WHAT'S UP WITH THE HIGH COST OF COLLEGE?

Answer the following question:  College costs so much because?

A) The high cost of gasoline and other fuel
B) The rise in health care costs
C) Wages have fallen reducing the amount of income tax collected.  States have less money to subsidize higher education.
D) Supply and demand
E) All of the above

If you chose E—you’ve been paying attention to the headlines. While all the trends in the list have contributed to increases in college costs, D is the correct answer.

In the last five years, college tuition has increased at twice the rate of other consumer goods. The biggest factor in the high cost of college is the most fundamental economic principle:  supply and demand.

From 2004 to 2012, a population bulge is passing through our nation’s high schools.  As our country’s economy has grown more global, and more volatile, record numbers of high school seniors are applying to academic colleges and universities. Competition to enter top and mid-level colleges, has gotten very tough.

Academia, the name given to academic colleges and universities, has promoted itself as the way to a high paying career.  And, that’s right, isn’t it?  Maybe and maybe not.

Below, is some advice from recent college grads on how to get good value for your education dollars.  Teens and their parents may also want to check out the new book from Harvard University Press, Investing in College: A guide for the Perplexed, by Malcolm Getz.

As research for my book, What Color Is Your Parachute? for Teens, I had the fun of interviewing approximately 500 young adults between the ages of 20 and 28.  Some were still in college, others had graduated and were working.  Here’s the advice they have for those of you thinking about college.

Mistaken assumption #1 — My parents will put me through college, no matter how much it costs or how long it takes.

Remedy:  Talk with your parents.  Learn how much they can, realistically, contribute to your further studies.  If you need to work, about 80 percent of college students do, a four-year degree can easily turn into 6 or more years of study.  Your parents may need you to be fully self-supporting before you graduate from college.  Knowing this ahead of time makes life less stressful.

Mistaken assumption #2 — I need an academic degree

Remedy – Engage in career awareness, exploration, job shadowing and internships while you are in high school.  Then, do some serious career planning.  75 percent of today’s jobs need some post-high school studies. Only about 20 percent of these jobs need a university degree.  There are many technical jobs with considerably higher starting salaries than jobs requiring college degrees. If you think vocational or trade means low wages or dirty hands, take a look around.  Today’s skilled technicians wear white coats and look more like medical lab technicians than the grease monkeys of yesterday.

Mistaken assumption #3 — I needed an academic degree first. 

Remedy:  First careers are short, often lasting only a couple of years. Huge investments of time and money at this point in one’s life may be wasted when the student doesn’t know much about his or her preferences or the jobs that might match them. Consider getting skill training first, then pursue academic studies. Since only a third of college students get their bachelor’s degree in 4 years, if you can qualify for jobs that pay more, you can work less and have more time to study.   Or you might choose to work full time for a year or two at a job that pays well, and save for further studies.

Example:  One young man had gotten a Bachelor of Arts in political science.  His dream was to become a lawyer, then run for office.  In college, he supported himself working at a video arcade.  To make more money, he took classes to learn how to repair video game equipment.  After spending $100,000 on his BA, he needed to get to work quickly.  He got hired by a company to set up video game franchises.  To get promoted, he took business classes at his local community college and more technical training.  He now earns $65,000+ a year opening video game businesses.  This man loves his job, but realizes that if he would have gotten his practical training first by now he would have been able to buy a franchise and use that income to support his studies.

Mistaken assumption #4 — Get the best education you can and don’t worry about the costs.   Some parents care more about bragging rights than value.  If your parents can afford to pay $120,000 for your education and don’t care if you get a job that pays $35,000, why not go that route?  However, most families pay attention to ROI—return on investment.

Remedy:  Don’t borrow more than two-thirds of your likely starting salary or you won’t be able to pay your bills.   Given all the articles about the horrors of credit card and student loan debt, I’m meeting more students who have set their own limits on the amount of money they borrow.  Many are working hard to keep their student loan debt under $10,000.

Mistaken assumption #5 — No research on starting salaries.

Remedy:  Find out how much starting salaries are for the kinds of jobs you hope to get.  Even in fields known for high pay, starting salaries are often quite a bit lower.  Lots of salary data is based on industry averages, not starting pay.  Don’t just read printed information.  Do field research as well.  Talk with people doing the work you hope to do, especially the youngest new hires you can find.  You don’t have to be insulting and say, “How much do you make?”  Instead, ask, “In this industry, what is the range for starting salaries?”

Don’t rely on college admissions advisers for job market information.  The job they know the most about is being a college admissions adviser.

Mistaken assumption #6 — There’s a job for every degree.

Remedy:  Only one of every three college grads finds work commensurate with their level of education.  If you are not in a career track major, it will be your responsibility to find work in which you can apply your education, skills and interests.  Don’t depend on your college career center or campus recruiting to find you a job.  Learn effective career planning and jobs search techniques.  Throughout your work life, you need to know how to get the best paying job you can qualify for in whatever job market you find yourself. 

Mistaken assumption #7 — It will be easy to get a job after graduation.

Remedy:  By the summer of your sophomore year, begin checking out jobs that interest you and making career contacts.  There aren’t that many jobs for young people with just academic learning.  Work experience will help you get hired because you’ll become productive quickly once you are on the job.  Getting this experience, through summer or part-time jobs, volunteer work, co-op education, service learning or internships takes time and planning ahead. 

Remember, making career contacts in college gives you the “Wow” factor.  The people you meet will be impressed that you getting a jump on the competition.  If you wait until you have graduated to begin your job search—and 70 percent do—there is much competition for few jobs.

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