Beyond bribing your kids and grandchildren in return for academic performance, here are some other tips and tools to keep college expenses under control:
1. Try to ensure that your college student graduates on time.At private colleges, only 52 percent of students earn their degrees in 4 years, and only 31 percent manage to pull this off at public schools. And of course, the more semesters it takes for your student to graduate, the greater the total college expenses. To get an idea of a given college's track record in this regard, visit either www.collegeresults.org or collegecompletion.chronicle.com. Here are a couple of ways to minimize the time spent attaining a degree:
- Have your student take as many Advanced Placement courses as possible. Also, investigate the College Level Exam Program at prospective colleges. If your student can accumulate college credits beforehand, it will save you money.
- Consider an accelerated program for your college student. Some colleges offer students the opportunity to complete a degree in three years, or to combine an undergraduate and master's degree in one program.
2. Be an educated consumer about college-related expenses and financial aid.
Most college websites now offer "net price calculators". To find them, Google the name of the school and "net price calculator". (You may find it useful to have tax returns and investment statements at hand.) These calculators generate rough estimates of what it will cost your student to attend a given college, net of scholarships and grants. While not totally dependable, at least these estimates are customized to your family's unique financial circumstances. Using these tools, you may be able to narrow the field of potential suitors, or to perform some budgeting, well in advance of the college application process.
What if you'd like to do some preliminary budgeting for college expenses and don't yet have any particular schools in mind? Check out the Expected Family Contribution Calculator on the College Board website at www.bigfuture.collegeboard.org. This calculator will generate an estimate of what you might be expected to pay for one year of college, including the potential for financial aid, again based on your own financial inputs. In turn, the output from the EFC calculator may allow you to focus on either (a) schools generous with need-based aid, or (b) for wealthier families especially, schools generous with merit-based aid.
3. Think outside the box in your choice of college.
We live in a global economy, and this applies increasingly to higher education as well. More and more U.S. students and their families are thumbing their noses at the high price of earning degrees at American schools, and are instead pursuing their educations abroad. Articles in the Wall St. Journal and NBC News have highlighted the relative value attracting Americans to British and Canadian universities, respectively. (To see the Wall St. Journal article, please click on U.S. College Students Finding the Financial Value of U.K. Schools, and to see the NBC News article, please click on U.S. College Students Finding the Financial Value of Canadian Schools.)
About the Author
Paul Winter, MBA, CFA, CFP® is a Fee-Only financial advisor and fiduciary in Salt Lake City, UT. His independent wealth management firm, Five Seasons Financial Planning, provides professional portfolio management and objective financial planning services to individuals and families, and to their related entities including trusts, estates, charitable organizations, and small businesses. To contact Paul, please click here.