Four-Year Myth -- What You Can Do Now

Complete College America's white paper The Four Year Myth proposes its solution to the problem of college students taking 5, or 6, or more years to complete an undergraduate degree. CCA calls it "Guided Pathways to Success" (pp. 14-19).

Their's is an impressive solution to a problem that must be solved; and the sooner the better. However, CCA's solution is systemic. It requires system-wide changes in states, universities and colleges.

That will be nice . . . when it happens. In the meantime, you've got a kid in high school. What can be done for your student?

It would take a book to detail everything Succeed Where It Counts does (and such a book is in the publisher's hands, right now). But even through a book, it is an impossible challenge to address every variable. Your student is a unique human being. Your student deserves a tailored fit. Your financial future also benefits.

In outline form, here's what SWIC addresses with each family:

  1. AFFORDABILITY: what is a realistic budget, annually, for you to pay for college? Components include ways to reduce spending, student employment, and dollars currently being transferred away unknowingly and unnecessarily that can be recouped.
  2. INDIVIDUAL ASSESSMENT: we use the Birkman Career Assessment to help every student begin to visualize what a career might look like.
  3. CAREER COURSE-SETTING: we use Candid Career, job-shadowing and other opportunities to help a student capture a clear and accurate picture of what a particular career involves on a day-to-day basis.
  4. ACADEMIC RIGOR: we encourage students to evaluate their own ability to do college level work, and to compete in rigorous, academic environments. Their high school transcripts are a key indicator.
  5. COLLEGE SELECTION: we lead students through a process of narrowing down, from many dozens to a manageable group of a dozen or so colleges, for finer scrutiny.
  6. CAMPUS VISITS: are essential, time consuming and costly ( parents' PTO, travel, overnight lodging, food). That process begins online, and on the telephone to minimize costs.
  7. FINANCIAL AID: (free+self-help+loans) we work with parents and develop their plan. It sets parameters for what may be possible for scholarships and grants-in-aid ("free" money) from the colleges; for students' employment during college (self-help); and for the Direct Student Loan program. We discourage borrowing by either student or parents beyond the Direct Student Loan limits.
  8. CONSUMER PURCHASE: (value + price) at the end of it all, the decision is a family choice and a personal choice. The least expensive is not always the best, and the best is not always the most expensive. College is a consumer purchase. That means price and value are factors to weigh when making the decision.
Contact Suceed Where It Counts today for a no-cost and no-obligation consultation. Click on the "Home" tab, and then on the red button at the upper right corner of the Home page.

Posted in College Planning, College Planning Strategies.

The Four-Year Myth -- why are students not graduating in 4 years?

Two more today and next week and that will wrap up my synopsis of Complete College America's white paper The Four Year Myth.

  1. What CCA concluded from the research
  2. How SWIC addresses CCA's solution
Complete College America's white paper did not address the underlying economics causing the explosive rise, over the past 20 years, in the costs of a college education.


They did uncover corollary cost contributors which are, primarily, students taking longer than the presumed amount of time specifically, 4 years to complete an undergraduate degree.
  • Students, overall, take unnecessary, non-degree-related classes. One reason is the schools themselves offer classes that have pop-culture, emotional or intellectual appeal, and are substituted for a degree-necessary class because students want a break from the academic rigor of their majors.
  • Students transfer from one college to another.  CCA's White Paper states that 60% of bachelor's degree recipients transferred colleges and, thereby, lost credits toward graduation.
  • Students need a class that is either full or otherwise unavailable. That may leave them short of credit hours sufficient for scholarship and grant requirements. Therefore, students take classes they do not need simply to generate a credit-hour load for financial aid purposes.
Finally, all of those are directly related to students entering college without a clear direction as to purposes and outcomes. Every first year student must define a major to pursue and, at least, an inaugural vocation for which that major is preparation.
Next blog will specify how SWIC strategically addresses the issue.

Posted in College Planning, College Planning Strategies.

On-Time Graduation is Not Optional



That image is from Complete College America's white paper, "The Four Year Myth."

Colleges report graduation rates as so many percent of a first year cohort completing a course of study within six years. Add $140,000 to what you think (and even financially plan for) are your out-of-pocket costs. Now what's the cost of a college education look like?

And, realistically, the numbers cited do not account for inflation (currently +/- 6% annually at colleges nationwide). Nor do those numbers show the opportunity costs of $140,000 over a working lifetime.

In that same white paper Complete College America exhorts colleges to reform their systems so that students do not wander in the limbo of "discovering themselves."

My blunt advice is, "Get a job or join the military. Discover yourself. Then go to college."  Sorry. I said it is blunt.

There are other pathways. Those take time, effort and, in most cases, a little bit of money. Well worth all of that!

Posted in College Planning, College Planning Strategies.

Four-Year Myth -- Graduation Rates Matter

Look at these graduation-rate numbers:
 
Community Colleges

1- TO 2-YEAR CERTIFICATE
15.9% - ON TIME
 
2-YEAR ASSOCIATE
5.0% - ON TIME

Four-Year Institutions
4-YEAR BACHELOR'S
(NON-FLAGSHIP)
19% - ON TIME

4-YEAR BACHELOR'S
(FLAGSHIP/VERY HIGH RESEARCH)
36% -  ON TIME

That disturbing reality is the report of Complete College America, as of 2015.  I included their Community College statistic for a very important reason. Many parents adopt a position that their student will attend community college and, thereby, reduce the expense of education. That is demonstrably not true, unless the reasons for all of those statistics are addressed -- specifically, intentionally and intelligently.
  • Specifically: statistics apply to everyone in general, and to no one in particular. When I meet with students my perceptions are often significantly different from the descriptions offered by their moms and dads. No surprise, on the one hand; but, on the other hand, the differences I perceive translate into many tens of thousands of dollars in college expenses. It is not some kid going to college. It is YOUR kid!
  • Intentionally: an affordable college education for your student will not happen by accident. Sadly, this anecdote is true:
    • A mom emailed me: "Please tell me how we can get money from FAFSA for our $24,000 college costs." This student was a high school senior. It was March of her senior year, and FAFSA has no money either to lend or to give.
    • My heart breaks, but that family simply waited too long and made too many assumptions about financial aid and affordability.
    • Affordability  -- people ask me when is a good time to start. I say, "When you come home from the doctor with the news you are pregnant." Since most of us are not that well organized, nevertheless, as soon as the thought occurs to you, do not procrastinate. Contact me immediately. Affordability is possible and the more time you give yourself the better off you will be.
  • Intelligently: Affordability also involves the process of college selection. Factors that must be included are
    • Academic/admissions threshold
    • Graduation rates
    • Retention rates
    • Flagship programs
    • Financial aid history.
The troubling statistics do not have to trouble your family, but you will have to act constructively for that to be so. Succeed Where It Counts, Inc. provides every family a complimentary conversation that is, virtually 100% of the time, illuminating. Schedule that conversation today.

Posted in College Planning, College Planning Strategies.

The 4 Year Myth -- Hidden Costs

$600 million dollars a year in unanticipated, if not unnecessary college education costs due to students transferring from one college to another. According to Complete College America's "The Four Year Myth" 60% of undergraduates transfer at least once prior to completing a four-year-degree track. In so doing they lose credits for courses taken, and extend their length of stay in college by a year or more.

Six hundred million dollars is an eye-opening number, yet it still leaves you thinking about "all those poor people," rather than, "That's me!" Furthermore, there are other, often hidden costs associated with lingering around the ivy-covered walls longer than prescribed.

In a previous blog, The Four Year Myth A True Story (March 20, 2017; scroll to read it), there is cited the costs of two extra years. That includes cost of attending four extra semesters plus income not earned over that same period of time. The dollar figure cited ($220,000) is not theoretical, but actual and is borne by one family for one student for one undergraduate diploma.

Other hidden costs, seldom considered, include the time value of money, also known as opportunity cost. Here are two examples:

  1. Jack and Jill use retirement funds to defray education expenses. They take advantage of the IRS exception permitting a penalty-free withdrawal from their 401k account. But they still owe the tax due on the amount withdrawn. Even that, however, is not the hidden cost to which I allude. Let's assume J&J were earning, without a hiccup, 6% annually as their return on investment in a well-managed retirement fund; and they withdrew $40,000 to cover education costs of $10,000 per year for four years. If J&J are 45 years old, and retire at age 67 they lose 6% compounding growth on $40,000 for 22 years. What does that add up to?  One hundred forty-four thousand, one hundred forty-one dollars and change ($144,141.50). That amount may well equal their entire tax obligation on the full value of their 401k at retirement. Assuming their student is attending at the average cost of $23,000 per year, and assuming it takes only four years to graduate, the college education they are telling everyone cost them $92,000 in fact cost them more than $236,000.
  2. And now the example becomes even more hair-raising. Assume they avoided raiding their retirement fund and, instead, took out a line of credit on their residence (HELOC), paying 6% for the privilege. Let's also assume that, following the four years of college they got that loan repaid in ten years, totaling fourteen years of debt service.  Principle + interest equals $59,219, plus origination fees and other incidental costs. Add that onto the lost, compounding growth they could have gained had they invested $40,000 instead of borrowing it, and the cost of a four-year education approaches $300,000.
My question is, "What else could you do for your student with $300,000?" Until that question is answered it is hard, if not impossible to answer the question, "Four years of college: how much is that worth?"

Granted, there are other virtues beyond the "sheepskin." Many students find their life partner at college, enter into a career path that is fulfilling and remunerative, and develop a network of strong relationships that serve a lifetime.

I advocate, therefore, it's not just price, but value. Determining value takes work that, I believe, most families would do if they knew to do it. You've read this so now you know.

Posted in College Planning, College Planning Strategies, Retirement Planning.

The 4 Year Myth -- a true story

I had planned to write more from the Complete College America's white paper, but . . .

yesterday I was on the soccer field with a young man who went off to one of America's top engineering universities after his graduation from a Charlotte Mecklenburg public high school. I asked if he graduated in four years or five. "Six" was his answer. 6 -- six -- twelve semesters -- and this is a bright, responsible, industrious individual (my esteem for him, having known him for eight years or more). Another young man who was with us, and is currently a senior at an area high school, responded, "Yeah, engineering is a five-year degree, I hear."

There's a problem (my opinion) when students enter college with a defined notion that 4 years to a degree is unrealistic. I promise you, the university in question lays out a four year program. Why didn't my friend, therefore, complete his degree in the prescribed four years (eight semesters)?

  1. Uncertainty as to his major upon entering
  2. Required classes that filled up and forced his hand to wait until subsequent semesters
  3. Too many electives
  4. A decision ahead of time that he would not, could not and, therefore, will not finish in four.
The young adult I reference is no slouch. He just bought into the story line that "it doesn't make a difference how long it takes, just so long as you earn your degree."

Here's what it cost him:
Bottom line? $220,000 is what his "Four Year Degree" cost him -- not $80,000 (as advertised).



Posted in College Planning, Wealth Creation Strategies.

The Four Year Myth

 
Complete College America is a non-profit formed to address the obvious problem of students attending but, seemingly, never graduating with a marketable education. Among the group's publications is the "Four-Year Myth."

Are you operating under the delusion of that myth?

I can't recount how many parents (especially dads) have assured me, "I've told my kid 4 years -- that's it!" Then what? With your students and you into the thing at costs approaching, if not exceeding, six figures are you really going to abandon it? Can you send your children off into the workplace with "some college" as their resume enhancement? In this and several, successive entries I will summarize and comment on the key points.

First: In American higher education, it has become the accepted standard to measure graduation rates at four-year colleges on a six-year time frame. . . .  As lifetime savings are depleted and financial aid packages run out, the extra time on campus means even more debt, and for far too many students, additional semesters do not result in a degree or credential.
 
There are two, primary reasons students do not finish a "four-year degree" in four years.

  • Changing majors mid-stream
  • Transferring between colleges even from a community college to a four-year institution.
Think about those:
  • How can you reach your destination when you don't know where, from the outset, you're going? Succeed Where It Counts, Inc. offers each student the opportunity to complete a Birkman Assessment. Some parents resist the idea that their 16-year-old can have any clear idea of a career, but the evidence indicates otherwise. Teenagers not only can, but in fact, should know their strengths, weaknesses, aptitudes and interests as measured through an objective, scientific tool. If nothing else, such a strategy offers the opportunity for teens to break free from the trap of less-than-helpful peer influence. Every high school student should be applying for college admission based on a clear sense of career direction from the outset.
  • Another vital component to achieving four-year success is research on, and visits to every college under serious consideration.
    • Does the school offer the major you seek?
    • Is that academic major a flagship program, or one of the "we offer that, too" after thoughts?
    • Do you like the campus?  Geography, architecture, campus life and other factors of personal taste matter a lot when you consider that the college you attend will be your place of residence and work for four years 24/7.
    • Meet the professors in your proposed major subject. Are they friendly, approachable, persons with whom you otherwise would be comfortable associating? How do you know? A campus visit.
    • Talk to current students and ask what it is they love and what it is they're not so crazy about. How do you do that? A campus visit.
Next blog will address the hidden costs of extended stays in college. For now we'll leave it with this quote from Complete College America.
However, something is clearly wrong when the overwhelming majority of
public colleges graduate less than 50 percent of their full-time students in four years.
Current on-time graduation rates suggest that the "four-year degree" . . .  [has] become little more than modern myths for far too many of our students. The reality is that our system of higher education costs too much, takes too long, and graduates too few.

Posted in College Planning, College Planning Strategies.

Gately offers Invocation for Maryland Senate



Pictured are Maryland State Senator Michael Hough, Mrs. JoeyLynn Hough and Rev. Dr. George Gately. Mike invited me to offer the invocation for the Senate of Maryland Friday, February 17, 2017. It was my pleasure and honor to do so.

Mike is my cousin. His great-grandfather, Stanley Gately, was my father's brother. Stanley was killed in battle in September, 1944, Germany. He is buried at Arlington National Cemetery. Following his death my father and mother took in his daughter Regina "Jean" Gately, and raised her until her 18th birthday; at which time she attained employment and moved out on her own. Jean married Earl Dilley, and they brought three children into this world -- Catherine, David and Beth. Beth is Michael's mother.

Here is a transcript of the Invocation:
ALMIGHTY GOD, we address you this morning from the common ground of our faith and dependence on you. Giver of life and all good things, we acknowledge your providential care and benevolence; and we do so with thankful hearts.
 
First, as we are admonished to do, we give thanks for our nation and those who lead us in government. May they be conscious of the benefits of faith and prayer, and may they each and all draw faithfully upon that wisdom which is from on high: first pure, then peaceable, gentle, open to reason, full of mercy and good fruits, without uncertainty or insincerity.  And the harvest of righteousness is sown in peace by those who make peace.
 
We also give thanks and lift up to you those who serve this sovereign and good State of Maryland.

  • Governor Larry Hogan,
  • his cabinet and staff;
  • Senate President Mike Miller and Pro Tem Nathaniel McFadden;
  • the leaders of each party Senators Peters and Jennings.
  • Blessings upon them each and all, and upon each person who serves as a Maryland State Senator today.
 
Our prayer of gratitude and for mercy is made also on behalf of the Staff of the Senate, and in particular those who labor here year-round and keep this government running well. We also include those who serve in often unnoticed ways, but without whom our work would grind to a halt -- those who serve in maintenance and security and clerical positions.
 
Setting aside our partisan differences for this moment of unity in your presence, merciful God, we ask that you give us wisdom with compassion in these tumultuous days of strong opinions. We ask that you help us balance
  • public safety and security with mercy;
  • fiscal stewardship with mindfulness of the poor and destitute;
  • strong, informed points of view with a spirit of understanding and unity.
 
You are God Almighty, and you are the author of our lives. We close this petition for your grace with this: every Senator is also a member of a family. They love their families and their families love them. We pray for the health, the safety and the general well-being of each Senator and each senator's family.
 
Dear God, thank you for your presence among us, for listening with a mind to answer, and for the gift of life which has been imparted to us through your own Spirit. Amen.

College-&-Retirement -- #4 of 4

Taken up in this blog:

  • Social Security
Previous blogs in this series:
  • Retirement Readiness
  • Paying cash -- is it always best?
  • Parent borrowing -- it costs more than you may think
Can the federal government seize your social security benefit to satisfy delinquent education loans?
Yes, your social security benefit can be, and will be reduced in order to satisfy a delinquent education loan balance.

There is another interesting survey-based indication that, across three generations from baby-boomers to millenials, people indicate they plan to continue working in their retirement years. Fifty-percent and more say they do not look forward to idleness as part of old age. They want to work. The follow-up question is, however, do you want to have that choice, or do you want to be forced to continue working in order to make ends meet?

Social Security is not a retirement income. However, for those who plan well, that universal benefit does provide an irreducible minimum, a floor if you will, and a hedge against inflation for a diminishing nest egg as the years roll on.

A "must-know" fact for parents and grandparents who are borrowing money, or co-signing loans to help fund their children's educations, is that most of those loans are federal guaranteed. What that means is the federal government can, and will attach your assets, including your Social Security benefits in order to satisfy the debt.

Succeed Where It Counts, Inc. advises against borrowing for college, beyond the Federal Student Aid opportunity. FSA loans are limited to $27,000 over the course of undergraduate studies (that ceiling may rise by an additional $4,500 for some students). For students who earn their degrees, and who secure employment in a career-quality job, that is manageable -- in the $250-$300 per month range, depending on the interest rates.

And that brings us to another subject -- student debt and the expectation of loan forgiveness -- for our next blog.


Posted in College Planning, Retirement Planning, Wealth Creation Strategies.

College-&-Retirement -- #3 of 4

February 22, 2017

Taken up in this blog:
  • Parent borrowing
Taken up in the upcoming 4th blog:
  • Social Security
Previous blogs in this series:
  • Retirement Readiness
  • Paying cash -- is it always best?
Loans to pay for the costs of college, for many people, seem an inevitable choice. There are two, common sources of loans that involve parents and/or grandparents.
  • PLUS
  • SallieMae
PLUS is the acronym for Parent Loan for Undergraduate Students. As with the Stafford Loan program which is a loan directly to the student, PLUS is federally guaranteed with an interest rate tied to the T-Bill. For the current school year, that rate is 6.31%. The loan origination fee is 4.276%.

SallieMae loans are often co-signed by the student and parent or grandparent. Although no loan fee is charged, interest rates are variable and approach 10%.

Either way the loan is offered based on credit-worthiness, and shows on future credit reports. PLUS and SallieMae loans begin accruing interest upon disbursement. Repayment forbearance is available upon application and approval, but the interest continues to accrue and capitalizes into the balance due on the loan anniversary.

What does that look like in real life? Take a family with two children. The parents are on the hook for $50,000 for each child (either PLUS or as co-signers on SallieMae). Let's assume SallieMae offers the same 6.31% as PLUS (just to keep the math simple). After ten years the $100,000 principle plus interest = $184,392. 

Let's say those parents were 45 when they took the loans to pay for college for the kids. Had they paid that $100,000 into their retirement accounts, netting a modest 5% (five and not 6.31) per annum, by their 75th birthday they would have an additional $432,000 for those later retirement years.

That number ($432,000) is called Opportunity Cost. It is, in fact, the true cost of paying for your children's college education.

Is that really what you want to do?

Posted in College Planning, Retirement Planning, Wealth Creation Strategies.

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