Deciding whether to attend college after high school is one of the biggest decisions teens make in their lives.
That one choice is a catalyst for all of their experiences from that point on. Who they meet, where they live, what they do for a living, and their financial situation. It’s not a decision that should be taken lightly. According to educationdata.org, the average cost of attendance, which refers to the total cost of tuition and fees, books and supplies, and room and board, for a student living on campus at a public 4-year in-state institution is $25,000 per year. Out-of-state students pay $44,000 per year. If you’re looking at private institutions, the cost rises to $54,000 per year. These aren’t small numbers. Knowing whether the student’s career interest requires a college degree and how they’ll pay for it before diving into a college search is important. Here are three questions your students should ask their parent/guardian before starting a college search:
Do I need to go to college to be successful in my career?
College isn’t always needed for a bright future. As this article points out, there are thousands of high-paying jobs that don’t need a college degree. A shortage of workers is pushing wages higher in the skilled trades and the return on investment from a bachelor’s degree is -41.1% in the first 10 years, with bachelor’s degree holders not seeing returns until they’ve worked full-time for 15 years (educationdata.org). Taking into consideration what career field your student is interested in before deciding on a 4-year college is huge! Here’s an excellent breakdown of return on investment over time by degree. When lost income due to not joining the workforce right away, and loan interest is taken into consideration, the price of a bachelor’s degree may be as high as $500,000. However, the wage gap between young workers with a bachelor’s degree vs. a high school diploma is $22,000 a year, and depending on what college a student attends and their major, there’s the potential for $800,000 or more in increased earnings over a lifetime, which allows more to be put toward retirement savings.
With so many factors to consider, how does a high school student make the right choice for them? A powerful tool that all students can use to help them decide what path they should take after graduation is the Money Path app. The app helps students make sense of career starting salaries, education costs, and financial planning with confidence, whether they’re heading to college, transitioning to the workforce, beginning an apprenticeship, or entering the military.
Will I have any help paying for college?
Once the student has thoroughly investigated whether college is right for them, they need to ask their parent/guardian if there is any money saved for them to further their education and if they will have any financial assistance from the family. Students may have had a 529 plan set up for them by a family member, which is an investment account that helps pay for qualified education expenses. Anyone can set up a 529 plan on behalf of a student, they do not need to be related. Whether students have a 529 plan or not, they should apply for financial aid by using the Free Application for Federal Student Aid (FAFSA). We’ve written an entire blog on tips for preparing students for the FAFSA, which can be found here.
Research by educationdata.org shows that student borrowers pay an average of $2,186 in interest each year and the average borrower takes approximately 20 years to pay off loans, so determining whether loans are a manageable option is important. Money Path shows the student loan amount in a budget for the career starting salary of the degree of choice so students can assess what amount of student loans is manageable and see the long-term financial impact it will have on their future budgets. It gives students the ability to evaluate the impact of tuition, financial aid, and student loans to make the most informed decision, and it’s easy to use.
What if it takes me longer than four years to graduate?
According to educationdata.org, while four years is the traditional period to earn a bachelor’s degree, just 39.8% of students graduate within that time with 60.9% graduating within six years. A number of things can happen that would cause a student to take longer than four years to obtain a degree, students might switch majors, transfer schools, take time off, etc. Whatever the case may be, extra time in school equals extra money spent and more loss of income by not being in the workforce full-time. Being proactive and creating a budget is one way to prepare for the possibility of being in school longer and paying for tuition and expenses. Money Path allows students to create budgets that are based on the starting salary for their career choice and manage expenses. Students are able to create multiple paths and try out different ways of balancing rent, car payments, groceries, entertainment and even saving for retirement. As one student who used the Money Path app said, “The most helpful part of Money Path is the calculations on the cost of life. This isn’t stuff often taught in school.”
Money Path is currently available at no cost to Wisconsin school districts thanks to generous sponsors. Don’t miss your chance to help students build better financial futures and make the academic and career choices that are right for them! See the power of Money Path today!