College is quickly becoming unaffordable for many people. Yet, in order to make money, you need a degree. Trying to navigate the complexities of this issue can prove difficult in today’s climate. Is there a solution?
Figuring Out the True Cost of College
College is expensive – and getting more expensive by the day. No matter how you slice it, costs are going up and will continue to do so for years to come.
According to data from College Board, the average cost for a four-year public institution for students enrolled in-state is $9,650 per year. The average cost for a four-year private institution is $33,480 per year. Over the course of four years, that’s a price tag of $38,600 to $133,920.
These are just today’s numbers. If you have a young child and are looking down the road, the projected costs are a whole lot scarier. Current growth rates suggest four-year public institutions will cost an average of $30,000 per year in 2035, with four-year private schools costing closer to $85,000.
But the advertised cost and actual cost are often two different things. When you throw financial aid into the equation, many students end up paying far less for their tuition.
“The average undergraduate student has 58% of the cost of college covered by grants in 2017. In 2009, only 48.8% of the cost of college was covered by grants,” Debt.org explains. “The federal government upped its grant awards from $20.6 billion in 2006, to $41.7 billion in 2016. Colleges added another $43 billion in grants in 2016, giving student a pool of nearly $85 billion in ‘free money’ to help lower the true cost of going to college.”
Having said all of that, college still isn’t cheap. On top of tuition, students have to think about other costs, including various college fees, books, meals, supplies, transportation, and housing. This latter one is particularly problematic in many college towns, where real estate investors often have control of the inventory and drive prices up because they know they have a captive market.
How Students Can Leave College With Less (or No) Debt
According to some of the most recent data available, 68 percent of 2015 bachelor’s degree recipients graduated with student loan debt attached to their name. The average debt per borrower was $30,100. But those numbers appear to be rising, with Debt.org suggesting the average student debt in 2017 was $37,172.
“If a 2016 graduate took the standard repayment plan for the $37,172 borrowed – 10 years, at 4.29% interest rate – they would be paying $382 a month for the next decade, Debt.org points out. “Experts estimate that you will need a starting salary of $47,000 to afford to pay off the loan if you remain single. If you marry, that number goes up to $52,000.”
For those who choose to pursue post-graduate degrees, it’s not uncommon to end up with more than $100,000 in debt. And, despite having advanced degrees, many of these people don’t have salaries that allow them to keep up with payments.
We clearly have a problem that calls for a bottom-up solution, but today’s college students don’t have the luxury of waiting around for some type of student loan reform. Instead, they have to do everything they can to lower the cost of college and (hopefully) graduate with less debt.
Here are some suggestions on how it can be done:
- Stay In State
While you might think going to school six hours from home sounds appealing, it’s really not all that different than going to a school 45 minutes from home. In either case, everything is new and fresh.
You can save, on average, 60 to 70 percent in tuition costs by choosing to go to an in-state school instead of one out-of-state.
- Make Scholarship Applications Your Job
There are literally tens of thousands of scholarships out there. While most students will get turned down 99 percent of the time, the 1 percent that are awarded scholarships can reap the benefits of significant financial aid. And when you average that money out across the time spent applying, it’s usually a really high hourly rate.
- Do More With Less
As a college student, you’ll need to learn how to do more with less. Saving a few dollars here and there might not seem like much, but it all adds up. For example:
- Don’t just go out and buy a new computer when yours starts to slow down. Instead, have it repaired and learn to take care of it. Just because we live in a disposable society where people quickly upgrade their possessions, doesn’t mean you have to.
- Get off the meal plan. Most meal plans are very expensive when you break them down on a meal-by-meal basis. Instead, buy your own groceries and learn how to cook. You’ll save hundreds per month.
- Coffee is a lifesaver for college students, but don’t go out and pay $5 a cup. Brew your own for one-tenth of the cost.
- Share Housing
Finally, gather friends together and share housing. The more people you can pile into a house, the more money you’ll save. While a $3,000 per month apartment costs $1,000 for three people, it costs just $750 for four. Right there, you’ve saved a couple thousand dollars over the course of a year.
Pressure Mounting for Reform
In 2016, Senator Bernie Sanders’ presidential campaign turned the topic of student loan reform into a major issue that received serious attention from the mainstream media and the general public for (arguably) the first time ever. And while his campaign may have come up short, he thrust the issue into the spotlight and many other politicians – both on the right and left – are jumping on board.
As pressure continues to mount for student loan reform, it’ll be important for students, graduates, and their families to continue making smart money decisions. Because, regardless of whatever reform happens, the onus is ultimately on the individual to take responsibility.
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