The College Cost Conundrum

Christine and I found ourselves talking college savings as we prepared our taxes this past week. With a freshman in high school, one in middle school and another to follow - it is not surprising that the cost of college takes up many dinner time conversations at our home.

Planning for college is an overwhelming and daunting exercise for parents in the 21st century. As parents, we know that our children will need some kind of education after high school - whether that be a four-year degree, an applied associate degree or certificate - to have a real chance at a livable wage job. On the other hand, we see the headlines about rising tuition and student debt and we have a minor panic attack.  Most of us also don't see how the math works - how can I possibly save enough to put my son or daughter through college?  It is a very real dilemma.

According to the College Board's annual report on college pricing - In-state tuition, fees, room and board at a public four-year college averages around $18,500.00 per year.  Want to go out of state? a public 4-year will cost you about $31,000.00. Daunting, I know.  

What about financial aid? Yes, there is federal aid and state aid in many states for those who financially qualify. Many states have merit based aid for students who meet certain academic requirements. Finally, many institutions have their own financial aid packages.  In many cases, this helps with the cost, but you will still be looking at a substantial investment.  According to the College Board the "net price" - college costs after financial aid and other deductions - for in-state tuition, fees, room and board are about - $12,600.00 a year.

These numbers give you a ballpark to play in - but depending on the institutions you are looking at, the ball park could be Yankee stadium or the Toledo Mud Hens ballpark.  Meaning that there is a wide variation, even for public institutions, depending on their selectivity, size, etc. 

If the story in the New York Times this past week is any indication, your guess on what you can count on in terms of financial aid is as good as mine. The way colleges set a net price for their college can be confusing and overwhelming.  

The whole enterprise makes you want to crawl under your bed and hide.  So where to begin?  I will spend some time writing about some of the options in the coming weeks, but here is a start.  

Step one - Start a 529 Savings account for all your children.  529s are a kind of 401K for college savings - a tax deductible way to save for college.  Most states have a public 529 program available.  You can also go through a bank or an investment firm to get one started.  529s will accumulate investment gains that are much higher than a simple savings account.  Here is a good list of state 529 plans. 

Step two - Set up an automatic withdrawal from your bank account into your 529.  Set aside a minimum amount that comes out of every pay check to get started - whatever you can afford.  If you have not done this yet - change your schedule today and get it done.

Step three - Set two target institutions. Look for an in-state public institution that you would likely want your son or daughter to apply to and a "stretch" college that would be a viable, but financial stretch. Find their tuition, fees, room and board cost to give you a range.  We found this great tool on the Colorado College Invest web site as one resource, it includes in-state and out of state colleges, although it appeared to be list price - not net price. There are many other net price calculators online that you can use. Here is the net price calculator at The College Board and another from the U.S. Department of Education.  These calculators are helpful, but not fool proof.  

Step four - Set a target savings amount.  Most of us won't be able to save for the whole cost - so set a percent goal or other number.  We are shooting to save at least two year's worth of the total price of tuition, fees, room and board (not net price) before he graduates from high school for Ben's top target institution 

Step five - Develop a plan to reach that goal.  Ideally you would save a consistent amount each month. The more you invest now - the greater return you will get down the road.  So challenge yourself a bit. However, you might want to ease into it.  Set a base amount and increase it, maybe every 6 months, to move toward your goal.  

These are some real basic initial steps.  In the coming posts, we will start to explore some more creative options. 

Beware the College Placement Exam

Yesterday I posted a piece about the value of college degrees in STEM (Science, Technology, Engineering and Math) and how preparing our high school graduates to enroll in Calculus as their first math class is critical to their success in a STEM degree. I recognize that many looked at your son or daughter's math grades and said, "That Calculus thing?, not happening." While it is widely recognized that high school students should take four years of math in high school, to include Algebra II, to be optimally prepared for college, we also know that many students will struggle with math and continue to do so when they get to college.

The fact is that most colleges believe that a rudimentary knowledge of algebra is important to being a well rounded college student.  In fact, you will find most colleges will expect students to have completed Algebra II in high school - not doing so or testing poorly on the subject matter will likely place your high school student in a remedial course in college.  Remedial courses are non-credit courses that don't count toward a college degree, but are required for students who don't demonstrate the requisite skills in math and/or English. A remedial class will add extra time and money to a college degree. Even worse, is that students who are placed into remedial education are far less likely to complete a college degree.

While the easy answer is to make sure your high school student completes Algebra II in high school, doing so will not exempt them from remedial education.  When they walk on campus, they will be asked to complete a placement exam, typically either the COMPASS or Accuplacer. Other colleges may take a look at the ACT or SAT score. If your high school student does poorly on these tests, even if they aced Algebra II in high school, they could be placed into remedial education.   Serious bummer.

So, in addition to taking Algebra II your student should study and prepare for these exams.  There are many resources online to help your student prepare for these exams.  Here is a link for the Accuplacer and the COMPASS.

But, your efforts should not stop there. Here is the critical insight that you need to keep in mind.  Placement tests are very poor at predicting whether your high school student will pass a college level class.  In fact, there is research that demonstrates that your student's high school GPA or whether they took a rigorous math class during their senior year is more predictive of success in college-level courses than any test.

So, don't take your son or daughter's performance on a placement exam at face value - if they have taken a rigorous high school curriculum and have gotten good grades, there is no reason they should be placed into remedial education.   The same holds true for getting students into college calculus.  Don't accept a placement into College Algebra when your son or daughter has done well in advanced high school math courses.

Bottom line - while a rigorous high school curriculum offers no guarantee of getting the right placement for your son or daughter into college courses, it is going to be your strongest tool for making a strong case in favor when you advocate for a better placement.

Your potential STEM graduate

Our son Ben goes to the Denver School of Science and Technology, a high school with a clear goal of preparing high school graduates for college degrees in STEM - Science, Technology, Engineering and Math. When I talk to parents, I often hear that the school sounds great, but it is too specialized or my kid is not a "math kid." Ben would probably not describe himself as a "math kid", but he is doing math and lots of it at DSST.  So much math in fact that he and the vast majority of his classmates will complete calculus before they graduate.  I don't know about you, but I barely walked past the one section of calculus at my high school, much less took the class.

The fact of the matter is that more and more of today's jobs desire applicants with STEM fields.  A report from the Center for Education and the Workforce at Georgetown University recently found that jobs in STEM fields and Health Sciences are the fastest growing in the economy.  Further, the report says that people with STEM degrees are in high demand for many high paying non-STEM fields.  As a result, those trained in STEM are highly competitive for all jobs.

What is interesting is that when asked, almost half of high school graduates will tell you that they are interested in a STEM degree.  Students are more savvy than we realize, most know where the money is and are smart about where to find it. So you might want to take another look at your son or daughter, they may be a closeted STEM student.

The bottom line is that taking advantage of high school to challenge your son or daughter to take as much math and science in high school is a good thing, even if they don't end up as an engineer.

In a piece I did for my job at Complete College America this past week, I discussed new research that provides some insights about what it takes for a student to graduate with a STEM degree.   Bottom line, if your new college student doesn't complete calculus in their first year of college, a STEM degree is not in the cards.   Further, we know that students who start in College Algebra, rarely make into and through Calculus. So, if you have a kid dreaming of being the next Silicon Valley mogul, make sure they get through high school Calculus and enter directly into college calculus or beyond their freshman year.

While your kids might not like it, their future will be a whole lot brighter if they take lots of math - and not only because they won't be sleeping in your basement.