First, relax...it will be okay...eventually...

I know, it all sounds impossible. But more people are going to college than ever. And while many of them are accumulating debt faster than Congress, you can still get through this without an impossible financial burden. Just remember, that there will likely be no single source of money, you will have to be realistic on selecting the right school, and your major means everything. So, relax and start the journey, one step at a time...

Loading...

Friday, August 19, 2011

OK - What will it REALLY Cost Me?

Diving into the US Census Bureau data (http://www.census.gov/compendia/statab/cats/education.html) shows some revealing data. For 18-23 year old students, the average out of pocket expenses for a 4-year degree public school is about $8,700 per year (non-doctoral colleges) for net education costs (tuition and fees), after taking financial aid into account. Yes, there are still living expenses to cover, but it puts some realism into the scary numbers you may read.
Since the most often over-looked expenses are living expenses (room and board), let's look there first. A full school year room and board is in the range of $6,000 to $9,000 for a non-commuter, either sharing an apartment or in a dorm. Of course, you can always spend more. With a part-time job, (full-time in the summer, I hope) or work-study, the student should be able to cover at least basic living expenses. Next, tuition. With family contributions of half, and loans for the other half, you begin to see some daylight. Perhaps a 529 plan for half of the family contribution (equal to $100/month savings through middle and high school), then your family contribution just needs to cover less than $9,000 over four years. Sure the student ends up with about $17,000 in student loans (less than the average of $23,000 or so), but that is a good trade for an education that gets you a good job. And again, the rule of thumb is to accumulate student loan debt of no more than your first year's salary in your expected field - given there are employment opportunities in that field. And start that 529 plan today!

Of course, this depends on getting an education that makes you more employable, not just more knowledgeable. That Art History degree may make it tough to pay back that loan, though if you are getting the degree for personal enrichment, it's not an economic decision anyway. Understand the payback potential for your field of study, and get the facts before you start. And that is a subject for another post...

1 comment: