Earning a college degree remains an affordable investment
by Miles Postema
School Board Member
When I was in elementary school, I remember my mother saving silver dollars to fund my college education. I was the seventh of eight kids and the only one that went to college. My folks started saving early with the expectation that I would go to college. Between their contributions and my part-time and summer work, I obtained my undergraduate degree with only $2,500 in student loans. I read an article last week that today less than half the families of school age children are saving for college.
From time to time we see stories questioning whether a college education is still a good investment. There can be little argument that earning a college degree remains a good investment. There is continuing and growing earnings premium for those with a four-year degree over those with only a high school diploma. Generally, those with college degrees are more likely to get jobs. Michigan is fortunate to have 15 strong public universities each with their own unique mission. In addition, the state has another 28 community colleges. So, public higher education is readily available to everyone. Over the last 40 years, though, the funding for public higher education has shifted from state funding to tuition funding, transferring more of the burden to students and parents. Universities still receive much support from the state but the percentage of operating costs funded by the state has declined dramatically over time.
For a number of reasons, some simple and others complex, debt accumulated by students continues to grow. Students with four-year degrees often graduate with $25,000 or more of debt. Graduate students, particularly those in medicine and law, routinely graduate with over $100,000 in debt. While that by itself is sobering, consider for a moment the student that accumulates debt but never graduates. Students that begin an education but do not finish bear the burden of accumulated debt without the benefit of the degree. Students that drop out of college are probably considered only somewhat more favorably than those that never went.
A college degree remains affordable but it requires a fair amount of discipline and planning. There are several ways to limit the overall cost of tuition, fees and student debt and some of the major ones are outlined below:
Finish in four years. Recent studies show that roughly half of the students graduating earn their degree in six years or less. Students in high school usually graduate in four years or less. Why? Because the high school curriculum, while flexible, is generally predictable, patterned and tracks well towards completion of a diploma in four years. A college diploma can be earned in four years or less but often students take five, six, and even seven or more years to finish a degree due to changes in majors, poor planning, or both. That can be the equivalent of running 110 yards to complete a 100-yard dash. Students often withdraw from courses to take the course again later. “W’s” are more common on transcripts today. Paying twice and taking the same course twice is expensive and time consuming. If the cost of attending college is $20,000 a year you can easily see the added cost of a fifth or sixth year. A student would be better off in the job market the fifth or sixth year beginning their career and earning an income.
Consider one or two years at a community college. Students often want the “experience” of moving away from home and living on or near a college campus. In addition, most universities have a freshman residency requirement. For many students, it is best that they take advantage of the on or near campus experience, but this environment comes at a cost. Community colleges offer students an affordable alternative. A student can complete two years at a community college for about half of the cost of the first year at most four-year institutions. Locally, Grand Rapids Community College provides an excellent education and with appropriate planning the credits transfer one for one. I could not tell the difference in the faculty at community college and Western Michigan University when I attended each and I had excellent professors at both colleges. Community colleges also offer an opportunity to obtain an associate’s degree if additional higher education is not pursued. There are other opportunities to pick up college credit including advanced placement and dual enrollment programs.
Borrow what you need and not what you want. Students borrow to fund their tuition but often spend loan proceeds on living expenses or luxuries. Once you have the money, it is easy to spend it. Students may not realize how much debt they have accumulated or the impact of the monthly payments when they graduate. This becomes a harsh reality in a tough job market where they may be underemployed or even unemployed for a time before finding a job. When I see students in the line at Starbucks or local restaurants, I wonder if they are spending borrowed dollars. It’s none of my business but paying for a coffee over time with interest is not a great investment.
Planning and enhanced financial literacy. No one should complete a degree in a field in which they have no interest but changing majors often sets students back in their progression towards a degree. Faculty and staff at universities are great at advising and helping students plan and stay on track towards a degree. Multiple or frequent changes of majors will add time and debt. When able, students should take a full load of classes. The cost of a college education is not only tuition and fees, but a major expense is the cost of living. An extra year of college adds cost over another year when the student could be in the job market with their degree. Many students are not as equipped as they might be to handle their finances or understand the impact of accumulating student debt. Increasingly, universities are looking for ways to help students with their financial planning and ways minimize the accumulation of debt.
A major part of attending college is the experience and there is much to the education that happens outside the classroom. Keeping student debt at a reasonable level is a manageable goal and generally achievable with planning. A college degree can bring debt but still delivers strong returns on the investment. Careful planning ensures the investment is well spent.