Affording College in the 21st Century

The costs of attending college continue to rise, though not all colleges represent good value for money. Many simply increase fees in alignment with fees charged by other more expensive post secondary education institutions, so it is imperative to ensure a college is actually worth its ticket price before selecting it. Affording college in the 21st century will largely be determined by family income. The very wealthy can afford to pay the costs and those with low incomes will receive financial aid. The sector affected most by rising costs is middle income families who fall outside the broad remit of financial aid.

It is becoming an increasing dilemma to save for either retirement or a child’s college education. Retirement funds are protected assets when expected family contributions are determined, but income and assets are considered. Families who invest in college saving plans will need to increase the levels of contributions to keep pace with rising costs.

It is likely that more emphasis will be placed in the future on the students’ direct contributions to the cost of education. Currently the expected family contribution includes both parental and student contributions, with the latter assessed as a percentage of savings. The Ivy League model is most likely to be copied whereby students are expected to contribute a minimum set amount from vacation earnings.

Student loans are available to students through the federal department of education, and from private lenders. Federal loans offer the best value for money as they offer low fixed interest rates. Private loans are often used by those who mistakenly presume they will not qualify for any federal aid which includes student loans, and as an expensive top up for those who require further funding after federal loans have been utilized.

Private student loans are not an ideal scenario as the costs of borrowing are high and in most cases require a co-signer to stand as guarantor. As more student loans fall into default it may become increasingly difficult for students to find a willing co-signer, particularly as guarantors become more knowledgeable about the full implications of co-signing.

A good option for families who can afford it is to take advantage of college plans whereby the level of tuition is fixed for four years from the date of college entry, thus predicting future costs becomes easier to manage. More colleges may make such plans available in order to attract students who are wary of the uncertainty of rising tuition fees.

The best way to ensure that college is an affordable option is to prepare well in advance of entry. High grades, community involvement and proven leadership skills help students to obtain the best scholarships and acceptance to the best colleges which provide generous financial aid. Students and parents should save early in readiness to cope with the costs, whilst protecting necessary savings for retirement.

Whilst more students are encouraged to attend college to obtain degrees it will become increasingly important to ascertain that the money invested will result in a degree which will have been worth the expense of attaining. The real cost of student loan debt may become too high for students who fail to make advance provision for affording college in the 21st century.