College Planning:  Talking Reality with the Teen

College.

To a father of three, the word is as frightening as orthodontist.

Like many parents, my wife and I wonder how we’re going to help our children cover the cost.  We’re aware that the economic reality is that the college sheepskin is worth more than the high school diploma.  We see the marketing push for our impressionable teen:  Eldest, you’re the kind of student that we’re looking for!  Did you see our rankings in Barrons/US News/Princeton Review?  Don’t you deserve to be here for all of your hard work?  Our graduates routinely earn entry salaries of $X, move onwards to advanced degrees and are positioned as the nation’s leaders of tomorrow!  We want the best for them and see them live a full and productive life and a good education is key to that.

We also question the current model, especially when we read that more than 20 private college presidents earned an annual salary of $1 million.  Many of these institutions have an annual cost in the mid five figures.  We understand the opposing reality in that there’s no pension and our goal is not to spend our dotage in Eldest’s basement.  So there’s real guilt when I have to buck the prevailing wisdom and fight the college marketing machine to talk frankly to the kids.

This morning was another chapter in the ongoing conversation about reality versus the college machine.  What points did we cover?

  • I’ve spent considerable time discussing money and economics with the kids and this conversation was about bankruptcy.  Eldest is familiar since we’ve discussed the concept and procedure before and she understands that debt can be mitigated or cleared in the process.  We talked about the fact that student loans from the government – the principal source of college financing – were not forgiven or affected by a person’s bankruptcy.  In fact, they’ll follow the borrower like stink on a skunk until paid in full or the borrower dies.
  • Does the institution have to be top-tiered and have a name?  Indeed, do the first years even have to be at the institution at which you graduate?  Hell, I graduated from one of the nation’s top liberal arts universities and look what I’m doing.  If the name matters, perhaps a better route is to save the money and transfer in for the remaining two years.
  • Does the degree justify the post-college debt load?  Suppose two people are attending similarly priced private universities.  One plans to be a chemical engineer and the other a historian.  They graduate with similar debt loads.  Are the job/income prospects of the two able to support the respective debt payments?  Remember that what doesn’t go to the debt could instead go to caring for your own family or retirement.  Because I was talking to a teenager, I also mentioned better wheels, nicer apartment and upscale electronics.

This is as far as time and attention allowed, but it will be repeated.  And then repeated again.  I hate to have the conversation, but the cost of not doing so is too high.

Note:  For a good extended handling of real-life college financing and college options, I would suggest The Truth About Money by Ric Edelman.  When I first read his book, my eldest was a toddler and I read it with intellectual interest.  Now that she’s a teen, I’ve reread it and found it worth the time, even twelve years later. 

Especially twelve years later.

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