"Graduate in Four Years, Debt Free" The Headline Fired Me Up!

By George Gately, IEC, CCA
Mooresville, NC

"A chance to graduate in four years, debt-free" that was the headline and it caught my eye. The story is about an initiative at The Ohio State University (my Buckeye friends have taught me the THE is de rigueur). Here's the link read the story; or copy & paste the URL into your browser. [https://www.wcbe.org/post/ohio-state-president-announces-debt-free-degree-initiative]



Forgive me, but the initiative and the glowing news account are marketing, not reform. Let me give you my blow-by-blow.

1. A chance to graduate in four years, debt-free that exists now. The cost of education is one factor, but the main contributors to student debt (www.completecollege.org) are change of major and transferring colleges. In other words, Independent Educational Counselors (like me) are more important to a four-year degree than is OSU's initiative.
2. The initiative "includes a combination of increased scholarships, grants and paid internships." I am all in favor of students working their way through college. I did, and my total education debt was $1,000, paid off at $10 per month, over ten years a nuisance but not a burden. If more scholarships and grants are possible now, why hasn't the school done that earlier? Oh, the answer is in the next paragraph:
3. "The university plans an $800 million fundraising campaign to help cover" the costs of the initiative. No belt-tightening (none mentioned) is planned. OSU is asking others to pay them to educate someone's else's children. There is the education! "OPM" means "other people's money," and it is a mantra in the business world. That brings me to
4. College is BIG business really big! Buyer beware. Parents are the customers. Colleges sell higher education services. Faculty and administration are paid well above average for that.
5. "Students or their families must fill out financial forms each year." There you go. Many low-income students are already going debt-free. Affluent families hiring me express no concern for the costs of their child's education. It is the middle class the $80,000-$150,000 AGI families; most of whom are both parents working.
6. OSU reports a 68% admit rate; with ACT scores ranging from 26-32. So, a student must first cross the admissions threshold. BUT and hold onto your hat The Ohio State University lists five campuses, four of which have open admissions policies. That is, you apply, you go. The main campus reports nearly 47,000 undergraduates enrolled. The other four are very small.

"George," you're thinking, "aren't you being just a bit cynical?" Cynical, no; skeptical of colleges really reversing course to make a bachelor's degree affordable? Absolutely!

My conclusion is that, the more colleges toot the horn of their nobility, the more America's families need IECs who are not dancing to the tune.

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The Best Way to Pay for Scholarships

How Much is a College Education Going to Cost You, Really? 

SCHOLARSHIPS FOR COLLEGE

Previously, I published an article entitled "The Best Way to Pay for College" (February 16, 2021). This is an expansion on one of the topics covered: specifically, scholarships.

Searching for scholarships by browsing the internet is not the best way, nor the safest. There are scammers and hackers out there, right?! Some professional organizations, however, do the vetting and the research needed to help you find the "legit" awarders. One of those is the reputable and resourceful College Fund for North Carolina (cfnc.org).

A visit to that group's website will confirm my major point about scholarships. That is, they are narrowly defined, and awards are typically modest. Take note! I am not discouraging anyone from searching for a private scholarship. What I do hope to help you understand is that private scholarships are unlikely to sustain you through four years of undergraduate education.

Narrowly defined

Among the scholarships listed on cfnc.org there are the following qualification restrictions:

• At the top of the list, the applicant must be Latino or Hispanic 

• Another requires the applicant be "a lesbian woman" (in quotes because of the current issues around gender)

• Another states the applicant will compete based on class rank, GPA, SAT/ACT scores, leadership and note that word and financial need.

• One more applicant must have been in Social Services foster care after the age of 12, and have remained in care at age 18.

Those examples are on the first page at the website. Listing the eligibility requirements is not meant to be a criticism, and much less a complaint. Any person or organization who wants to help pay for college, I say, "Yay! May their tribe increase." Taking the red pill, however, you probably agree that socio-economically middle-class students, with average grades and average lives probably will have a long search looking for scholarships for which they are eligible to apply.

Furthermore, the amount of money awarded to any one student mostly falls in the range of $500 - $2,000; and are a one-and-done award. Again, don't brush off the thought of any free gift, and don't expect any free gift, or combination of gifts to pay for college.

And that free gift brings us to our final point. Most scholarships stipulate that the award will be paid directly to the student's college account, to be applied against tuition. You may not see the snag, unless you've read my book, College is a Consumer Purchase.

Need-based financial aid awards are typically not cash awards, but rather discounts against the price of a semester of tuition. In other words, the college is not giving you anything. They are simply charging you less, up to 100% of tuition (the so-called "full ride" you hear people bragging about). Think about it: if your college has given you a full-tuition grant-in-aid of $4,242 per semester (example is based on Appalachian State University), and then they receive, on your behalf, a private, $1,500 scholarship, they are going to apply that against their own discount of $4,242. In other words, they will discount your tuition by $2,742 for one semester and add to that discount the $1,500 cash grant. You will still attend tuition-paid, but you will not have $1,500 to tool around with.

Let's wrap it up this way: welcome to the world of business where the ability of the business to keeps its doors open is its first responsibility. That means customers, as a rule, pay for the service and/or product provided. You, the student, and you the parent ARE THE CUSTOMERS.

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The Best Way to Pay for College Part I 
College Planning: Doing the Impossible
3 Things Every Busy High School Student Needs to Know

When it comes to college planning, time is of the essence. 

At my inbox appeared a telephone consultation reservation for July 27. No idea who the person was, and when we talked I thought, "Oh my; there's no way!"

Here are the details (with fictitious names):

• Melissa, the mom, was desperate. Her daughter was a rising, high school senior. They had done no planning -- none! Melissa began to cry. My heart broke and, against my better judgment, I told her I would help them.

• April, the daughter, got on the phone with me. I laid it out for her. I was honest, even blunt. If she wanted me to help, we would have to get done in about 10 weeks what I do with most students over the course of a year, or even longer.

• April has amazed me! We have a weekly call, about 45 minutes duration. I satisfy myself that she thoroughly understands the assignment to be completed before our next conversation, and the call ends. I have done nothing for her that she cannot do herself. With all of my students, I am the coach, they are the players. 

• At each phone call she is totally prepared, and her work is done well. She has accomplished about six months' work, in less than a month.

Thank you April! Not only have you demonstrated your readiness for college, your maturity as a young woman (18th birthday in January) and your determination to achieve your goals; but you have also shown me your pluck and capabilities, which certainly are not unique to you. 

No longer will I lower my expectations for my students. I will expect their best, knowing it is within them to do good work, on time.

If your student is a senior in high school and you have yet to begin the college planning process, don't waste a single minute. Work strategically and diligently, not allowing any time to slip through your fingers. As April has demonstrated, if your student is willing to do the leg work, great things can be accomplished in a short amount of time. 

At Succeed Where It Counts, we recommend to begin the college planning process during your student's sophomore year of high school. If that sounds too early to you, over a decade of experience tells you it isn't. You want time on your side so you and your student can learn, think and make wise decisions with time to spare. 

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College Campus Culture and You

Why Campus Visits Deserve Your Time and Energy

Is Community College After High School a Good Idea? 

Campus culture is an important aspect of finding the right college. You want to be happy and comfortable at the college you choose. Four years is a long time to be unhappy and uncomfortable. The question, then, is what is campus culture and how do I identify it?

Colleges have unique personalities, just as do you and I. And, like us, colleges have general characteristics that make them similar. For example, human beings have similar, physical attributes. We can pick out a human being standing in a herd of cows. Colleges are plainly distinct from other educational institutions. You know when you are on a college campus, as contrasted with a public secondary school. It is not the obvious attributes we need to consider.

Less obvious, and actually more important, are those characteristics of colleges that make them different from each other. That is the campus culture you want to identify and evaluate. Campus visits, during the school year, if at all possible, are the primary method of evaluation.

Do you like what you see? Walk around the quad as classes change. Visit the student union and the cafeteria. Can you see yourself hanging out with those young adults?

Be brave and talk with some students. Ask them what they like, and don't like about the college. Ask them what surprised them their first year. One absolutely wonderful quality about college students is their willingness to talk, and their candor. When you identify yourself as a high school student, I expect you will find those young people to be very friendly and open.

Look around at posters, as well as notices of meetings and events. What is happening on campus? What is being pushed to the front of students' attention? If you are on a tour with a student ambassador, ask that person about things that the college frowns upon. Ask what gets students in trouble with the administration. Ask what the predominant, weekend activities are throughout the year.

Talk with an admissions counselor. Ask them about official conduct codes, dress codes, social codes. Ask about campus safety. Ask about students' rights, and if there is a published statement of student rights. Of course, those may be uncomfortable conversations, but you will be glad to find out before you enroll and pay thousands of dollars to attend.

Here's an example of why you want to have the conversations recommended in this blog. Matt Damon, famous actor, is in the news for doing something that would get many college students in big trouble; maybe even dismissed from school. Here's the story: Matt Damon Gets Schooled. What if you used that same slur at college? What would happen to you? Nothing happened to Matt, really. How about a college kid using that same, admitted, insult?

Campus culture matters from what is obvious to everyone to what is hidden from most, until it is too late. Figure it out before you enroll, and even before you apply.

Enjoyed this post? Here are others you may enjoy reading as well: 

• Why Campus Visits Deserve Your Time and Energy
• 3 Things Every Busy High School Student Needs to Know
• The Best Way to Pay for College

What does an F-14 Tomcat aviator have to say to your high school student? 

• Follow your dream, it's worth it.

• Make academics #1 priority.

• Learn to manage your time-schedule.
  
  

Here's a link to a YouTube broadcast from Commander Ward Carroll (USN, Ret.).

Before you click to watch, finish reading this. Make sure you notice the following facts about Commander Carroll's experiences.

1. His dream was the Naval Academy. However, because he did not give his maximum best effort in high school, he was forced to spend a year at a prep school in order to earn admission to Annapolis. That was expensive in dollars, and in time an entire year of his life.

2. At the Naval Academy his dream became F-14 Tomcat officer specifically he chose RIO (Radar Intercept Officer; second seat) due to a substandard eye test.

3. Once again, by not making academics his #1 priority at USNA, he had to detour for another year in order to qualify for the assignment.

4. A highly significant skill he acquired, however, and by his own testimony in the video, is the skill of time management. Commander Carroll remarks that the USNA intentionally overloads your schedule. You cannot do everything with equal attention. Therefore, you learn to prioritize and focus on "first things first." He states emphatically, that skill is invaluable in a combat aircraft. It will save your life!

Here's the reason I write this blog, and share Commander Carroll's wisdom. The greatest challenge I have in coaching teenagers to achieve their goals is their overly busy schedules. School, part-time job, sports, friends not to mention self-care such as sleep all add up to more than can be done in a 168-hour week. Then I come along and ask a 16, or 17-year-old to accommodate one hour (two at the most) per week. Crash and burn!

The facts are:

• None of the students I work with plan to be professional athletes, yet everything in their lives seems to get subordinated to the practice and play schedules.

• None of the students I work with is working their part-time job in their anticipated, adult career. Behind sports, work seems to get the next time grab. Even asking a student to notify an employer a week or two in advance of a need for a day free, is met with resistance from most students.

• Success in our common goals (right college, right price, graduate on time with the right degree) can be valued, literally at thousands of dollars of savings, plus a college education with purpose for the future.

Bottom line: Commander Carroll's video is an admission of poor priorities, as well as testimony to the value of his military academy education.

 

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The 4 Year Myth -- Hidden Costs

The 4 Year Myth -- A True Story

Navigating the Pathways of College Admission and Financial Aid in 2021

Campus visits matter a lot!
According to the prestigious non-profit, Complete College America, the second factor in students needing more than four years to complete their four-year undergraduate education is transferring from one college to another.

That is often precipitated by a change in major; which is the number one reason for prolonged, undergraduate education.

One extra year of college, in many instances, is the cost-equivalent of the first four years. You can look for the white paper, "The Four-Year Myth" (www.completecollege.org), and learn the details. I have also posted a 6 part series on the subject. You can check those out here - Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6.

There are a few "must-do" activities every prospective college student must complete during their high school years (and before they start 12th grade). 
I have those detailed in my book College is a Consumer Purchase, 2nd edition (now available for purchase on amazon). Among those are strategic, campus visits.

Remember, students live and work at the college of their choice, for weeks on end. If a student is not more than comfortable on that campus, it is nearly inevitable that he or she will leave hopefully to transfer rather than drop out. 

"The" pandemic (you know of the one I mean) further complicated campus visits. My current students, rising seniors in high school, are scrambling to complete a strategy for campus visits; one that has proven powerfully effective for more than a decade. The reason for the scramble, of course, is that college campuses were closed to visitors for more than a year. A virtual tour is great. In fact, it is one of the responses to COVID-19 lockdowns that represents an advancement. I am a fan! However, the virtual must, eventually, be followed up with the in-person inspection.

My recommendation to you is actually an urgent appeal. Whatever plans you have to change in order to fit in at least six, meaningful campus visits before high school resumes (August?), do it. The consequences of slacking off may include:

• Great(er) anxiety a year from now (or whenever the student starts college),
• Increased likelihood of transferring colleges,
• Costs of a college education rising more than 50%, to as much as double.

Listen, you may be making a mental list of reasons why you can't align your summer to a heavy, campus visit schedule. Consider, as a counter-balance to excuses, that this is the most important decision for nearly every family. It is your student's first step along the adult path of life. My prayer is, that step will be made confidently, on the best path among the many choices facing you.

What do you think is the best way to pay for college?

Well, besides having someone else pay for you . . . that would be nice. So let's talk about that for a moment. 

Scholarships

Here's the truth:

• There are no rich people out there waiting to jump at the chance to pay for your child's college education.
• Scholarships tend to fall into two categories: Merit, based on very low income; and Merit, based on exceptional achievements.
• There are others, and they are often very narrowly defined as to eligibility.
• Scholarship searches should be done no later than the summer between 11th and 12th grade. Deadlines for application are typically early in 12th grade year.

Cash

Remember, you finance every purchase you make. Either you pay interest to a borrower, or you lose the interest you could have earned had you kept the money invested. That is what opportunity cost is all about. Spend $80,000 for your student's college education, at in-state tuition rates. What could that eighty-grand, well-placed, have earned for you between now and your retirement? That is the true cost of paying cash.

Loans

• Borrowing from the right source may, actually, be very efficient. Here's an example: You know you can earn 5% - 6% using proven, financial strategies.
• Students can borrow (2020-2021 rates) at 2.75%
• Why take money out of account earning 5% or better, when you could use someone else's money @ 2.75%?

I am not recommending loans, nor am I recommending paying cash. What I am advocating is that you consider all options; and especially those that an experienced college planner, with financial expertise, may suggest.

The news is filled with stories warning about student debt, lamenting student debt, highlighting political promises to forgive student debt. I have yet to see a news story that reveals the true cost of a college education with or without loans.

One factor in understanding true cost is to add in opportunity cost. Another factor is missed income because a student took more than four years to graduate. A third factor is the one most people think about, interest rates.

Let's look at them in reverse order. Interest rates on Direct Student Loans are actually as low as current mortgage rates; currently 2.75% for students borrowing for the academic year 2020-2021 (FSA Student Loans). Furthermore, undergraduates hit a borrowing ceiling of $27,000 over four years. A $27,000 loan at 2.75%, amortized over ten years will incur a monthly debt service of less than $276.00. That is not crushing debt service for a college graduate.

Are you wondering, then, where all the stories come from about crushing student debt? The answer is found when students "need" to borrow beyond the $27,000 federal, direct loan. Then they go into the private lending market. Sallie Mae is a big player in that arena, and interest rates there can be as high as 12%. Here's an example of what can happen:

• Wilma decides she must attend "Bigtime U" at out-of-state rates of $31,750.

• $31,750 multiplied by 4 years is $127,000. She borrows $27,000 @ 2.75% using the Direct Student Loan privileges. The remaining $100,000 is picked up at Sallie Mae, and let's say her consolidated loan interest rate is fixed at 10%; amortized over ten years.

• Total, monthly debt service is $1,586.00. Yes, that is one thousand five hundred eighty-six dollars per month for ten years ($1,310 to Sallie Mae; $276 to Federal Student Aid).

• Furthermore, her Sallie Mae loan required a co-signor. So now a $100,000 obligation is sitting on mom's, dad's or grandparent's credit report.

We're not done. Hang in there. Keep reading.

If Wilma takes five years to graduate with a B.S. in something, that fifth year will cost her the full, out-of-state tuition, plus other costs; let's say $50,000. In addition to borrowing another fifty grand at current interest rates, she will not be earning $45,000 in her first career track job (The 4-Year Myth). Therefore, the cost of the fifth year is actually $95,000; nearly equal to the cost of the first four years. We have previously written a 3 part series on The 4-Year Myth. You can click here to read part 1,
part 2,
and part 3.

Finally, factor #3 is opportunity cost. Let's keep this simple and not even factor in the interest Wilma is paying. Let's just look at the principle sum of $177,000 ($127k for years 1-4, and $50k for year 5). If Wilma had put that amount of money into an investment account earning a modest 5% interest, compounding annually during her working career, she would have, at age 67, more than two million dollars to live on in retirement. I hazard a guess to say she will struggle to achieve that with her college degree, and $1,586 per month debt service.

You can find a better path. Be a smart consumer.