Wednesday, October 28, 2015

Parents Should Play a Huge Role in Deciding Which College Their Kids Attend, as Well as How to Responsibly Finance That 'Higher Education'

Experience is a great teacher, albeit often a prohibitively expensive one. Thus, the knowledge of others is the best experience from which we can learn. And that begins with learning what our parents can teach us through their many life lessons, some good and some bad, but all potentially beneficial.

As we age, we accumulate many useful if unheeded life experiences. Ignoring reality and following the sentiment contained in the lyrics of the old country song "I wish I didn't know now what I didn't know then" isn't a good way to make choices.

Much of what we learn too late applies to effort, showing up, education and debt. We really can't 'write our own ticket' if we get that degree, and borrowing excessively to do so absolutely will not 'pay for itself.'

Let's face facts. Most colleges are sellers that want to 'fill up' their educational 'factories' by getting as many paying butts in the seats as possible. That means prospective students are targets of the selling. But unlike buying a car or TV, the government, both in the form of student loans and grants, provides most of the money to close the sale.

And with the exception of highly prestigious and heavily endowed colleges such as Harvard, Stanford, Duke and Yale, the more expensive the college, the more it takes an all hands on deck mission to recruit the all too often financially unsophisticated, unknowing and unsuspecting eager beaver teenagers and their families.

As a result, college recruiters, unknowing students, and freely available but super expensive government loans represent a life changing and often devastating financial experience for the unsuspecting new enrollees each academic year.

And that's precisely why there's an urgent and compelling need for necessary if sometimes unwelcome parental guidance to be an integral part of the college attendance decision making picture.

The depressing reason families are having this important conversation says this:

"The ways in which a college degree from a prestigious private school might affect her future weren’t lost on Anna Brackett’s daughter, who is 18 years old. Well before the Brooklyn teen received acceptance letters from state universities and pricier, private ones, her parents had laid bare the consequences of choosing the more expensive school.

“I was up front with my daughter about how going into life with a huge amount of debt on your shoulders is something that you cannot take lightly,” Brackett said. So when her daughter got the letters and looked at the bottom line, she couldn’t find a way to justify taking on tens of thousands in debt, when she had the option to graduate debt-free. Her daughter ultimately chose Binghamton University, part of the State University of New York system. . . .

About 85% of parents said they spoke with their child about paying for college and got into the nitty-gritty of their own family contribution, student loans, scholarships and part-time jobs, according to a survey of 2,000 parents released by Credit Sesame, a credit monitoring company, published this week.

The Credit Sesame survey adds to the growing body of evidence that a chat about college finances is simply becoming part of growing up. Half of parents talk with their 7 to 12-year-olds about saving for college, according to a 2014 survey from Sallie Mae.

Though it’s arguably good for parents and their kids to discuss college costs in depth — these conversations can help students avoid mountains of debt after graduating or attending a school they later regret as a bad investment — the rising cost of college and families’ increased reliance on debt to fund higher education may be underpinning parents’ openness with their kids. Brackett, 49, noted that members of her generation largely weren’t forced to grapple with tough financial questions when choosing a school.

Parents and students enter into an often complicated and opaque process when trying to secure financial aid, making some kind of financial discussion essentially a requirement for anyone hoping to successfully pay for college, said Mark Huelsman, a senior policy analyst at Demos, a left-leaning think tank. . . .

More than 60% of parents plan to contribute up to $10,000 to their children’s college, the Credit Sesame survey found. With wages stagnant over the past several years, that nest egg can be hard to build, but it amounts to little more than a drop in the bucket when it comes to the price of college. Tuition, fees, room and board for one year at a four-year public school for an in-state student cost $18,943 a year on average during the last academic year, according to the College Board.

Forced to find a way to make up the rest of the cost — whether it’s working longer in the case of parents (40% of those surveyed by Credit Sesame said they plan to do this) or taking a part-time job during school in the case of students — it’s no wonder families are taking the time to discuss it, said Stew Langille, Credit Sesame’s head of brand. “It’s hard to figure out what the right financial decision is,” he said. “It’s a big issue.”

Abigail Myer, Brackett’s daughter, said she doesn’t regret opting for a cheaper public school instead of the small liberal arts colleges she was considering in upstate New York. . . . And she knows that graduating debt-free will give her the freedom to choose a job based on its merits, not on how much it pays."

Summing Up

Family conversations about the cost of college and the total investment required of the family in terms of time, effort and money are absolutely essential before the college decision is made.

Money borrowed will have to be repaid, and the less borrowed the better life after college will be.

Before the college choice is made, many families and their kids need to know much more than they do about the all-in costs of higher education and the value associated with getting that coveted degree.

In turn the new crop of college graduates will be better prepared, both academically and financially, when their days in the classroom are finished.

We simply can't expect or rely on the self interested education community or government officials to properly guide, inform and advise our families and kids on the most responsible course of action.

That very important job of engaging in a worthwhile and before-the-fact-cost-benefit analysis is for each family, and for each of us as individuals, to undertake.

Sadly, it's being done too infrequently.

That's my take.

Thanks. Bob.

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