Thursday, November 6, 2014

Acting Smarter by Treating College for What It Is .... A Huge Investment in Time and Money ... Avoiding Student Loans

Now that the midterm elections are over, let's return to the real world. Today we'll discuss college in terms of what it is --- a big investment in time and money.

How long, how big (inputs) and for what result (output), those are the appropriate questions to be asked.

The less time and money invested in order to achieve the biggest financial or other desired returns over a lifetime represent the main idea. In other words, we want to spend as little time and money as possible to achieve the optimal results.

First, let's consider one of my all time favorite quotes by Edward R. Murrow, "The obscure we see eventually. The completely obvious, it seems, takes longer."

So here's the completely obvious point. How much time is spent getting a degree is perhaps the greatest factor underlying how much the cost of college will be, all things considered.

Making a concentrated and focused effort to shorten the lapsed time in college from beginning to end will provide two lifelong benefits: (1) less out of pocket costs in the form of tuition, fees, room and board, and other expenses; and (2) earlier entry into the income producing job market.

New on Campus: The 3-Year Degree tells about this 'wasted time' factor in more detail:

"To combat rising college costs and student debt, more schools are offering a time- and money-saving idea: a three-year bachelor’s degree.

Schools including Purdue University, the University of Iowa and the University of South Carolina are betting that students will want to finish college sooner by spending a year less on campus. Whether there will be many takers, however, remains unclear.

Many early experiments with accelerated degrees have fallen flat. While cost is a crucial consideration for most families, and the vast majority need to borrow money, many students are eager to enjoy every bit of traditional college life, including social activities, athletics and summers off. The accelerated programs require students to give up some of these perks.

“Parents are really interested in saving time and money, [but] the students are really interested in the four years of a college experience,” said Jenna Templeton, vice president of academic affairs at Chatham University in Pittsburgh. . . .

At least 22 private colleges have introduced three-year options since 2009, according to the National Association of Independent Colleges and Universities. But the number of students signing up . . . has been modest.

Figuring out how much a three-year degree saves isn’t straightforward. Colleges generally charge the same per-year tuition, but these students often incur extra charges for summer courses and added classes during regular semesters.

The additional fees, however, are still lower than another year of full tuition, and students avoid a fourth year of housing and meal expenses. Moreover, these students can enter the workforce and start earning money a year ahead of four-year classmates. . . .

The programs, however, can face snags. Sterling College, a small liberal arts school with an environmental focus in Craftsbury Common, Vt., tried to roll out a three-year program in the 2010-2011 academic year, but a 2012 shift in federal policy on Pell Grants for needy students proved a roadblock.

Federal law states that if students are in school for two regular semesters and received the maximum Pell amount for those terms, additional summer study won’t be covered. More than half of Sterling’s students receive Pell Grants, and without them, pupils can’t afford to spend summers at school, said President Matthew Derr. . . .     

Still, some in higher education say the new focus on three-year degrees distracts from a more basic problem: getting students through four-year colleges in four years. Less than four in 10 first-time, full-time students who entered school in 2006 graduated in four years; 54.9% did so in five years and 59.2% did so within six, according to the National Center for Education Statistics.

“We need to do a much better job graduating students in four, five or six years than we need to focus on getting a fraction of students through in three years,” said Daniel Hurley, associate vice president for government relations and state policy at the American Association of State Colleges and Universities."

Summing Up

Today less than 40% of students graduating from college do so in four years. The four year college plan is largely a myth, and a very expensive one at that.

Completing college with a solid degree and solid grades is generally a great investment in terms of an individual's lifetime earnings. The trick, and essentially the missing ingredient and focus by students, is to make that investment in attaining a degree as little as necessary in terms of time and money. And how much time it takes has a great deal to do with how much money it costs.

Student loans aren't free or cheap. They're very expensive and create lots of problems for our graduates in adulthood.

Distance learning, early college courses, part-time jobs, grants-in-aid and, perhaps most important, graduating from college asap are just a few of the things that can help students avoid starting adulthood with a boatload of debt.

But first, students must be taught and learn to internalize the simple concept that time lost is gone forever, and that the best way to maximize the return on any investment is to minimize the amount of time and money spent when making that investment.

Time is money.

That's my take.

Thanks. Bob.

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