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Since the late 1980’s college costs have been increasing at an average annual rate of 6,9%. As a result, for most families, the only option to fund a college education is debt in the form of either student loan debt or home equity loan debt.
To help you understand the costs of funding a college education and other need to know facts, below are some important basics.
Private vs. Public College Education
Public Colleges cost you less than Private Colleges. Depending upon the State, the cost difference in tuition ranges from nominally lower to materially lower, particularly if you are a Resident of that State. For example, in Louisiana, Residents pay a nominal fee for Tuition that is tens of thousands of dollars less than the cost to Nonresidents, making college affordable for most Residents. In New Jersey, the cost difference is nominal for Residents.
Room and Board differs as well. In low-cost States, Room and Board is several thousand dollars lower per year than in high-cost States.
For those who do not have adequate College Savings, seeking out a Public College in the State you reside in will lower the cost of a College Education.
Community Colleges
Community College costs are the least costly strategy for students/parents who lack college savings and who do not wish to be burdened with significant student loan debt. Most Community Colleges offer two-year Associates Degree Programs, which can be transferred to four-year Private or Public Colleges.
The Community College Strategy is the least costly way to fund a college Education.
College Costs
College Costs include:
- Tuition – Tuition is the largest cost component in a college education.
- Room and Board – For students living on or near campus, Room and Board will be the second largest cost component in a college education.
- Food – Room and Board typically includes a Basic Meal Plan. Basic Meal Plans typically cover two meals a day. Some only cover one meal a day, others three a day. Some cover five days, others seven days. Because Meal Plans vary, Meal Plan costs vary. Do your homework before you make a commitment.
- Books
- Fees
- Health Insurance – Although a student may be covered under their parent’s Health Insurance Plan, that coverage may not extend to other States. Before committing to a college, make sure you understand if your parent’s health coverage extends to wherever you will be attending college. If it doesn’t, then you will need Student Health Insurance coverage, while attending college, which increases your college costs.
- Travel – Colleges more than four hours from home often require air travel for the student and parents.
- Spending money for essentials, bars and restaurants, clothing, toiletries.
- Study Abroad – Some colleges offer Study Abroad Programs. Studying Abroad for a semester or more increases your college costs, sometimes significantly. Studying Abroad is a luxury cost.
Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, Effort-Less Wealth, Change Your Habits Change Your Life, Rich Habits Poor Habits and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”
