Six Ways To Hold Down College Costs

A mother recently told me about her son, a first-rate student who was accepted by Cornell University and by New York’s City College for the upcoming fall term.

The mother wanted her son to get the Ivy League experience that Cornell offered. They are a family of modest means, but she was prepared to help her teenager as much as she could, though it would have meant taking on considerable debt.

Unlike Cornell, which offered only a partial scholarship, City College promised the young man a full ride to enroll in its honors program. As part of the City University of New York system, City College does not have Ivy League prestige, but it has provided high-quality educations to generations of upwardly mobile young people – and it costs far less. Attending City College would mean that the woman’s son could live at home if he wished, and he could get his undergraduate degree at minimal out-of-pocket cost.

The young man chose to enroll at City College. He told his disappointed yet admiring mother that he saw no reason to begin adult life under a pile of debt. I think he made a wise and mature decision.

Expensive colleges can be like designer jeans. They are nice to have, and you should expect high quality (which you will usually, though not always, receive), and people will respect the label even if they know little about the product. But they don’t necessarily do the job any better than a workaday pair of denims. Sometimes the best decision is to forego the name brand.

College costs and student debt levels have finally spiraled high enough to trigger some serious soul-searching among students, parents and educators about the real value of higher education. The fact is that buying a college education is a lot like buying a car. If only one model and color will make you happy, you have no bargaining power. If you are willing to consider any vehicle that can take you where you want to go, there are many opportunities to save money along the way.

Here are some ways students can keep college costs affordable and avoid starting life deeply in debt :

1. Make schools compete. Admissions officers are obsessed with college rankings. Almost any high school graduate – not just the class valedictorian – represents an upgrade for some schools, and just a run-of-the-mill candidate for others. Schools seeking an upgrade will offer generous discounts, without any demonstration of financial need and often without even being asked. They must compete on price to attract stronger students. Be prepared to take advantage.

2. Use advanced placement credits and graduate early, if possible. Simple math: The less time you spend at a school, the less you pay – and the sooner you start working. Take advantage of advanced placement and similar college-level classes while in high school and consider which colleges will give you the most credit for those classes. Don’t pay for more college than you need.

3. Be prepared to transfer strategically. You get the same degree from Designer U. whether you spend two years or four on its campus. If money is tight, and if you can start someplace less expensive, give this option serious consideration. Yes, it might get in the way of Greek or other extracurricular activities; consider how much this is worth to you in dollar terms. Also, if your first school proves to be stingy with AP credits, a transfer might be your best bet.

4. Avoid early decision. Early decision programs, which require applicants to commit to a school before receiving competing offers, are designed to benefit college admissions offices – not students. (Early action, which allows students to consider several offers, is more evenhanded.) Early decision may help you get into a school that you absolutely insist on attending, though it is no guarantee, but the price of this advantage can be high. If you want good educational value for your dollar, assert your right to comparison shop. Remember, some college out there is going to want you – and when you get there, it will become your school, and you will probably love it.

5. Combine graduate and undergraduate education. The sooner you get through school and start your working life, the better off you are likely to be. If you have a strong career direction that requires graduate school, look for a program that will get you all the education you need as quickly as possible. If, like many teenagers, you really do not know what you want to do with your life, consider deferring college for a year or two while you get some work experience. Freshman dorms are not the only place from which you can launch a voyage of self-discovery, but they are probably among the most expensive places to do so.

6. Live at home and work while you study. This is the old-fashioned way to go to college: Study when and where you can, work when you must, and live where it is most economical. Do you really want to borrow money to pay for a residence halls meal plan, when Mom and Dad have a perfectly good kitchen and a fully stocked fridge? You can also get a part-time job, on or off campus, to cover a lot of your costs while you are still in school. Like early decision, unpaid summer internships have become a gimmick that disadvantages students, but you don’t have to follow the herd. Traditional student summer jobs range from waiting tables at resorts to parachuting into forest fires as a “smokejumper.” Those jobs are not always easy to get, but they are still out there – and nobody expects you to jump into a forest fire for free.

There is nothing wrong with expensive colleges, prestigious colleges, freshman dorms or student loans. They all have their place, and if your family can comfortably afford these things, there is no reason not to avail yourself of them. But you should treat college as exactly what it is: one of the most expensive purchases you are likely ever to make. You can get the best long-term value for your education dollar if you consider your options with an independent attitude and an open mind.

About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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