College Expenses May Seem Like a Mystery. Tips on Formulating Effective Queries
We don’t have a problem with the price of education; the issue is that we don’t always know what we’re getting for our money.
Reporter Ron Lieber of the New York Times came at this conclusion after spending years writing on personal finance and college savings. His book, The Price You Pay for College, is set to be released on Tuesday, January 26.
According to Lieber, the process of preparing for higher education should be more like “buying for a home or a vehicle.”
I’m attempting to rally a horde of individuals to sharpen their inquiries and increase their demands. The educational institutions owe us far more in the way of data, replies, and precise information that will allow us to establish value. It’s not fair that we have so little information.
The good news is that Lieber thinks we can remedy this by taking a tack that puts more information and control in the hands of parents and anybody else who could be hit with a hefty college tuition cost.
The term “scholarship” has lost all of its significance, Lieber explained in a recent interview with NextAdvisor, which he used to discuss the rising cost of higher education, admissions techniques that most parents don’t know about, and more. To maintain a reasonable reading time and maintain clarity, the discussion has been shortened and modified.
Next Advisor: How can parents save money on college if they know how much it will cost?
Mr. Ron Lieber
If you’re Ron Lieber, In my opinion, any state’s flagship institution can provide at least $100,000 in value, and oftentimes much more. I also think that many private organizations are capable of providing worth of $300,000.
But if we go into a store without a clear idea of what we need, and if we don’t ask pertinent questions about the things that matter most to us, the likelihood that we’ll receive our money’s worth is low. Basically, I just want prospective students to have a clearer idea of what they want out of college and how to maximize their opportunities to get what they came for before enrolling.
Both of my kids are now in elementary school. Our strategy for paying for college is a bit… hazy. Just how hopeless is it for me already?In my opinion, the situation is far from hopeless. If your children are in the single digits and you still don’t have a solid plan for their future, I recommend sitting down with your partner (if you have one) or, if you’re strong enough, your ex to do some serious soul searching. In what sort of university did we enroll? How much, in today’s money, would a university like that be? To what extent did our parents assist us monetarily, if at all? How much did our debt total? How do we feel if the debt remains? What kind of promises can we make to our children, and what kind of outcomes can we hope for?
When budgeting for college costs, how should parents account for their own feelings?
When we pay attention, we can usually put a name to the feelings we experience when making any financial choice, no matter how large or little. To put it bluntly, the cost of higher education presses all of those buttons. Because it involves our children, we can’t help but let our feelings cloud our judgment. So, right from the start, I was looking for the emotions that may cause the most trouble for others.
The first is worry about a social fallout as a result of imposing limits on our children; we worry that their failure will be our responsibility and that they will end up in a worse socioeconomic bracket because of it. Then there’s the regret that we made the wrong decision when it came to our career path, where to settle down, or even whether or not to have children. When it becomes apparent that these factors may limit our children’s future opportunities, we feel terrible and want to do whatever we can to give them what they want, even if it’s not what they need.
I’m pushing folks to recognize these feelings, take them down, and hold them at bay. However, it all begins with awareness, which is something that most individuals lack.
Is there a specific point at which a family’s finances need to be in order before they begin college savings?
Some fundamentals are probably correct for the vast majority of individuals. Free money in the form of an employer match for retirement savings is an irresistible incentive to contribute as much as possible to your workplace retirement plan. You should put in some serious effort to pay off student loan debt if, for whatever reason, the interest rate on your loans is higher than the return you may expect from your 529 plan. Whether or not you can achieve your goals depends heavily on your own unique set of circumstances.
Personally, I haven’t met many folks who were sorry they put money aside for further education. Indeed, I don’t meet many folks who think they oversaved.
If a parent is considering opening a 529 plan but is put off by the fact that the money can only be used for education costs and not retirement, what would you recommend instead?
Keeping some wiggle room for oneself is a perfectly reasonable goal, in my opinion. If there is even a remote possibility that your child may go to college, you should open [a 529 plan] and take advantage of the fantastic tax savings that come with it (both at the state and federal levels). Do both if your heart desires it! You may diversify your college funds by contributing to a Roth IRA and a 529 plan. Then you may reap the rewards of both options.
What was the most unexpected thing you learned while writing this book?
The amount of work that our schools put into collecting and using individual profiles of our young people is astounding.
They have access to all of the PSAT data submitted by kids and compare it to massive databases containing information on others just like your adolescent who live in the area or attended the same high school. And they’re keeping tabs on your adolescent’s every move, from the texts and emails they send and receive to the websites and mail they read. The information is then triangulated in a massive database whose sole purpose is to determine the price that will make the family feel like they are getting a good deal and receiving a “scholarship” based on the merit of this child, when in fact the “scholarship” was created to provide the lowest possible discount that will cause you to say yes but not $1 more.
In my opinion, most individuals have no notion that hundreds of millions of dollars are spent annually on this equipment.
Fast Facts About College Tuition That Ron Lieber Wants You to Know
In a flurry of replies to a variety of inquiries, Lieber provided his short take on a few key concepts and phrases relevant to the process of preparing for and paying for higher education.
1. A sabbatical
All high school graduates who are considering further education should also examine the possibility of delaying their college career. While not advocating for them, studies have shown that students who take a year off between high school and college perform better academically than those who don’t. From anecdotal evidence alone, it’s also obvious that they go on to improved employment prospects. So, if you’re a parent who values academic success and professional success, you’re not doing your job until you consider a gap year as an option.
2. The local university
An excellent method for cutting costs. However, you should enter the fray with a full tank of gas and a well-thought-out strategy. Also essential to this strategy are the counselors at both your community college of choice and your chosen transfer institution. You need to have both of them on speed dial before you ever enroll at community college, and you should be checking in with them at least three times a semester: before class registration, in the middle of the semester, and at the end of the semester. The plan is to spend two years at a community college, transfer, and finish up at the four-year institution.
3.The need for student loans
A perfectly acceptable method, if you are confident in your ability to complete [your degree]. And as long as you give serious consideration to whether you need or want to borrow more than the modest $30,000 cap on federal undergrad student loans.
4. An exclusive university
Numerous private universities provide substantial savings. On the basis of both need and “merit,” as the term is sometimes characterized. As a result, don’t automatically write off a university because of its high sticker tag. Think about what a person in your situation could have to pay. The net price calculator can provide you an approximation if you have shown financial necessity. And if you don’t qualify for financial aid, the school’s list price is $75,000, and there’s no way you or your parents will pay that much, then you can use the school’s common data set to try to tease out the odds of getting merit aid and figure out how much that might be, which you can back into using a couple of pieces of data I talk about in the book.
A vague and nebulous concept that schools employ as a marketing tool to make students feel good about themselves, but no one can seem to agree on what it means. And it’s used by outside profiteers to trick naive or trusting families into paying hundreds of dollars to services that claim to be able to present scholarship opportunities to you, opportunities that, even if they exist and you win them, might end up being subtracted from the grant money that the school would otherwise give you.