College and Bust$!!!

“You can’t continue to have higher education tuition grow at a multiple of the rate of inflation.”

Mitt Romney

 No need to be hush-hush.  Everyone knows the rising costs of college is out of control and there seems to be no relief in sight as debt continues to skyrocket for both students and their parents.  Last week my husband and I officially became empty nesters as we dropped both of our daughters off at college. I’ve literally been suffering from withdrawals as I pass their empty bedrooms but I’ve also been having trouble sleeping wondering how my husband and I will deal with our mounting expenses.

Over the years, we have tried to figure out every conceivable option to save for our children’s college education with 529 plans and the like.  Now, years later, nothing could have prepared us for how bad things have become.  Even with all the extra savings and the HELOC (home equity line of credit), we are both scratching our heads wondering how to get out of this mess and we are not alone.

My college graduation from Glassboro State College (1988)

Recent reports put student loan debt as high as $1.6 trillion in the United Sates with graduates paying an average of more than $35,000.  This is a far cry from what things were when I attended Glassboro State College (now Rowan University) in the late 80’s.  Back then the total cost of attendance with room and board (in state) was a fraction of the $30,000 plus it is today.

In fact, the costs to attend college has risen over 200 percent since the 80’s.  The following is a breakdown of how costs have changed by decade with figures adjusted for 2017 dollars:

Private nonprofit four-year institution

  • Tuition for 1987-1988: $15,160
  • Tuition for 1997-1998: $21,020
  • Tuition for 2007-2008: $27,520
  • Tuition for 2017-2018: $34,740

Public four-year institution

  • Tuition for 1987-1988: $3,190
  • Tuition for 1997-1998: $4,740
  • Tuition for 2007-2008: $7,280
  • Tuition for 2017-2018: $9,970

Source: https://www.cnbc.com/2017/11/29/how-much-college-tuition-has-increased-from-1988-to-2018.html

My older daughter Erica is a junior at the University of Maryland/College Park while her younger sister Lia is a freshman at the University of Delaware.  For the 2019-20 academic year, UMD raised tuition for out of state students by 4.79 percent while UDel raised it by 4 percent.  A number of factors contribute they say to the continuous rise in tuition including high demand, construction costs, increased administrative staff and less state funding.  I’m certainly in favor of raising prices when it is warranted but I’m not in favor of overpriced education.

The cost to attend college has outpaced both inflation and wage growth. While increased costs have certainly lowered the rate of return for many students, it remains difficult to compete in today’s economy without a post-secondary education. Students continue to borrow money and many parents are struggling to make up the difference.  So with high demand and the increase in student loans why should these institutions keep costs down?  It seems to be a vicious cycle.

As you may know, many countries offer free tuition.  These include, for example, Norway, Sweden, Germany and France.  Senator Bernie Sanders proposed a plan to make college free in the United States.  His plan would not only make two and four-year public colleges free, it would also get rid of all student debt.  Yes, all 1.6 trillion of it! He wants to do this by placing a tax on Wall Street.

Truthfully, I have no idea if such a thing would work or if it is even remotely possible.  Personally, I don’t see how asking a few dozen financial firms to come up with an extra $1.6 trillion (and still stay in business) could work but I do commend Sen. Sanders for attempting to fix a problem that seems unfixable.  If our foreign counterparts can do it why can’t we?

While my daughter is happy and thriving at the University of Maryland, she did not get to go to the college of her choice.  My daughter Lia is loving the University of Delaware which luckily was her first choice.  Of course, many factors were considered when deciding on a college (costs, scholarship offerings, grants, choice of major, etc.) We explained how much we can contribute to both of our daughters.  They are responsible for the rest.

Erica is in the scholar’s program at UMD and will be graduating with both a major and a minor in three years.  Lia decided to attend UDel despite the higher costs but has been working hard to offset her student loans.  I am proud of both of them but it saddens me to see how hard obtaining a college education has become. While the increased costs has made attending college less advantageous then it was years ago, it means the world to me to see them thriving and doing well.  I look forward to what the future holds for both of them.

The Center for College Affordability and Productivity (CCAP), a nonprofit research firm in Washington D.C., has released a list of 25 ways to help reduce the high cost of college.  Here are some examples:

  1. Attend a community college: Attending a two-year college and transferring to a four-year university will cut costs considerably.
  2. Move more class offerings online
  3. Overhaul the FAFSA (Free Application for Federal Student Aid)
  4. Offer three year Bachelor’s Degrees
  5. Promote Dual Enrollment Programs: This includes taking college credit courses such as AP (Advanced Placement) Courses while in high school. My daughter Erica completed over 30 credits in high school which is allowing her to finish her college requirements in three years.
  6. Reform Financial Aid
  7. Eliminate Excessive Academic Research
  8. Reduce the Costs of Textbooks
  9. Reform Accreditation to Reduce Barriers to Entry
  10. Promote Competition Based on Value, Not Reputation: Colleges love to boast about their acceptance rates these days.  We need to care less about how many students they admit and more about the value they provide in relation to the dollars they charge. 

It does not surprise me to hear that more than 1 million default on student loans each year with 40 percent of borrowers expected to do so by 2023.  What does surprise me is that the government makes it extremely difficult—if not impossible—to discharge student loan debt in bankruptcy.  As I said earlier, it is a vicious cycle that leaves both students and parents with few choices.

Good luck to my fellow empty nesters out there.  May your children be happy and fulfilled with their college education and may your hard-earned nest eggs not run dry!

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