In part 1, if you missed it, start here at https://refi.com/dont-mortgage-your-future-part-1/. We began to walk through the current cost of money and spending tomorrow’s money today. We began to unpack the rising cost of college tuition. Also, the best way for family’s to prepare for college in today’s rate and value environment.
Average Cost of College by Degree Type
The average cost of college for public colleges and universities is similar for bachelor’s, masters, and doctoral degrees. The greatest differences lie in private nonprofit schools, which illustrates how costly a doctoral degree is compared to a master’s and bachelors.
Research has found that the average cost of college for the 2017–2018 school year was $20,770 for public schools (in-state) and $46,950 for nonprofit private schools, only including tuition, fees, and room and board. Each year, school costs have continued to increase, even accounting for inflation.
Each year expect to see public in-state or private tuition to increase an average of 6%! That is a smart money term for tomorrow’s money. College tuition should never be left to a “we will figure it out when we get there” moment. Often it is too difficult to quickly navigate those waters. Why? Simply remember these questions from part 1:
- What will your finances look like then?
- What will interest rates be?
- Value of your home? Will it be on the high end like today, or will values dip?
- Employment. Could your employment change? Increase or decrease? Loss of employment?
- Counting on a scholarship? Don’t. In fact, due to COVID, universities are slashing scholarships by 40% over the next 5 years.
- My business should be taking off, right? If you are counting on earning the money, that is great! However, what if?
Taking the value of today and assuming your child graduates in 4 years, how are you going to tackle the $187,800 investment? $46,950 x 4. Please note this covers tuition, room, and board. Not fees (lab fees as an example) and books. That can move the cost another 4% per semester.
So what is the solution? Can you reasonably achieve your goal? Will your child need loans? Will they need to get a job while going to school? Will it involve retirement money? Credit cards? Second job? Putting your business on hold? The answer is — none of the above! We live in a historical moment of time that allows you access to money at a level so cheap, that we have never seen it before. In part 3 we will break down for you on how college and paying for college is right in front of you.