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College Planning Tips from Car Buyers

  College is expensive and getting more expensive every year.  It’s almost like buying a new car.  You wouldn’t simply show up at a car dealer’s lot and drive off with the first car you saw, would you?  I didn’t think so.  Well, here you can use these college planning tips from car buyers to drive away with a better deal.

On average tuition costs nationally rise about 5.2% annually, far above the inflation rate for other sectors of the economy.  With the sticker prices of colleges ranging from $18,000 to more than $50,000 per year, paying for college is like buying a new car … every year for five years.  Are you ready for that?

There aren’t that many parents I know who buy a new car every year.  But that really is essentially what you’ll likely end up doing.  Unless you plan ahead before stepping onto campus, you’ll be digging yourself a great big financial hole for you and your student.

Here are some lessons from car buying that can be used for college shopping, too.

Do Your Homework

Be an informed consumer.  The slick brochures and ads may be designed to tug at your heart strings but it’s better to approach this like any other business transaction.  Use resources to compare apples-to-apples about the school: costs, graduation rates, financial aid packages, alumni network, job placement.  Obviously, the college websites are a first place to start.  Then use independent resources like those available at US Department of Education’s College Navigator Tool. For more in-depth comparisons, there are a number of commercial services available to college financial planners who can also help with this.

Take a tactic from your job search days as well.  Reach out to alumni for informational interviews and you may get a more personalized perspective about what worked and didn’t work on campus.  It’s better to know ahead of time if the schools you’re looking at are a good fit – socially, academically and culturally – to help improve your student’s experience and keep him actively interested.

Take a Spin

You wouldn’t likely buy a car without taking it out on the road for a test drive.  The same can be said for a college.  Visit campuses and check out classes.  College tours are a good start.  When I was at UMass – Lowell, I escorted groups of high school seniors and parents around.  I was able to answer questions and give visitors a student-user’s insights.

While college tours are nice, you’ll learn more if you actually organize a visit on your own that focuses on your specific interests.  Into sports?  Then visit the facilities and arrange a meeting with coaches.  Pursuing a particular major?  Then touring the labs or speaking to teachers may be helpful.

The College Visit System Tool – A Better Test Drive

Whatever you do, it’s best to approach this part of your college selection process with a plan. Improper college selection can be disastrous as it contributes to student dissatisfaction and lowered performance.  Both can add time and money to getting that degree.  I had a single mother approach me once after her son had attended University of North Carolina – Chapel Hill transferred after a year and a half to a Massachusetts community college.  If she had had a plan ahead of time, she may have saved herself over $50,000 and her son’s lost time and credits.

In my college planning practice, we recommend that students use something like our College Visit System.   This CVS system provides a structured method for a student to score every school visited consistently with the student’s personalized criteria.  Using such a repeatable method minimizes the risk of choosing a college on raw emotion and makes it possible to compare schools without having to rely on your memory alone.

Don’t Buy More Than You Can Afford

This is sound advice for almost any financial or business transaction.  Buying a car or shopping for a college can be very emotional.  Most anything to do with money usually is. But if you can put this into perspective and understand the impact on your other life goals, you may avoid getting off track.  Sure, you can take out loans, mortgages, even sell the house or raid the retirement accounts.  But should you?

Parents may feel that they are willing to pay any price and sacrifice to get the “best” college education for their children.  But at what risk? What’s the tradeoff?  This is why looking at the college funding plan in the context of retirement planning makes sense.  Consider a financial check up to get a clear sense of the costs to you and your family.  If you’re going to commit to a plan, understand the impact and maybe explore alternatives.

Don’t Forget the Add-On Charges

When you buy a car you’ll pay more than the sticker price.  There are dealer prep fees, registration, sales taxes and related charges.  The same can be found with colleges.  There’s more to paying for college than tuition.  There are a host of costs to factor in like student fees, books, labs, computers and dining.  Don’t forget travel to and from the campus – whether commuting to the local school or flying cross country.

Let’s Make a Deal – Buyers Rarely Pay Sticker Price

The advertised price is rarely paid by students.  If your student has applied to multiple, competing schools, you’ll be in a position to haggle.  Schools will routinely offer discounts, scholarships or other aid to bring down the cost.

Do You Really Need the Extras?

When buying our last car (when we officially joined the mini-van crowd), we saw cars with all sorts of bundled extras:  navigation systems, entertainment systems, prepaid service packages or extended warranties.  All would add thousands to the cost of the car.  And each one had a lower price alternative that could be purchased separately.  Avoid paying for the extras.  Lots of times, schools invest gobs of money for swanky latte bars, athletic or health club facilities and other amenities.

Visiting my old campus with the new health club, Starbucks and suite-style dorms makes me jealous and want to go back to school.  But in the end, will those amenities mean much when talking to a potential employer?

Mileage May Vary

Just like gas mileage estimates on the sticker, what you and your kid will get out of a college degree will depend on how you use it. College selection is overlooked in the process.  Some choose a school simply because of family tradition.  Others look at the sticker prices of “expensive” schools and avoid them not knowing better – I know I did but I had no one to guide me.  Some students do better at smaller schools and others thrive in large urban settings.  The best school will depend not on the reputation of the school but on what is the right fit for the student.

You can save yourself tons of cash by focusing on the front end – choosing a major, a career path, a learning environment.  And there are tools available to do just that:  The Birkman Method and Myers-Briggs tests to name a couple.

Let’s not forget the return on investment – what you get for your drive through college.  Yes, even with the increasing cost of a college degree, it still makes sense as college graduates out-earn those without a college degree (Bill Gates notwithstanding). Given a choice between two schools for the same degree, does it really make sense to pay extra when graduates may start out earning roughly the same amounts?  I have two clients pursuing nursing degrees.  One is at an in-state public school and the other is attending an out-of-state public school.  Both will earn about the same upon graduation but one will have more debt.  You be the judge.

There are a host of factors that go into choosing a college and a car.  Aside from price there are few similarities but these shopping tips may help. To be better prepared and find the right school for the right student at the right price begin with a plan.