Originally posted on C2 Education Blog.
The news broke last week that students who graduated from college in 2010 owed a record-high average of $25,250. This news comes at a time when recent graduates are facing unprecedented difficulty in finding employment and whensalaries for recent grads are declining. Yet despite this desperate financial climate, many colleges are still raising tuition.
At C2 Education, we believe that all students should have access to quality higher education, regardless of economic status. To help you and your child on the road to an affordable education, we’ve compiled some helpful tips for avoiding student debt trouble.
- Pick the right school
There is often a vast difference between how much tuition a school charges and how much the school actually costs, so you don’t have to sacrifice a top tier school just to make ends meet.The federal government now requires that colleges post a “net price calculator” on their websites, a calculator which defines what a student will actually pay after subtracting discounts and grant aid. As a general rule, more prestigious schools often offer the most attractive financial aid packages because they tend to have large endowments. Thus a highly prestigious school with a steep tuition rate can often be cheaper than a less prestigious school with a moderate tuition rate. For example, Yale University, the 3rdhighest ranked school in the nation whose tuition tops $40,000, has an average net price of only $17,634. In addition, Yale’s financial aid policies discourage student loans, so 2010 Yale graduates averaged only $9,254 in student loan debt, more than $15,000 less than the national average.By thoroughly researching various schools, their net costs, and their financial aid policies, you can find an excellent college or university with an affordable price tag. In addition to net price calculators, the U.S. Department of Education’s College Affordability and Transparency Center is also an excellent source of information. - Pick the right major
When it comes to student debt, there are 2 primary considerations regarding choosing a major. The first is future earning potential. The cost of college wouldn’t matter if everyone who graduates from college immediately found a high-earning job in their chosen field – sadly, we don’t live in that fantasy world. One of the primary deciding factors in a recent grad’s job search is almost always their major field of study. Earlier this year, Georgetown University released a study regarding the earnings potential for 171 college majors. The study notes that although college graduates make 84% more over a lifetime than those without a college degree, various undergraduate majors can lead to vastly different median wages. For example, the study found that the highest-earning majors were engineering and pharmaceutical sciences; the lowest-earning majors were education, art, and social work. Check out The Wall Street Journal’s “From College Major to Career” to help you research different majors.The second primary concern is the student’s aptitude for the major. Consider this: 40% of students planning an engineering or science major (typically considered the highest earning majors) either switch to other subjects or fail to earn a degree; that number leaps to 60% if you include pre-med students in the calculations. Most disturbingly of all, students at highly selective institutions are the most likely to leave the science fields. Why? The short answer is that most students find studying science and math at the college level to be too demanding – they wash out. These students will have wasted a great deal of time and money studying a subject that they ultimately won’t earn a degree in and many end up spending an extra year or more in college in order to make up for the time spent pursuing the wrong major. When your child picks a major, make sure it’s for the right reasons because a student who isn’t passionate about the field may not end up with a degree at all. - Be a Helicopter Parent
We know that everyone tells you that it’s important to let your child experience college on his own, and we agree that your child should be allowed to stretch his wings. However, for the sake of your child’s future and your wallet, you should never leave Junior entirely to his own devices at college.Grades: College grades not only determine whether your child will be able to attend graduate school and whether your child meets all graduation requirements, they can also affect your child’s financial aid, especially if he has been offered scholarships or grants. So while you probably shouldn’t call your child every hour to check to see if he’s finished his homework, it is important that you keep track of whether he is attending class regularly and whether he is struggling in his classes. Stay involved so that your child stays motivated!Extracurricular Activities: It is important to be aware of the extracurricular activities that your child involves himself in and to encourage him to get involved in career-oriented activities. Many colleges have clubs, groups, and organizations which offer wonderful opportunities for networking and for gaining real life experiences – which can be very helpful when starting a career later on. - Avoid unnecessary debts
According to Sallie Mae, the average undergraduate student carries upwards of $3,000 in credit card debt. The government has since tried to address this issue with the CARD act, which makes it virtually impossible for anyone under 21 to get a credit card on their own. It’s not a bad idea to help your college student get a credit card – when done correctly, this can help to teach financial responsibility and to establish your child’s good credit going forward; however, there are a few steps you should be sure to take. First, cosign on the card so that your name is on the account – knowing that you can easily access their account generally makes college students more careful about what goes on the card. Second, make sure that either the statements come to you or that you can easily access the online statements. This ensures that you are able to keep tabs on how your child is spending money and whether he is paying on time.Beyond credit card debt, be careful of excess student loan debt. It is a fairly common practice for students (and even parents) to take out additional student loans over and above the amount needed for tuition and use the excess money for other things, such as buying a new car or paying down other debt. These loans seem like free cash until the time comes to start paying that debt off. Sadly, private lenders and even some financial aid offices encourage this sort of profligate borrowing – after all, there’s money in it for them!It is important that you help your child to budget his money effectively as he transitions into adulthood – otherwise he may spend his 30s living on your couch. Check back later for more college penny-saving tips to help you and your child avoid excess debt! - Know your financial aid options
The world of financial aid can be confusing, but if you and your child hope to navigate higher education without building up massive debts, it will be important for you to research all of your options. Details vary from state to state and from school to school. Check back next week for C2 Education’s Financial Aid Primer!
