How much is a college student worth?

Have you ever wondered how much a studen is "worth" to any college??

Using this as a premise can take one through an interesting exercise in exactly how any college attributes heir financial aid awards to a specific student.

Is a talented female worth more than a talented male? What does it "cost" to recruit a talented minority student who is gifted in music?

If you apply the corporate Human Resources model, the incoming freshman class will consist of a variety of talents and skills----AND the colleges will be willing to "pay" for the appropriate match. Understanding this as a parent/consumer can save unbelievable sums of money and MUST always be taken into consideration when choosing a college.

Great insight can be obtained as to your student's "attractiveness" by comparing financial aid offers from colleges that rank themselves similarly.

A Reasonable Tuition Increase?

With gasoline prices increasing by 33% in the last 12 months, it appears that a 5% annual tuition increase is equitable. What is not factored in is that private college tuition prices have increased 375% in the last 25 years, while housing is up 124% and medical care is up 223%.

What is driving these astronomical college price increases?

Viewers who watched Davidson College's men's basketball team perform so well in the recent NCAA basketball tournament might be surprised to learn that students at the North Carolina college get free laundry service. Drop off a bag of dirty clothes, and two days later you can pick up shirts and pants, pressed and on hangers, with the rest folded and tucked into a brown paper bundle.

Just as there is no "free lunch," there is really no "free laundry service." Incoming freshmen at Davidson will pay $42,950 in the fall of 2008, and as seniors they will pay approximately $55,000 per year!

Average salaries for college administrators rose by 4% in 2007-2008, beating inflation for the 11th straight year. I'd like to wonder why that is, but then I look at the huge increases in college tuition, and I see.

Last year, Princeton froze tuition (at $44,000 per year). However, they also saw fit to increase room and board by 18%. Obviously the increase in gasoline prices was anticipated by the economic department.

Financial aid - or financial pain?

Recently I have had the opportunity to review many “financial aid” packages from colleges across the country. I am continually amazed at the way representatives of institutions of higher learning can mis-represent and color the facts of financial aid to families.

Let me be VERY clear----loans are NOT financial aid! They represent long term pain, at best, and financial bondage at worst!!

Some quotes from college representatives are:

“When you are thinking about where to attend college, cost should not be your main consideration.”

“I don’t think college cost should be a factor to where students apply for admission.”

And how about this one... “Students should not look at a school because it is affordable. The student's ‘college experience’ is what really matters.”

We are growing a college debt-laden generation that is being led to the slaughter by colleges who should instead be teaching fiscal conservativeness and prudent management of resources.

It seems that our only hope for college debt is a GOVERNMENT BAIL-OUT!

Would you co-sign for your child to buy a new car?

When a family evaluates the available options of paying for college, invariably college loans appear to be the only solution. Rhetorically, one might ask if it is prudent reasoning to co-sign a loan for a 17 or 18 year old----so they can purchase a BRAND NEW $25,000 car??

If this appears illogical, why is it that many families will co-sign for that amount FOUR YEARS in succession to finance a college education.

Is the entire decision motivated by the fact that a college graduates future earning’s potential can be $1,000,000 greater than a NON-college graduate?? The fallacy in that thinking is that the college graduate WILL DEFINITELY EARN that $1,000,000!!

What occurs in the college graduate’s life while she/he is attempting to PAY BACK the $100,000 in accumulated college debt----OR----does the student receive the $1,000,000 differential upon graduation??

Things that make you go hmmmmmmmmmmmmmmmm!!

Sub-Prime Loan Disaster

Most people have not connected the dots, but the impact of “liar” mortgage loans on college debt will be SIGNIFICANT!!

Here is how I believe we will get there: the mortgage industry truly drives interest rates, and the current chaos in the housing market is generating HIGHER INTEREST RATES!!! In addition to this upward interest rate pressure, there is increasing pressure on lenders to cease “bundling” OR “packaging” loans for resale---------which the mortgage industry calls “securitization.”

Securitization is also becoming very scarce within the college loan industry. Banks are NO LONGER able to package loans and achieve economies-of-scale by bundling and selling college loans.

I believe it is very reasonable to expect college loan interest rates that are TWO PERCENTAGE POINTS HIGHER than what is available today (in some cases OVER 10%)------------prior to college openings in the Fall of 2008.

Just another reason to use strong consumer purchasing principles when choosing a college!!

A huge consumer purchase

What is the NUMBER ONE mistake families make in considering a college education for their son or daughter? I believe it's not taking into consideration that this is NO different than any other large consumer purchase...such as a house or a car.

We must look at a variety of schools, with their “return-on-investment” in mind (starting salaries for college graduates---when adjusted for inflation--- have remained FLAT at $42,000 per year for the last thirty years!!).

Remember that over 40% of students NEVER receive a degree, and 30% of students transfer colleges in the first two years.

Some thoughts on how to make sure you don't get trapped by college debt: evaluate many schools (particularly outside your geographical area), be certain each school offers ALL your major areas of interest (most students change majors four times—prior to receiving a degree) and appeal any financial aid offer for more money.

An informed consumer receives the BEST college financial aid package!

The New Math: Four Years of College...in Five Years

When one discusses the factors that drive college loan burdens, the fact that a FOUR YEAR degree----a misnomer for many----MUST be considered.

College graduation rates for the last 24 years reveal some interesting findings. In private four year colleges, 43% of graduates require MORE than four years to obtain a degree!! In public, state-funded four year colleges, 60% of graduates require MORE than four years to obtain a degree!! The national average for all four year colleges shows that 48% of graduates require MORE than four years to obtain a degree!!

Isn’t it about time to call a four year degree what it truly is?? A FIVE YEAR DEGREE----that is possible to obtain in four years----ONLY IF the sun, moon, and stars are perfectly aligned.

Is it any wonder that it is so difficult to budget for the cost of a degree, when the price of that degree is (according to the above statistics) often under-estimated by 20%.

More food for thought on why college loans are escalating more rapidly than any family budget item----with all deference to gasoline prices ---- which are controlled by the Middle East, NOT Americans!!