Higher education commands reverence in Boulder County. National publications report that we are one of the most educated metropolitan areas in the country. Educated parents naturally beget educated children and accordingly most area residents see higher education as a necessity.
We are also tremendously concerned about funding higher education. Recently its cost has increased at twice the level of inflation. Other than retirement planning, it’s the most prevalent concern I see in my financial planning practice.
For every parent who has squirreled away funds into a 529 account every year since Junior’s birth, there are many who have not saved adequately for college. Many parents despair that their kids will be limited in their choice of schools or, even worse, resign themselves to six figures of debt in order to finance higher education. At the least, they may put off saving for retirement for years while their kids are in school.
Fortunately there is another way to affordable higher education. In “Debt-Free U” by current college student Zac Bissonnette, he outlines a path that can minimize the financial hit of college.
Unlike many books that promise virtually unlimited esoteric scholarships if your high school senior writes just one more essay, his approach is one that can work for almost anyone. I’ll warn you that it doesn’t include this strategy — apply for the “best” school to which your student can gain admittance and do whatever you can to pay for it.
Going to an elite school may not matter. Bissonnette cites evidence from Princeton economics professor Alan Krueger that the caliber of student is more important for predicting future earnings than the college that is attended.
The idea is that if your child could gain access to the most elite schools in the land, they will do well regardless of what school they attend. Choice of graduate school may make a bigger difference.
Debt can limit your child’s career choices. If your child finishes undergrad with $100,000 in debt, it is unlikely that they will have much career flexibility. They will effectively have a mortgage from day one of postgraduate life, and will be motivated to pursue a high-earning career in order to pay it off.
Work while in college. Students who worked 11 to 20 hours a week while in college reported better grades than students who didn’t work at all. Having your child work 20 hours a week in college and during the summer can make a tremendous contribution to college costs without affecting academic performance.
Loans need to be repaid. This is an obvious point, but parents and students seem willing to treat loans and grants as practically equivalent. One study showed that when students were offered grants instead of loans at one college, there was not a significant increase in enrollment.
In short, we apparently are not viewing college loans as genuine debt — debt that can postpone retirement, limit career choices and is extremely difficult to escape.
Private and out-of-state public schools. If you’re dead set on a private education or prefer an out-of-state public school, look at schools where your student’s academic record significantly surpasses the median applicant. That puts your student on track to receiving merit scholarships, and if there is need-based aid it’s more likely to be grants than loans.
Avoid “Early Decision” as that can commit you to a high-priced school. My recommendation is to look at the Boulder-based WUE program so your child can qualify for near in-state tuition at the University of Oregon and more than 100 other Western universities.
Through following these guidelines, even those who haven’t saved for college could see their child finish school with little or no debt.
Dave Gardner, for the Daily Camera.