There are dozens of benefits that justify earning a higher education, including–but by no means limited to–better employment prospects, access to jobs with higher pay and the broadening of a college student’s social and mental horizons. Even so, approximately one in two high school graduates choose to forgo these potential benefits because they cannot reconcile the cost of the college experience with the bleak reality of the financial situation in which many new college grads find themselves.
There’s no denying that college is outrageously expensive. And, unfortunately, it is only getting worse; while the average family income in the United States grew 147% in the years between 1982 and 2007, the cost of college grew by a staggering 440% in that same period. What that means in terms of real numbers is that the average cost of a four-year degree from a state school is now $30,000. Most American families do not have that kind of money up front, which necessitates that they borrow it from private or government programs that issue student loans. Unfortunately, student loans leave college graduates an average of $20,000 in debt when they finish school. And approximately 10% of graduates will have twice that debt to repay. Collectively, American students owe more than one trillion dollars.
Figures like these, in combination with the fact that only half of all college graduate obtained a full-time job in 2011, are why more than six million graduates cannot pay back their student loans. The economic recession that began in 2008 has made it exceptionally difficult for college graduates to find jobs in their field. The upshot is that students take on lower-paying jobs that do not require degrees in order to make ends meet. Even so, that limited income is, in many cases, not enough to pay back their debt.
One in six default on their loans and a whopping 85% of 2011 college graduates were forced to move back in with their parents after school because they could not afford their own living space. To keep your children from contributing from that statistic, there are several ways to start saving well ahead of the day they move into the dorms:
- Start when your kids are young
- Contribute regularly to a savings account
- Invest wisely in equities
- Take advantage of 529 College Savings Plans
- Utilize tax credits for parents of college students
Of course, parents do not have to shoulder the entire responsibility of their children’s education. There are many ways for students to help pay for their own education, including earning scholarships, applying to federal student aid programs and participating in work study opportunities. To make sure teenagers are contributing to their college funds, parents can encourage them to grow their own income by saving money from a part-time job. Remember, saving just $20 per week by making small sacrifices leads to $1,000 in savings over a year. And with college tuition rates steadily increasing, every dollar counts.
College Isn’t Cheap by FrugalDad.com is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Based on a work at http://frugaldad.com/2013/01/04/college-isnt-cheap.
Terrific infographic!!
But I still wanna know why our elected officials only talk about making student loans less painful rather than holding colleges accountable for the unreasonably high tuition.
The rate at which college tuition (and books!) have increased in price certainly bears no resemblance to the piddly cost of living increases that working stuffs get. THAT is the problem I want Obama to dig into, not making it easier for students to dive headlong into perpetual debt.
Start earning when your kids are young, this is the best way to do.
Wow, those are some depressing numbers. My kids — when I have them — will definitely be looking at public universities!
Don’t assume public universities are any better deal. In my state the public tuition is less – however they are annually raising rates on room/board AND considering taxing dorm rooms too. Private schools have more ability to offset sticker price with tuition assistance, and do not have to rely on state funds to make their budget!
Great post and the info graphic is amazing. Question for you.
I’m still pretty young, getting married this year and kids are probably two to three years away. Am I crazy to start saving for their college education now? Do I get the tax benefits even though the children don’t exist yet?
Attending two years in a community college can save a fortune and give a student time to really develop a plan and desire for a major.
“the fact that only half of all college graduate obtained a full-time job in 2011″
And I read that less than half of that half got a full time job in the field for which they went to school, and something like a quarter of that half were in jobs that don’t require a degree.
As a society we are reactive instead of proactive. We set up problems like free trade where the playing field is not level as we cannot compete with .20 cent an hour labor. This results in graduate joblessness and loss of homes in countries where wages are high and the standard of living are high. You combine that with lack of regulation and over sight and here we sit. We need our leading economist that are advising the government to get outside the box. Instead of paying $10.00 for a shirt at Walmart, I was better off paying $20.00 for a shirt and my government have money to operate on and there be plenty of jobs because the shirt was made in America, sold in America and kept us in balance. Every country needs to find their balancing point and create security among the citizens based on the countries strength and weaknesses. We are destroying every market with over supply of every product with free trade. Then what economist, are we going to call this free trade self destruction, screw balance? Brazil protects the strong industries from imports so they do not eliminate jobs in their country with a balanced approach. Maybe that is why they are buying up all our foreclosed condo’s in south Florida because we are ignoring the balance. College students could pay back their student loans after graduation if there were jobs, instead they are just getting bad credit for all their hard work! The empty factory buildings all over the country, the unemployment and the foreclosure problem are because our regulators chose free trade over transparent balanced trade, it is really that simple. Even children’s sports keep children playing against each other in the same age group for balance, safety and security.
I’m reading your comment and I’m really confused by what you are trying to say. Are you suggesting that government is the solution to this mess? That we need more regulation in the market in order to solve the issues of unemployment? I dropped out of college after a semester. I know how hard it is to find good work, especially without a degree, and I know the problems associated with college. But I know that government is not the answer to these problems, in fact it is the problem. I’m not speaking to you as a conservative or a republican or someone with party-alignment, but I’m speaking to you as an economist and someone who has studied economics fairly thoroughly. Free markets are the answer. We do not live in a free market today, almost everything is regulated to some extent. This is because the American government has basically adopted Keynesian economic theories as the norm. Keynesian economics theorizes that unemployment and inflation have an inverse relationship, and that if we allow for a little inflation, which is at roughly 2 percent right now, that unemployment will go down. This usually works, but it has been proven to fail. In order to have Keynesian economic theory there must be some regulation. But you see unemployment is not the problem. Unemployment will always exist, but it is a short-term problem, in the long run, most people who are driven to succeed have no problem finding a job if the market is free, what is a problem is when you don’t know the true cost of things. When inflation happens, no ones knows what stuff really costs, because money becomes worthless to some extent. Inflation effects everything and it really effects college prices, which have risen 440% according to this article. College prices don’t have to rise to that extent, but they do because of the artificially induced inflation made by the regulations of the FED. I’m not particularly worried about unemployment of college grads, but we can’t simply react to it by regulating more, we have to look into the future, the long term. Fix rising college prices, because right now the price is artificially inflated, it is in other words a bubble, similar to the housing market bubble that was part of a cause of the recession. There’s only one way to really fix inflation, and that is by less regulation.
Pay for college using credit cards. Then claim bankruptcy once you graduate
Another thing to consider if you have kids, is look into if they can take college courses while still in high school. That program was in place while I was in high school, and the student doesn’t have to pay for tuition. If this is offered when my son is in high school, I will be pushing for him to try that to save as much as he can. He’s only 4 now, and I’m afraid to think of what college costs will be by the time he graduates.
Very depressing. One of the biggest disappointments is the shift of students that go to a community college, work part time, or live at home to save money. Not that these things are bad, but the student misses out on so many soft skills that help professional growth. Independence, learning to live with people, participating in school organizations, studying abroad, etc. all impacted me as much as actual course work did. If college turns into students living with parents and working 20+ hours a week, it will no longer be an “experience” as it was.
College tuition is crazy. I personally just finished my first year of college and am going to graduate 100% debt free in a year. I know this isn’t possible for everyone, but I think that a lot of students just need to learn how to save early, like you said, and spend less. I have started a blog with a whole section on graduating 100% DEBT FREE! Check it out
countrylivingandsaving.blogspot.ca
I hope this helps out a number of student/parents!