With the costs of college skyrocketing in recent years—and no indications that this trend will reverse—many parents, even the relatively affluent, are understandably concerned about the cost of their children’s education.
As a result, myths and misconceptions about college abound. Experts recommend going to cheaper schools and majoring in more “marketable” fields in order to be successful, among other pieces of advice.
But is this advice true?
A recent article in CNN Money busts the five most prevalent myths related to college costs, below.
- Saving for college will reduce your financial aid package. In reality, the federal financial aid formula looks at your income, assessed up to forty-seven percent. Only 5.64 percent of your savings will be counted, excluding retirement accounts, your small business, and home equity. Private schools use their own formula for determining financial aid, however.
- Private colleges are unaffordable. When looking at the cost of a private institution, which can be twice what public schools cost, most parents get sticker shock. But don’t let the up-front price tag scare you away: most of these institutions greatly discount the cost of admission on the basis of both merit and need. The National Association of College and University Business Officers stated that the average discount of 2012 was forty-five percent.
- A liberal arts degree is an unemployment guarantee. While it’s true that students who graduate with degrees in the science, technology, engineering, and math fields tend to have above-average salaries, liberal arts majors do well after graduation. A recent analysis by the Georgetown Center on Education and the Workforce found that the “top-earning 25% of history majors earned a median annual income of $85,000 vs. $82,000 for computer-programming majors.” In addition, certain careers in the liberal arts field have lower unemployment rates than others in the sciences.
- Student loans will be an unmanageable financial burden. Student loans can help your child afford a better school than your family could otherwise afford. The key to borrowing is keeping the debt manageable. It is also crucial to graduate on time. Many students today take up to six years to graduate instead of four, thus increasing their debt.
- Transferring to a four-year school from a community college is a good way to cut costs. This myth is true, assuming your student actually finishes. Students who start at a community college are less likely to graduate with a Bachelor’s degree. Many four-year colleges make transferring difficult: they may not accept credits or may require a certain GPA.
Education is an investment in your child. That being said, many wealthy parents want their children to pay their own way so that they learn the value of their education. If you have questions about helping your children finance their education, please don’t hesitate to contact my office.