The StraighterLine Guide: How to Cut the Cost of College

The StraighterLine Guide: How to Cut the Cost of College

By Barry Lenson, Beth Dumbauld and Je rey Simons

? 2013 StraighterLine. All Rights Reserved.

Table of Contents

Introduction: Why Cutting the Cost of College Is Critical for You ...................... 3 Part One:

Why Is College so Expensive? ............................................................................................................. 4 - 12

Part Two:

What Can You Do to Cut the Cost of College? .............................................................................. 13 - 14

Part Three:

10 Tips to Save Money on College ................................................................................................... 15 - 31 About StraighterLine .......................................................................................................................... 32 - 36 Notes ...................................................................................................................................................... 37 ? 38

For more information, call 1-877-Str8erLine or 1-877-787-8375

Introduction

Why Cutting the Cost of College Is Critical for You

In the past three decades, the cost of attaining a college degree has increased more than 1,000 percent. Two-thirds of students who earn four-year bachelor's degrees are graduating with an average student loan debt of more than $25,000, and 1 in 10 borrowers now owe more than $54,000 in loans."

The Student Debt Crisis ? The Center for American Progress1

All those statistics are remarkable enough. But let's just focus on the fact that the cost of a college degree has increased 1,000% since 1982. Here are a few statistics which should put the problem in perspective...

r In 1982 a basic toaster cost about $20. If the price of toasters increased 1,000%, you would be paying about $200 for a toaster today. In fact, you still pay about $20.

r In 1982 an entry-level sedan from Ford or Chevrolet cost about $4,500. If the price of those cars increased 1,000%, you would be paying $45,000. In fact, you pay about $25,000.

r In 1982 a nice one-family house in most parts of the country cost about $100,000. If the price of that house increased 1,000%, you would be paying $1 million for that house today. In fact, you pay about $250,000.

Why have the rising costs of college outpaced the rising costs of just about everything else? One reason is that a college education is a pretty expensive product to produce ? at least it is if you produce it the ZD\WKDW$PHULFDQFROOHJHVGRWRGD\7KH\KDYHIDFXOWLHVDGPLQLVWUDWRUVVXSSRUWVWDEXLOGLQJVWR heat and maintain, athletic programs, parking lots to plow, dining halls to stock with food, and lots PRUH7KHQWKHUHDUHWKHH[WUDVWKDWPDQ\FROOHJHVKDYHDGGHGWRWKHPL[sVWXOLNHFOLPELQJZDOOV student centers with fountains and soaking pools, and dorms with nothing but single rooms with private bathrooms.

Regardless of the reasons, the last thing you want to have happen after college is that you're buried in a mountain of debt.

,QWKLVIUHHJXLGHIURP6WUDLJKWHU/LQH\RXoOOQGRXW r Why college is so expensive r What you can do to cut the cost of college r 10 Tips to Save Money on College

Let's get started.

3

For more information, call 1-877-Str8erLine or 1-877-787-8375

Part One

Why is College so Expensive?

College has always been viewed as a major life expense. Yet a college degree has also always been seen DVDWLFNHWWRSURIHVVLRQDOVXFFHVVQDQFLDOVHFXULW\DQGDNH\WROHDUQLQJKRZWROHDUQWKURXJKRXW \RXUOLIH7KURXJKRXWWKH\HDUVSD\LQJIRUFROOHJHWKRXJKUHTXLULQJVDFULFHVIRUPDQ\ZDVGRDEOHs and considered a wise investment with a high return. Yet somehow, somewhere along the college pathway to prosperity, there came a shift in that investment-to-value ratio. In other words, college changed from being a smart investment for getting ahead to becoming a very expensive necessity needed just to get by.

And here's why:

College Has Become More Expensive Relative to Current Income

It's not your imagination: when it comes to college, the "good old days" really were the good old days. Today, the cost of college is rising at such a rapid rate relative to income, 130% over last 20 years, that FROOHJHFRVWVFRPSULVHDIDUPRUHVLJQLFDQWQDQFLDOEXUGHQ than they did on students only 20 years earlier. Consider this: ZKHQDGMXVWHGIRULQDWLRQ$PHULFDQVLQWKHPLGGOHFODVVDFWXDOO\ earn a few hundred dollars less than they did 20 years ago.2

You Need a College Degree Just to Be Eligible for An Entry-Level Job

A college degree has become the bare minimum educational credential for many careers that, not long ago, didn't require any college education at all, let alone a bachelor's degree.

It's Too Easy to Over Extend Yourself Financially with Student Loans

2YHUQDQFLQJ\RXUFROOHJHHGXFDWLRQFDQOHDGWROLIHORQJGHEW issues. According to the most recent data looking at 2011 college graduates, the average student leaves school with $26,600 in student debt.3

4

For more information, call 1-877-Str8erLine or 1-877-787-8375

Where You Go to College Makes a Di erence in How Much You Pay for College.

Where you choose to enroll in college and ultimately plan on earning your degree makes a huge GLHUHQFHLQ\RXURYHUDOOFRVWRIFROOHJH&RPPRQVHQVHVD\VWKDWPRUHH[SHQVLYHFROOHJHVJHQHUDOO\ SULYDWHDQGIRUSURWFROOHJHVDQGXQLYHUVLWLHVZLWKKLJKHUSXEOLVKHGWXLWLRQUDWHVVKRXOGEHPRUH H[SHQVLYHWRDWWHQGWKDQOHVVH[SHQVLYHFROOHJHVJHQHUDOO\VWDWHFROOHJHVDQGXQLYHUVLWLHVZLWKOHVV expensive published tuition rates. A pretty simple concept ? yet one that's not always accurate.

:KLOHLWoVWUXHWKDWRQDYHUDJHVWDWHFROOHJHVDQGXQLYHUVLWLHVFRVWFRQVLGHUDEO\OHVVSXEOLVKHGSULFH ZKDW\RXHQGXSSD\LQJDWDSULYDWHFROOHJHRUXQLYHUVLW\QHWSULFHPD\EHFRQVLGHUDEO\OHVVUHODWLYH WRWKHSXEOLVKHGFKDUJHVIRUIXOOWLPHHQUROOPHQWDWDSXEOLFFROOHJHRUXQLYHUVLW\7KHGLHUHQFHFRPHV GRZQWRDVFKRROoVDELOLW\WRRHUQDQFLDODLGSDFNDJHVWKDWFDQPHHWRUH[FHHGWKHGLHUHQFHLQ tuition prices.

The average published college tuition and fees rates for 2012-2013 are as follows4:

Public 2-Year (In-State): .......................................................................$3,131 Public 4-Year (In-State): ......................................................................$8,655 Public 4-Year (Out-of-State): ............................................................ $21,706 3ULYDWH1RQSURW ................
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