You can hardly open a newspaper these days without seeing a feature article about another family that has lost their home. Usually the story is about people who lost their jobs or a family in which someone had a health meltdown. Sometimes stories are about people who lacked financial know-how and were duped into signing for an adjustable rate home loan or other rigged financial package designed to cheat them. But there is another financial crisis occurring that receives little attention. Moderate and middle income families are losing their homes because Mom and Dad will sacrifice everything to ensure that their children receive a college education. And they do so not necessarily because the education will help their children land a rewarding job eventually (although that is the hope), but also because the process of working for and completing a college degree is an extremely valuable life experience.
The cost of college extends far beyond tuition. Students need to eat and they need a place to live. They need to buy books and supplies (a significant expense for some majors, such as art or media). There are also the costs of cell phone, health coverage and care, transportation, clothing, and all the expenses associated with life. A fulltime student on work study (or working part-time) makes barely enough money to pay for books and some food. And the time taken to work cuts into study time and can be detrimental to progress in college classes. Not everyone is Superstudent. In fact, few young people are. College is not just for those who can juggle school, job, home, and personal life perfectly. Every young person deserves the opportunity to attend college and be trained to embark on a career in a profession of interest to them.
Completing a bachelor’s degree in four years is a thing of the past. Less than half of students who enter college ever graduate. Whether or not they graduate has a massive impact on their financial future. (Workers with bachelor’s degrees made 54% more on average than those who attended college but didn’t finish, according to the Labor Department.) Of those college students who complete their bachelor’s degree, 64% take five years or more and 57% take six years or more (Singletary, 2009). The tuition at universities rises significantly every year. Public universities are caught in the squeeze of fiscal crisis at the state level. Tuition is being raised, teachers are being laid off (or cut back), and departments are being downsized. This means less classes are offered so students are unable to sign up for the classes they need, prolonging their time in college.
Meanwhile, back at the house, parents are finding themselves supporting children through five, six, seven years of college. They are finding themselves with more than one child in school at the same time. They are finding themselves paying higher and higher tuition costs, with these costs going up each year. They are taking out a first mortgage on a house that they had already paid off, or they are refinancing and borrowing more money on the first. They are taking out a second mortgage (e.g., home equity line of credit) and then maxing it out, so they have a first and a second mortgage and still no resources to help pay college costs. So they sell the house and move into a rental unit to pay for college. Because what is more important, the house or the child?
While low-income students have many resources for financial assistance, middle income students are left high and dry. Consider these scenarios (probably you or someone you know).
1. Janey is terrific in the arts and humanities, but hates math and science. She gets As in her English, Spanish, and history classes, but doesn’t do so hot in her math and science classes in high school, and there are a lot of them and these classes are required for everyone, regardless of their interests. She winds up with a 2.9 high school academic GPA, not enough to qualify for a state scholarship (3.0 needed) because her parents make too much money. If her parents were low-income, she would only need a 2.5 GPA to qualify. She works at a part-time job that pays some of her living expenses while in college (including food and clothing), but Mom and Dad still pay tuition, rent, and many other big bills (including cost of books). For six years.
2. Judy manages to pull off a 3.5 academic GPA in high school and qualifies for a state scholarship, which pays her tuition. She is studious and focused, but she can’t handle the distraction and time loss of working a job while trying to complete school—her class work suffers. So she doesn’t work. The tuition scholarship is a big help, but Mom and Dad must pay for all her living expenses. She finishes college in five years. The state scholarship only pays tuition for four years.
3. Jenny goes to a specialized private college that suits her interests better than a public university. She gets the 3.5 academic GPA, but her parents make a little bit too much money for her to qualify for the state grant to help with tuition. (If they lied on their taxes, maybe they could squeak by, but they are honest.) The college provides her with some scholarship money, but only for part of her tuition and the tuition at her school is astronomical. The low-income students get more scholarship money. (We can see who is footing the bill for that; but hey, low-income students deserve to go to college just as much as the middle income students.) She gets a work study job. That helps. But even with all of the scholarship money and the work study job, Mom and Dad are taking out loans like crazy to pay their portion of that astronomical tuition.
4. Jessie has the 3.5 GPA and gets the state scholarship. She gets a work study job. She even gets another part-time job. She works her little fingers to the bone. But she still costs her parents $12,000 a year in rent, utilities, transportation, health coverage and care, cell phone, etc. And she has a sister, named Judy, who is number two on this list and only a year younger than Jessie. So Mom and Dad are trying to put two girls through college at once.
The colleges will suggest that the girls take out student loans. That will put them all in debt from the day they step out of college. Some young people come out of college with more than $100,000 in student loans to repay. And how will they pay that back in this economy, when jobs are scarce? It’s criminal to saddle young people starting out in life with that kind of debt, or any debt for that matter. Entry level jobs are frequently called “internships” and they don’t pay anything. Young people straight out of college are expected to work for free to get work experience? How can they hope to pay back a student loan working an unpaid internship? Is this yet another year that parents are expected to support their children after college completion?
Even if moderate and middle income parents have good jobs (that they don’t lose and that don’t require them to accept a reduced salary just to remain employed) and even if everyone in the family has reasonably good health, and even if there are no unexpected major expenses (like the roof leaking, the furnace dying, or the car getting totaled in an accident), the struggle to cough up enough money to support children through college is daunting. Some parents, with foresight, will have set aside money in tax-sheltered accounts for their children’s college tuition. But the money set aside was probably estimated on dated calculations that did not take into account the fact that public universities were going to raise tuition dramatically. In 2009, for instance, the University of California system raised tuition 32%. This knocked many students out of school completely until they could regroup and apply elsewhere. (Unless Mom and Dad took out another mortgage.)
The situation is a problem. What’s a parent to do? Here are some tips to help you hang onto the house and still get the children through college:
- Start early with a plan. Have children visit colleges and think about what they want to study. Make sure they have a very clear understanding of what they need to accomplish in high school, not only to get into college but also to earn local, state, federal, and private scholarships. Freshman year in high school is not early enough to start this process.
- Set aside money in a Coverdell or other tax-sheltered college fund as early as possible.
- Research scholarship and loan opportunities and make a financial plan (revise it every year as college costs rise).
- Remember that AP high school classes can save on tuition since they count for college credit.
- If your child has the ability, s/he can enroll in high school and college at the same time (joint enrollment) to gain college credits before high school graduation.
- Consider having your children complete their general education requirements at a community college, where tuition is much cheaper. Once they complete the general education (usually 60 credits) they can transfer to a four-year school.
- Even if your child is at a four-year college, s/he can still take community college classes (including over the summer) and transfer the credits. This can be helpful if your child falls behind and is in danger of staying in college longer.
- If possible, have children go to a nearby college and live at home. Be open to revising your relationship with your child dramatically so that s/he has the freedom to experience the world as a young adult.
- Remember that tuition will cost less if your child attends a state school in the state in which s/he is a resident. (In-state tuition is always cheaper.)
- Take out a Parent Plus loan to shield your child from graduating with student loan debt.
- Provide whatever supports are necessary to ensure that your child graduates in four years. If your child is unable to sign up for the necessary classes to complete college on time, get nasty. Call the dean of the department. Make a scene. Demand attention.
- Find a counselor (academic advisor) for your child at the beginning of the freshman year and get the counselor’s phone number and email address. Develop a relationship with the counselor and work as a team to help your child be successful and complete school in four years.
- Switching schools or majors is not a choice to be made lightly as it can delay graduation. Be sure that the choice is truly a necessary one for the happy future of your child.
- Buy used college textbooks and sell them back to the bookstore after the course is completed.
It would be excellent if relief for middle income families struggling with college costs appeared on the horizon. But it’s not very likely that this will happen. One can only hope that young people will realize the nature of the sacrifice their parents are making to see that they receive a college education and that they will value the experience and the accomplishment as much as their parents, if not more.