A parent client recently showed me an interesting info-graphic from FrugalDad.com. The graphic documented the pressures that the weak economy and rising cost of college have put on families. Among the highlights:
- Between 1982 and 2007 average household income rose by 147% while college costs rose by more than 400%.
- At over $1 trillion, student loan debt now totals more than the value of Apple, Microsoft, Facebook, Zynga, Netflix and Groupon combined.
- Unemployment for 20-24 year-olds is 12.1%
Yet despite these alarming figures, college remains an important investment. College degrees still help people find better jobs, keep those jobs, and earn more money. Prior to the recession, college graduates were more likely to be employed than workers holding only associate degrees or high school diplomas, and after the recession employment of college graduates dropped less than those without four-year degrees.
College graduates also were somewhat insulated from the effects of the recession. Overall, wages for college graduates only dropped 5% during the recession as compared to drops of 10% for high school graduates and 12% for those holding associates degrees. A college education remains the best path to higher paying jobs and job security.
The question, then, is how can new college students get the best return on their investment? One consideration is choosing a degree that will position students for higher earnings. New trends are pushing college to disclose wage information for their graduates. Students can use this information to compare wages for the degree programs they are considering and choose programs more likely to bring higher earnings.
The other side of the coin is keeping college costs low so that students are not saddled with debt just as they are beginning their careers. Unfortunately, the college financial aid process can be stressful and confusing to many families. Many mistakenly believe that their income is too high to be eligible for financial aid (not knowing that income is only one of 7 factors that determine college aid).
While everyone should apply for financial aid, the good news is that financial aid is only part of the picture. In addition to financial aid, there are other ways to improve cash flow and take advantage of tax strategies to lower your overall college costs. You can find a number of free reports and videos on this topic at www.CompleteCollegePlanningSolutions.com