Paul on November 23rd, 2015

We all know that college costs are rising dramatically. According to the College Board, the typical college price tag has increased by over 30% over the last five years.  But that tells only part of the real story.

A college degree should be attainable in four years or less but across the board it is taking longer.  Depending upon where you enroll, recent figures from the College Board and others suggest that it will take an average of 6.2 years at a public college and 5.3 years at private colleges. Too often as we assess the increased cost that accompanies extended college, we simply tack on the out-of-pocket costs to the extra years needed to obtain a degree but there is more, much more to consider.

In another survey, colleges were asked about the percentage of students who graduated within 6 years.  Six years!  The recent addition of the 150% rule suggests that we taxpayers and parents have increasing tolerance for the added time.  The 150% rule says that students will be eligible for federal aid for 150% of the time it should take to get a bachelor’s degree or six years! Degree completion in the six-year window reported in the high eighty percent bracket or above were considered to be solid colleges.  But wait! What is so laudable about taking six years to complete a four-year program?  Whatever happened to the four-year standard?

Tolerance for a six-year college experience is in part the result of a faulty and incomplete accounting of costs.  When projecting the costs of college, add to the cost mix (to the individual family, the government and the larger economy)  not just the cash outlay of another year or two but include “opportunity costs” as well.  Opportunity costs refer to the income the student would have been earning, the products and services he would be buying and the taxes he would be paying as a college graduate if he or she were not languishing an extra year or two at college.  Using this math, the cost of year five or six dramatically escalates.  Thus, as you look into various colleges, it makes sense to ask each college, “What percentage of the students graduate in FOUR years?”  If they respond by saying they don’t know, they do know but they just prefer not to tell you.

So when you are planning to deal with college costs, you would be well-advised to always consider opportunity costs.  That may make some low-cost, “knee-jerk” choices like community college or a local public, four-year college within commuting distance, actually more expensive in the long haul than colleges that may have higher sticker prices but a more predictable, four-year path to a degree.  Remember too, things are not always what they seem.  For instance, in California, with one of the nation’s largest community college systems (over 100 institutions serving over 2.5 million students), a report published widely not long ago revealed that among those who entered community college with the intent of transferring to a 4-year college, only 1 in 4 ever did and for those who actually transferred, the total time spent on the road to a college degree was in excess of six years or, put a different way, another $70-100 thousand dollars lost in personal opportunity costs alone.  This does not include the actual out-of-pocket cost of college in years five and six or the cost to the larger economy.  Even more sadly, fewer than 1 in 10 who went to community college in search of an associate’s degree ever got one.  In fact, the report noted that about 25% of the new students entering community colleges each year drop out before the second year.  Where’s the bargain in all of that?  (Despite the generally gloomy picture and in the interest of fairness, there may be some downstream benefit.  Several studies have shown that a little college, even if it does not include a degree, seems to have some lasting social and personal benefits.)

The implications for taxpayers and the federal budget of this tolerance for extra time is that the federal financial aid “pocket” is predicated on the number of enrolled students in college and the time it normally should take to complete a four year degree.  If we add another two years for a student, it is like adding extra students to the mix when in fact it is simply costing us more per student.  The net result is that less money is available per student across the board which ALWAYS results in higher levels of student and parent debt and aid “gaps” for everyone except those who attend very wealthy colleges that provide loan-free aid.  As you may already know, “gaps” refer to the under-funding of a family’s demonstrated financial need as suggested by the  EFC or Expected Family Contribution which, to put it very simply, treats “gapped” families as though they are making far more money as memorialized and validated by the amount of need-based aid they actually receive.

Everyone feels the impact of colleges who don’t or can’t deliver a degree in regulation time.  There has been a solution to this in the hands of the Department of Education for many years but that bureaucracy has been largely tone deaf to reform of any substance that holds the players on all sides accountable for substandard performance.  Forms of malpractice range from students who choose partying over studying and  colleges who fail to adequately manage their student body enrollments in a way that assures timely availability of required courses for every major and/or graduation requirement.  Other forms of malpractice extend to the federal government’s failure to adequately  and fairly oversee the implementation of its own rules and regulations regarding the need-based financial aid “system”.

The relatively painless remedy for normal Americans is to better understand how you will pay for college before you even look at colleges. With that knowledge, college selection is more likely to be based upon fit and not cost and those of us with long experience will bear witness to the fact that students who are happy, purposeful and well-adjusted in a public or private college setting typically find a way to get a degree in four years.

In an age where college costs are spiraling upward and where the raging bulls in the china shop are increasing student debt and the very real threat to parental retirement security, timing becomes more important.  College should take four years.  Students and parents electing to enroll in colleges that take longer should do so with their eyes and pocket books wide open.  Before you sign on any college’s enrollment dotted line, be certain that you are prepared to pay a premium for any extra semesters needed to attain your degree.  According to the Project on Student Debt, nationally, student indebtedness is averaging about $30,000 over the normal four years with an alarming number of students carrying much higher debt in the range of up to $100,000 or more and because that high-end debt undoubtedly includes extra time and private student loans, some are paying interest rates “as high as 19%”.  In 2015, outstanding student loans nationally have passed the $1.3 Trillion mark.  And we wonder why so few students from low-income families are willing to enter the debt-ridden, post-secondary education financial quagmire.

Escalating student and/or parent college debt and opportunity costs share the same parentage, time.  The unacceptable public cost and its impact on the larger economy staggers the imagination and as much as any other single factor impacts the fundamental sense of freedom and liberty among an entire generation of college-attending students and their parents.  Both the quality-of-life costs of foregoing college in order to avoid debt and the actual costs of attending one will have lasting, life-long effects on the individual, their parents and the nation.

One only needs to look at the stable of presidential candidates currently vying for the highest office in the land.  Their quick readiness to pander to the lowest, base instincts of what appears to be a wantonly under-educated electorate is enough to send a chill up the spine of any person who values democracy.  It reminds one of a quote from the futurist author, Isaac Asimov.  “There is a cult of ignorance in the United States, and there always has been.  The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that my ignorance is just as good as your knowledge.”  The last thing we need today is a college funding system that waters and fertilizes that garden.


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