation rate for the rankings), requires a total investment that ranges from more than $60,000 to close to $225,000.
That expenditure, or ”investment” includes the use of family (student and parent) savings and equity, state and federal money, and college and university funds. And last but not least – debt (public and private).
Now, if the average person wanted to “invest” these levels of funding in a house or building, or even a car, at least in the current economic climate, he or she would have undergo the scrutiny of several qualified “watchdogs.”
Credit ratings would be checked, and income verified. If a business were involved, the viability of the business plan would be evaluated. Whatever the basis, the project would be scrutinized by a small army of experts before you were allowed to move onward.
And yet, for a nearly quarter of a million dollar investment in higher education, for just one student, no such analysis is applied. More often than not, parents enter the college admissions and financing process only in the high school senior year, with little or no experience in the subject. A high school guidance counselor is not going be qualified to give them any idea how their tax return will help or hinder their ability to pay for college, leaving them exposed to the vagaries of the financial aid system.
There are several typical consequences of this lack of pre-planning:
- The student and family lose the power of choice in determining the “right” college
- The college “sticker price” discourages the student from even applying
- The parents get caught up in the confusing financial aid system, and sometimes even fail to apply
- The desire to attend college by any means results in the stripping of saving, retirement funds, home equity, as well as incurring significant debt
- The student decides to attend community college to avoid the cost of a four year school
To call this situation dysfunctional is the height of understatement …
To help parents sleep better at night, they need to address the issue of knowing what their financial options are prior to putting together a list of colleges from which to choose. To do this, a thorough affordability analysis is essential. The next step is for the student to review his or her competitive position. This allows the selection of “candidate colleges” to be more data driven than preference (and emotion) driven.
