College Selection and Emotion

Given the high price of a college degree, can you really decide where to go and how to finance it based on a gut check and emotion?

For many the decision to pursue a college education has been motivated by a family culture that places a high value on higher education.  For others it has been seen as a rite of passage along the journey toward adulthood. Some consider going to college not only as a place to continue a youth’s education, but a time for growth, maturity and to simply experience and enjoy life with a little more freedom. With the escalating costs for a college degree continuing, coupled with the ongoing challenges on a family’s finances and the bleak job prospects for new college graduates, family’s are shifting their priorities when it comes to what is most important about sending a child to a college.

No doubt that job security and economic independence are important reasons for families wanting to send their children to college.  Mom and Dad are looking for more than having their child “experience” college.  They want a more solid Return on Investment of their tuition dollars.  While creating a well-rounded, emotionally mature member of society is important and noble, parents want their kids to obtain an education or training that will allow them to obtain a job that will provide them an income and standard of living that justifies the expense of college.

On the other hand, the student and sometimes the parent want to focus on the prestige of a particular school name or course of study.

There is an inherent conflict between the left and right brains of parents, between the emotion of trying to have happy kids and the logic of finding a way to pay for college while balancing other priorities – like retirement funding.  Because of these challenges the college selection process needs to evolve.  Mom and Dad’s approach to paying for college has to adjust as well.

School and Major Selection: Important to College Cost

Let’s face it.  Parents want to do the best they can for their children.  They are willing to sacrifice almost anything for their children and their happiness.  And selecting a college much less a course of study are very emotional decisions.  Colleges know this and play on a parent’s emotions.  And the perception of value of any particular campus or major are played up leaving the parents torn between the emotion and financial reality of college selection.

So it boils down to an investment decision. In other words, the school and major selection are components of the “return” that one will receive on their tuition dollars.

School selection should take into account the percentage of students that graduate, the percentage of students that graduate within 4 years, the placement ratio of graduates into jobs of their chosen field, and the net cost of college after factoring in financial aid and scholarships. Certainly, a proper fit for the student based on size, distance from home and geographical location are all also very important non-financial components that should be included.

Career or major selection should  be a good fit for the student’s “hard wiring” or said another way, what suits his personality. Future job outlook and earning potential for a prospective career should also be taken into account.  Considering these factors will increase the likelihood of providing the student a future that they are looking for in the long term.  And this logical approach will also help him or her stay more focused and motivated to finish a program on time in the near term.  Doing this will pay big dividends to both parent and student.

School costs should be weighed against income potential from the desired education from that institution. Consideration should be given as to whether or not the prestige of the school that one may be paying a premium for is justified based on the income potential. For instance, I had clients who decided to go along with their daughter’s decision to attend an out-of-state public school at an annual cost of nearly $50,000 per year to pursue a nursing degree that will likely provide their daughter a similar job opportunity from an in-state public school that costs under $25,000.  Was this really a wise financial decision?  Only time will tell but the parents and student will have more loans and need more time to “break even.”

College Funding: Find a Balance with Other Goals

Mom and Dad need to also determine how much of their income and how many of their assets they can pledge toward college before it impacts their own financial future. Once that determination has been made, the residual costs of college will likely be financed by the student through loans.   Parents should make sure that their student completely understands the financial impact of taking on student loans. Based on the horrendous state of the student loan industry it is quite clear that individuals are obligating themselves to debts that they will have no ability to pay back without serious impact on their future.

College is big business and should be approached that way. All parents want their students to enjoy their college years; however, the emphasis needs to be on preparing for economic success after college.