This post is primarily for rising seniors and their parents. First and foremost, congratulations, you are almost done! This is that big year with lots to do and lots to plan. This is THAT year of Senior Prom, Yearbook quote, and ditch day (but not by YOU of course.) You have worked hard, and graduation is right around the corner. With school starting again in a few, it’s getting real. This fall you will likely start the application process for your next step. But before you race off to the exotic out of state private school, I want to talk a moment about the one thing often overlooked at this time in your life: College is a business decision.

Every investment requires thoughtful consideration, and education is an investment. With the student loan debt in America approaching $1.5 Trillion, and graduates being saddled with college debts as long as 25 years, your selection should take some real cost-benefit examination. A quality education does not only come from the expensive private schools. I hear all about the “College Experience” students “should” have,however, student loan debt is currently being blamed for 1 in 8 divorces in the United States. Turns out high student loan debt gets in the way of buying cars, homes, and starting families.

Know the Cost of Attendance Vs the Cost of Tuition (per Credit Hour)

The high education figures we all see thrown around in the news are typically the amounts published in the estimated Cost of Attendance. Each school publishes the cost estimate per year for parents and students, but primarily because, “This estimation may also be used by financial aid offices and loan companies to evaluate how much money they should loan a prospective student based on how much money they will actually need to attend. Each year, the average cost of attendance typically increases.” The cost of attendance estimates room and board, fees, transportation, tuition, and books and materials.

The actual cost of your education, the Cost of Tuition, can be determined by looking at the cost per credit hour, which is a very different number. Published in an article by Student Loan Hero last January, here are the current national averages of costs per credit hour:

• Four-year, public: $324.70
• Two-year, public: $135.09
• Less than two years, public: $281.17
• Four Year Private: $1039.00

Keep in mind, these are the national average, and your state or private school credit hour cost may be higher or lower. But let’s do a little math here. A four-year bachelor’s degree is around 120 hours or so. A four-year public school at $324.70 is about $38,964.00 for all four years. That’s under $10,000.00 per year. Compare that to the four-year private school average, the same 120 hours will run approximately $124,680.00. Before you buy a book, get a sandwich, or go to your science lab. In many parts of the country, that is the cost of a starter home. Still, $10,000 a year for a four-year public school is a lot of money.

Another option is to get your pre-requisites, such as English, Social Sciences, Western Civ and Math courses done at a two-year college. Let’s math again. If you complete 60 hours at Community college, you’ll pay an average of $135.09 a credit and $8,105.40 total. A little over $4,000.00 a year, and a savings of 60% off the four-year public university option. For many families, this is a wise decision.

Even more wise, is to “cash flow” or pay for tuition in cash each semester. With a full-load averaging 15-16 credits, each semester would cost about $2,161.44. Add books and fees, and you are still probably coming in at about $2,800.00 a semester or $5,600.00 a year. If you start working this fall, you need to save about $467.00 a month to fund your first full year at a two-year public school.

So, Why Cash?

Using Loans increases that cost per credit once interest is added! Looking again at the cost per credit hour, each credit costs more, when you take out a loan to pay for it. As of the article published in January 2018, the Department of Education has interest on federal Direct Loans at 3.76% APR. That is an effective rate of about 20 percent over 10 years. Adding that interest to each credit changes the cost:

• A two-year public-school credit at $135.09 would cost $162 over 10 years ($27 in interest)
• A four-year public-school credit at $324.70 would cost $390 over 10 years ($65 in interest)

Mathing again, the 60 hours at Community College can grow to $9,720.00. An increase of $1,614.60, then interest is also added on the books and fees if you have a loan for each semester to cover those as well! Think how great it would be to finish college without debt. To make that investment in yourself in cash, it takes planning. A combination of work and saving, living cheaply or at home, and getting any shortfall through scholarships (try My Scholly) should all be part of your smart education investment. Enjoy your senior year!

 

The second definition for “Price” in the Oxford dictionary online is, “an unwelcome experience, event, or action involved as a condition of achieving a desired end,” and the usage example given is, “the price of their success was an entire day spent in discussion.” For many Americans, the price of their credit cards, or driving a car with high payments, or a mortgage payment that is keeping them “house poor” is that unwelcome experience. And a result of that unwelcome experience is debt. And the price of that debt is stress.

Americans are stressed about their financial condition. The price of such worry is costing money in healthcare related to stress, relationship issues related to fights over money, and job productivity decline. A very recent and startling statistic, published by CNBC in March 2018, reveals 30% of Americans are stressed about money, “constantly.” And a whopping 85% reported being stressed “sometimes.” Here is the top reason from the article:

   “Why? Well, 66 percent of adults, including 71 percent of millennials, say it’s because they don’t have a three- month  emergency fund, and 46 percent say it’s because they don’t have any savings set aside in one to cover an unexpected expense like a job loss or medical problem.”

This is not a new phenomenon that all of the sudden Americans are stressed about money. A 2014 report from the Consumer Financial Protection Bureau found that seven out of ten American workers say financial stress is their most common cause of stress, and almost half (48%) say they find dealing with their financial situation stressful.

Why am quoting stats when you may be visiting this article for ANSWERS because you are up at night unable to sleep due to money worries? Because you need to realize up front that are not alone. CNBC’s report translates to almost 3 out of 10 Americans are stressed constantly, over 8 out of 10 are stressed sometimes. I know, I know, “my situation is different…” and I know that it is! Everyone’s situation is uniquely theirs.

What I am on a mission to change is the shame, guilt, hopelessness and embarrassment people feel when they are deep in money problems. I think that is so important. Debt is hiding in the households of the American family and it is killing the livelihood of many of us. We need to throw open the curtains and look around and understand we are not alone. You CAN take control of your money and regain your peace of mind. You CAN find people to walk with you. You CAN create the plan that is right for you and your unique situation. And you can get back that good night’s sleep.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from The Law Office of Dawn K. Kennedy or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.