IS COLLEGE STILL WORTH IT? - ABSOLUTELY!

According to the U.S. Department of Education, the average prices for undergraduate tuition, room and board were estimated to be $13,600 at public institutions and $36,300 at private not-for-profit institutions.  Remember, those are averages – there are over 100 schools that cost over $50,000 a year.

College tuition is outpacing median incomes but not going to school is even more expensive.  The income gap between the college grad and the high school dropout is huge.  College graduates earn 80 percent more.

While a four-year traditional university is preferable, it may not be for everyone but other post-high school education is also beneficial.  Community colleges, vocational training and even online universities play a valuable role. They offer an alternative higher education and retraining that is affordable and convenient.

Let's put this in real terms. In 2010, of the Americans who earned over $150,000, 82 percent had a minimum of a bachelor degree.  Only 6 percent had just a high school diploma.  People can graduate from college with quite a bit of debt but the investment in college is still a good value.  A study from the Hamilton Project found that $100,000 for college would yield a higher lifetime return than if you had invested that same amount in corporate bonds or hot stocks.

KEEP THOSE GRADES UP!

In today's economic environment, higher property taxes and cost of living, frozen wages and withered home equity have put the crunch on middle-income parents.  Many no longer have the savings or even borrowing power to keep up with the ever-rising cost of education.

A family making $75,000 a year might have to contribute $10,000 a year toward the cost of of college before qualifying for need-based aid.  For a family with $150,000 in income the contribution jumps to $35,000 a year or more.  The need for student loans has skyrocketed.

Universities like Tulane are offering sizable amounts of aid based mostly on academic promise in order to bridge the loss of brighter students to less-expensive public colleges.  According to an Education Department study, the percentage of students receiving merit aid since 1995 has grown to significantly rival the number of students with need-based aid.

Merit aid is one of the most promising answers in college financing now.  Students can be attracted to schools for any number of emotional reasons including the look of the campus, having a friend also attending or even the climate.  Then the parents have to figure out how/if they can pay for it.  Remember your budget.

Put financial consideration high on your list when making the college “wish list”.  Be sure to include schools which offer substantial merit aid.  Look at schools that will want you and be willing to help out.  The University of Miami, for example, awards merit scholarships averaging more than $23,000 a year to nearly one quarter of it's freshmen.  Tulane offers similar statistics.

Good grades are not only necessary in order for your child to get accepted by the college of choice, but to help pay for it.  It is important to note that once accepted, the student has to continue to get good grades and meet set standards in order to renew the merit-based aid.

IT SHOULDN'T TAKE A TRUCK TO MOVE INTO THE DORM

Gearing up for college move-in is another chance for teaching budgeting and common sense.  Having a teen leave the nest for the real world is a milestone but we shouldn't try to assuage our anxiety with unnecessary shopping and spending.

First your child needs to find out what is provided by the school and also what is permitted in the dorm room.  Keep in mind that dorm room space is limited. Now it's time for a list.

You and your young adult need to make three lists: “must-haves”, “wants” and “bring from home”. Remember to research prices and list them with each item.  Set a realistic budget and stick to it.

Before you make any purchases or decide what to bring, your child should contact the roommate.  They can save money and clutter if they don't duplicate items that they can share.  For example, one can bring a microwave and the other a floor lamp or stereo.

Remember that this is your child's time to grow.  Let them make decisions.  Having matching bedding might be a priority for you but not your son or daughter.  You are not the one heading off to college.  Don't obsess about remembering every last sundry, snack or notebook.  Even the most remote campuses have commissaries and book stores.

Get ready to start baking your kid's favorite cookies to put in those “care packages”!

Off To College: Credit Cards & Budgets

The mere words “off to college” and “credit cards” should give you goose bumps.  The scary news is that half of all college kids have at least four credit cards and will graduate with over $4,000 of credit card debt and $20,000 in student loan debt.  Not a great way to start out their career life!  This debt load means that 18-24 year-olds will spend almost 30% of their monthly income solely on debt repayment.
 
Now for the good news!  Most college students admit they need more financial management education — so teach them!  The beginning of any financial arrangement is always a budget.  Simply, a budget is a description of “Money In” and “Money Out.”  As a parent, you have some control over the “Money In,” especially if you’re supplying it.  But in most cases, your child will control spending the “Money Out.”  Your overall goal is to start having “Money Management” become a real life skill.  If you haven’t started money lessons yet, it’s never too late.  I call this process my “No Magic Money Log”.

It’s no magic where your money went – you spent it.  Have your kids carry file cards to write down everything they’ve spent money on.  This way, they can really decide what they “need” as opposed to what they just “want”.  Go through the list with your student and build a real budget.  It should include things such as phones, Internet, food, entertainment, and transportation.  Books and clothes may be one-time expenses and may not reoccur during the semester.  Let them report their budget to you on a monthly basis.  The more responsibility they have the more they’ll own their budget…and hopefully this will help you get a good night sleep.