Conquering the Cost of College (CCC)

Deciding Whether Or Not to Attend College

Assume you decide that you do, in fact, want to go to college. First, the bad news: There is little doubt about it. When it comes to attending college, generally speaking, you are talking about spending a lot of money. Attending college—particularly in the USA—is a very expensive proposition as shown by the next two graphics.

Despite the high cost of attending college, many students find attending college to be a desirable and worthwhile endeavor for various reasons. One of their most important reasons for wanting to attend college is this: A college degree, generally speaking, represents their tickets into a middle-class lifestyle—albeit the cost of admission is very steep.

Now, for a bit of good news: Although attending college in the USA, generally speaking, is a very expensive proposition, money does exist to offset the high cost of attending college. For those students who are determined to go to college, it becomes a matter of knowing where to look for the funding and then taking the time to pursue various college funding options.

The most important bit of good news is this: Education truly pays—in more ways than one. In most instances, the benefits of attending college far outweigh the financial outlays required to pay for college. The number one benefit of attending college is this: As illustrated by the next graphic, generally speaking, college graduates earn far more income over a lifetime than non-college graduates. Also, the unemployment rate, generally, is much lower for college graduates compared to those who opted not to pursue education beyond the high school diploma. Even among college graduates, the choice of majors plays a significant role in determining lifetime earning power.

Not only does it pay to obtain a college degree from a purely financial standpoint but also it pays from a societal standpoint. For instance, the college experience teaches students to think critically. The college experience, generally speaking, opens the mind. Not only does the college experience teach students how to party but also it teaches students to be more tolerant, respectful, and accepting of others from different backgrounds—albeit the lesson is not always successfully received. For it is true that sometimes more education leads to more egotism instead of more wisdom.

Obtaining the Funding to Pay for College

Perhaps one of the biggest hurdles that many college-entrance prospects face is the hurdle of college affordability. (Another big hurdle that many college-entrance prospects face is the hurdle of getting accepted into their primary college of choice.) As illustrated by the next two graphics, the typical ways to pay for college include scholarships, grants, work-study programs, personal savings/investing programs, personal loans or borrowing, and cash.

Sources of Financial Aid

Types of USA Federal Government College Financial Aid

Conquering the Cost of College

Many college students end up cobbling together some combination of the above-illustrated ways to pay for college. In the final analysis, the question remains: How can the typical student pay to attend college while simultaneously graduating from college without a heavy debt burden? As illustrated by USA student loan debt clocks, the college debt burden is very real and growing.

Probably to the disappointment and dismay of many, presently, there exists no "silver bullet" or broadscale magical solution for conquering the cost of attending college while simultaneously avoiding a heavy debt burden after graduating from college. Nevertheless, here are several college affordability tips:

College Affordability Tips

1. Cash

Obviously, cash would be the preferred and ideal way to pay for college. But, much like the case of, say, purchasing a home or purchasing an automobile, the problem with cash is that only a handful of students (namely, their parents) can afford to pay cash in full upfront for their children to attend college. As the above graphic illustrates, for the 2020-2021 school year, it would cost, on average, $22,180 in cash per year to attend a public college and $50,770 in cash per year to attend a private college.

2. Scholarships

One way to afford college while avoiding a heavy college debt burden would be to be awarded a full scholarship. There are various kinds of scholarships. These include academic scholarships (for instance, high school students who earn all A's in their school courses), athletics scholarships (this is, exceptionally talented sports players), and artistic scholarships (such as those students who are exceptionally talented in dance, music, theatre, and visual arts). The problem with scholarships is that not very many students possess the type of exceptional talents it takes to earn a full scholarship. Even if most students possessed exceptional talents, there are far too few scholarships available to go around. Click this link to search for scholarships: scholarships.

3. Grants

Another way to afford college while avoiding a heavy college debt burden would be, if eligible, to take advantage of numerous grant programs. The problem with grant programs is that, typically, they only partially cover the total expense of attending college. Also, many federal government grants programs exist to benefit low-income students to the detriment of middle-income students. Click these links to search for grants: grant programs.

4. Work-Study

Work-study programs offer another pay to pay for college. Much like the cases with scholarships and grants, the problem with work-study programs is their limited availability. Click this link to learn more about work-study: work-study

5. Loans

Loans are one of the most popular ways to finance a college education. College loans, whether taken through the public sector or the private sector, generally, are available for the asking. The problem with loans is not only do the present a challenge to repay the principal amount borrowed but also a challenge to repay the accumulated interest on the loan. Click these links to search for loan programs: loan programs.

6. Savings and Investments

Scholarship and grants are great if you can get them. The problem, again, is there are not enough of them to go around, not everyone is eligible to receive one, or they do not cover the full cost of attending college. In the case of scholarships, typically, you need to possess a unique talent to get one. In the case of grants, typically, you are reliant on the goodwill of others. Personal savings and investments programs represent another way to pay for college while simultaneously avoiding a heavy college debt burden. These programs run the gamut from 529 Plans, Education Savings Accounts (ESA), and Roth IRAs. Click this link to learn more about 529 Plans: 529 plans

7. Miscellaneous Tips

Numerous miscellaneous tips are available to help in curtailing college costs. They run the gamut from crowd sourcing to employer sourcing to pay for college. Some of these miscellaneous tips are more practical or feasible than others. These miscellaneous tips include the following ones:

• Select a major of study and a career in one of the jobs that participate in loan forgiveness programs.
• Engage city and state programs that fully subsidize a student's college debt.
• If a college is within commuting distance of your place of residence, then continue living at home and commute to college each day to avoid expenses such as room, board, and other on-campus student fees.
• Complete the first 2 years of college by attending a less expensive community college. In the USA, much like public schools, momentum is building to make it completely free to attend a 2-year community college. Attending a 2-year community college provides a viable option to jumpstart going to college to obtain a 4-year degree.
• Attend a lower-priced, lesser well-known college. The lower-priced colleges might not possess the prestige, high-caliber professors, or first-rate facilities of universities like, say, Harvard or Stanford. However, it is possible to obtain a solid education at some of these lower-priced, lesser well-known colleges. For instances, lower-priced, lesser well-known colleges are ideal places for students who qualify to receive federal college grant funding. The amount granted sometimes would be enough to cover the full cost of attending college.
• Engage in an online but accredited distance college study programs. For instance, the University of the People offers a relatively inexpensive online college study program.
• Some private-sector employers offer tuition assistance to promote employee growth and development, that is, if you work for the employer and decide to pursue a college degree while working. Working for such companies is one way to obtain a free college degree.
• In some rare instances, free colleges do exist. The drawback to the free-college approach is the limited availability of such institutions of higher learning or their stringent qualification requirements. Several countries do offer free college educations, but this option is of little consolation to the overwhelming majority of students across the globe who do not live in those countries offering free college educations.
• A more drastic option would to forego college altogether in favor of lesser expensive alternatives to attending college such as Job Corps, apprenticeship programs, etc. Click this link to learn more about apprenticeship opportunities: apprenticeships.

Savings and Investments Revisited

J.P. Morgan's report titled "College Planning Essentials" provides a good review of some college savings and investments options. As noted by J.P. Morgan's report, the key to a successful college saving-and-investment program is for parents to open a college savings/investments account very early in their child's life and to make consistent, periodic contributions into the account (say, for instance, monthly contributions of x dollar amounts).

Online calculators offer a good and quick way to gauge the soundness and effectiveness of different savings/investments strategies. One approach would be to set a specified savings goal, and let the calculator compute how much you would need to periodically deposit into the account to achieve the savings goal. Take the following J.P. Morgan graphic, for instance. Also, use the newborn example of a $230,069 specified goal to attend a public 4-year college, which also assumes that the time horizon involved is for 18 years. The following Savings Goal calculator should reproduce the results in the following J.P. Morgan graphic.

To have saved the required $230,069, the online Saving Goal calculator computed that $590.09 would need to be deposited into the account monthly for 18 years given a 6 percent interest rate compounded monthly. This $590.09 differs from J.P. Morgan's computation of monthly deposit of $601. Despite the difference, the point here is not so much about precision. For purposes of this discussion, the point here is about demonstrating the speed and ease at which you can compute different savings scenarios with a very high degree of confidence simply by using an online calculator.

A popular and painless way to contribute to a savings/investments program is to enroll in one of those bank sweep programs. For instance, when using your debit card, the purchase amount is rounded up to the nearest dollar. The rounded amount is "swept" into a specified savings account, say, a college savings/investments account. Another option would be to utilize one of the many available automatic savings apps such as Acorns.

The bill-pay method is another easy way to save. With online banking, there is the ability to schedule the payment of bills. One bill that can be scheduled is a monthly deposit into the designated college savings/investments account.

The First World's Low-Income Residents

State and local governments, too, have begun introducing innovative approaches for low-income residents to offset the cost of attending college and ultimately to escape from poverty. With a sound savings and investments program started at birth, parents no longer need to rely on pursuing some of the other above options to pay for their children to attend college. For some residents who fall within the low-income bracket, due to a perpetual money shortage, it is easier said than done for them to consistently engage in a savings and investments program for their children from the time of birth until their children become 18 years old.

One notable local governmental approach to offset the financial challenge faced by low-income residents is the city of San Francisco's Kindergarten to College (K2C) savings program. Professor Michael Sherraden of Washington University is credited with pioneering the childhood educational savings account concept as a means for ending poverty in the USA. An added benefit of programs such as K2C is this: Not only do they help students pay for college but also they instill in students the importance of investing early in life.

Another online calculator approach would be to input various savings amount into the calculator, and let the calculator compute how much you will have saved after a specified number of years given a certain interest rate and given periodic deposits into the account. Take the following J.P. Morgan graphic, for instance. Also, use the start-at-birth example, which assumes the periodic deposits would continue for 18 years. The following Savings calculator should reproduce the results in the following J.P. Morgan graphic.

In the above scenario, the online calculator computed the following: Starting at the birth of the child, if you started by depositing $100 a month into a savings/investment account and continued to do so each month for 18 years at an interest rate of 6% compounded monthly, then you will have earned a total of $38,929.00. If the monthly amount deposited was $250, then you will have earned $97,322.49. If the monthly amount deposited was $500, then you will have earned $194,644.98. Again, notice how the totals earned for the monthly $100, $250, and $500 deposits computed by the online Savings calculator varies from the total balances of $38,281, $95,703, and $191,407, respectively, as depicted by J.P. Morgan's graphic. Despite the variances, again, the point here is not so much about precision as it is about demonstrating the speed and ease at which you can quickly compute different savings scenarios with a very high degree of confidence simply by using an online calculator.

Also, as noted by J.P. Morgan Asset Management's review of college planning, parents can save a significant sum of money if they happen to be in a financial position to engage in a college savings/investments program for their children beginning at birth compared to borrowing to pay for college in the form of a loan. The goal of online applications such as Stash is to make investing easy and routine.

Using the above online Savings calculator in conjunction with J.P. Morgan's above invest-versus-borrow graphic, the calculator computes that a total amount of $119,723.75 could be saved after 18 years. This $119,723.75 total is based on an initial deposit of $1,000 and subsequent monthly deposits of $300 for 18 years at 6% interest compounded monthly (at the beginning of the period). These deposits translate into a total of $65,800 in contributions (that is, the $1,000 initial deposit + ($300 monthly deposits × 18 years × 12 months) plus $53,923.75 in interest earned (thus, $65,800 + 53,923.75 = $119,723.75).

J.P. Morgan's invest-versus-borrow graphic, by way of comparison to the online Savings calculator, shows a total balance of $117,698. The deposits translate into a total of $65,800 in contributions (that is, $1,000 initial deposit + ($300 monthly × 18 years × 12 months), which means the interest earned would be $51,898 (thus, $65,800 contributions + $51,898 earned interest = $117,698 account balance).

The first discrepancy between the online calculator and J.P. Morgan's invest-versus-borrow graphic was an account balance of $117,698 versus the calculator's balance of $119,723.75. The next discrepancy is J.P. Morgan's total amount owed of $164,572 if the amount of $65,800 was borrowed at an interest rate of 7.08% compounded monthly over a period of 10 years. In contrast to J.P. Morgan's total amount owed of $164,572, using the below online Compound Interest Calculator, it indicates that the total amount to be repaid on a loan of $65,800 would be $133,291.63 (that is, at an interest rate of 7.08% compounded monthly over a period of 10 years). It would seem that different criteria or assumptions are being considered by J.P. Morgan's invest-versus-borrow graphic compared to the online calculator.

In regards to these observed discrepancies, the reader should note that, when it comes to matters of risk, reward, and the time value of money, it is not unusual to encounter different perspectives, assumptions, and techniques or methodologies being used to measure it. The main thing would be for all parties involved in the financial transaction to be acutely aware of and in agreement with the ground rules or terms being used to structure a deal.

The Third World's Poor

It is easy to discuss the act of parents establishing a savings/investments program for their children in the context of developed countries where earned income is relatively high. What about the poorer, developing, or so-called Third World countries where earned income is relatively low? How, on Earth, can families in these less affluent countries afford to send their children to college when some parents do not earn any more than the equivalent of $1.90 USD per day to foster a living? Herein is where the success of programs such as the United Nations' Sustainable Development Goals (SDGs) initiative becomes critical.

Within the context of making a college education available for all regardless of country, the primary focus would be on successfully attaining SDG Goals 4 (quality education for all) and 1 (no poverty). Per the 2020 Sustainable Development Goals (SDGs) Report, "The 2030 Agenda for Sustainable Development was launched in 2015 to end poverty and set the world on a path of peace, prosperity and opportunity for all on a healthy planet. The 17 Sustainable Development Goals (SDGs) demand nothing short of a transformation of the financial, economic and political systems that govern our societies today to guarantee the human rights of all."

Professor Bhagwan Chowdhry of UCLA took Professor Michael Sherraden's childhood educational savings account idea a step further. Professor Bhagwan Chowdhry has proposed a somewhat similar plan to alleviate world poverty. Professor Bhagwan Chowdhry's plan is known as the Financial Access at Birth or the FAB plan.

Dr. Chowdhry's proposes that, regarding the newborns of parents who cannot afford to do so, with the birth of each child, $100 will be deposited into a bank account to be held in trust for the future educational benefit of the newborn child. After the initial $100 deposit is made, Dr. Chowdhry recommends that the donor makes $10 monthly deposits into the account. Dr. Chowdhry envisions multiple funding sources for the initial $100 one-time deposit as well as for the subsequent $10 monthly deposits. These funding sources include private citizens, philanthropic organizations, and national governments.

In one scenario, Dr. Chowdhry notes that, if the deposits were left in the account until the child reaches age 16 and is ready to attend college, then the account's balance will have grown to about $3,000 in USA dollars (USD). The $3,000 in USA dollars might be enough money to pay for the child's college education in a lower-cost country. The $3,000 USD would not nearly be enough money to pay for a child's college education in a higher-cost country like the USA.

The proposed $100 initial deposit and the subsequent $10 monthly deposits would equate to monthly deposits of $11.14. It is assumed that the account would be receiving 4% interest compounded monthly. It also is assumed that the $11.14 monthly deposits would be made into the account at the beginning of each month. (Hint: Use the Savings calculator to reproduce the $3,000 computation.)

It is believed that a college education would result in the child becoming gainfully employed and self-sufficient in adulthood. It also is believed that, when the child completes college and gets married, then his or her children would be less likely to grow up living in poverty.

Finding Career Success after College

Finally, the student journey does not end with obtaining a college degree. College success must translate into career success after graduating from college. The next step or challenge after college is to enter the workplace and preferably pursue a career that falls within your college major or your college minor of study. Regardless of the career you pursue in life, the question becomes this: How do you realize and sustain a successful career path? The next graphic illustrates some of the traits required for realizing and sustaining a successful career path in the workplace regardless of your position on the organizational chart.

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