Read an Excerpt
CHAPTER 1
Is College Worth It?
With how much college costs to attend these days, you or your parents may be wondering if getting a college education is even worth it. I understand that for some parents, like my husband and me, there is absolutely no question that a four-year degree is worth pursuing, regardless of how much that degree costs. For other parents, maybe yours, there are feelings of confusion about whether it's worth it to spend all that money on a piece of paper.
Perhaps your own parents did not get a four-year college degree. Or maybe they only have an associate's degree and, as far as they're concerned, they're doing just fine for themselves. In this chapter I'm going to present the benefits of a college degree from an earning, employment, and opportunity point of view. I'm hoping that this information will help affirm the value of a college degree so you can feel confident you're making the right decision as you begin to pursue higher education.
Jobs that require a college degree
If you aspire to be a doctor, dentist, or lawyer, then you probably already know that you need to get a college degree, along with at least one advanced degree. But did you know that some of the best-paying, non-legal jobs out there also require an advanced degree? And by "advanced" I mean a degree beyond your bachelor's.
Many jobs in healthcare require a master's degree. This includes nurse practitioner, physician's assistant, and nurse midwife. However, many other industries look for master's degrees as well. This includes math-related jobs (statistician and economist, for example) as well as education. In this latter group I'm not just talking about the people doing the teaching in both K-12 schools and at colleges and universities, but also those working in the administrative offices.
There are plenty of great-paying jobs that only require a bachelor's degree as well. Many of them are in the field of engineering, something a recent Georgetown University Public Policy Institute study titled "Recovery: Job Growth and Education Requirements Through 2020" confirms.
It says that along with healthcare and community service, jobs in STEM (science, technology, engineering, and mathematics) will be the fastest growing in our economy. Starting salaries in STEM can be close to six figures.
I don't want to bore you with lots of numbers, but I think these numbers make the case for getting a college education. In fact, that Georgetown University study reports that by 2020, 65 percent of all jobs in the economy will require postsecondary education and training beyond high school.
That breaks out to be the following:
[??] 35 percent of the job openings will require at least a bachelor's degree
[??] 30 percent of the job openings will require some college or an associate's degree
[??] 36 percent of the job openings will not require education beyond high school
Sure, you could look at these statistics and think, well the greatest percentage of those jobs only require a high school diploma. That may be true, but if you lump together the job opportunities beyond high school, you're looking at 65 percent of the job opportunities. So why would you limit yourself to one-third of the opportunities when you could make yourself available to the possibility of two-thirds of those employment opportunities?
One last thing to consider from this Georgetown University study: those that will find the greatest opportunities for employment must possess certain desirable skills. These skills are the ones that any higher-education expert will explain you're more likely to develop, having gone to college. We're not talking hands-on skills, but skills such as:
[??] critical thinking
[??] active listening
[??] mathematical knowledge
[??] oral comprehension and expression
When you attend lectures, participate in small-group discussions, and take a variety of classes at college, you're more likely to develop these four highly valued skills. That makes you more competitive in the job market and potentially earns you a higher salary.
College degree and income gaps
Speaking of salaries, it's a well-known fact that there is an income gap between those with a college degree and those without one. In fact, as time goes on, that gap continues to widen.
Consider this latest study from Pew Research. It showed that Millennials with a college degree, ages 25 to 32, were earning, on average, $17,500 more than their classmates with just a high school diploma. Those with only some college or a two-year degree didn't fare much better. They're earning $15,500 less than their peers with a four-year degree, putting them only $2,000 above those with just a high school diploma.
I know it's hard to even think ahead to your being a person in his mid-20s, working full-time, and worrying about a salary. But the truth is you can't avoid the topic of who you might be in the future. I mean, the whole idea for going to college and getting a college degree is to become the best version of yourself, including optimizing your earning potential in your future employment.
There's likely another reason there is such a big income gap between levels of education. It's simply easier for a college graduate to get a higher-paying job. You'll find this notion reflected in recent Bureau of Labor Statistics (BLS) numbers. It shows the stark difference in the unemployment rate, based on education.
The overall unemployment rate for everyone over age 25 is 3.9 percent. However, that number changes quite a bit when you break it down by level of education. Here is the percentage of the population that is unemployed, based on education, and based on the most recent BLS numbers:
[??] Some high school: 7.9 percent
[??] High school diploma: 5.1 percent
[??] Some college/two-year degree: 3.8 percent
[??] Bachelor's degree and higher: 2.5 percent
So that's two checks in the win column for going to college. In addition to gaining the ability to earn more money in your career, these numbers show that you are more likely to avoid being unemployed because you have a bachelor's degree.
Networking opportunities through a college degree
Here's another leg up that going to college gives you — an alumni network. Think about it this way: every person who graduated before you at your college or university could potentially employ you. One study showed that nine out of 10 college graduates would hire someone who went to the same school that they did. Nine out of 10. That's 90 percent.
This isn't just me talking. The Princeton Review has a publication called Colleges That Pay You Back. The idea is that these are the schools that your investment in getting a degree there will pay you back exponentially with time. One of the ways that payback happens is through employment. Sure, the colleges on this list are the ones you expect to hear (read: Ivy Leagues). Surprisingly, though, smaller colleges also make the cut, such as New College of Florida and Hampden-Sydney in Virginia, as do many public universities, including the University of Georgia, Florida State University, and Texas A&M.
The great thing about having an alumni network is that you never know when it is going to come in handy, but at least it's there for you. One of the places you can work your alumni network is on social media, especially LinkedIn. If you haven't yet checked out this work-related social networking site, you should at least have a profile up on LinkedIn by the time you're a freshman in college.
I can tell you from firsthand experience that there is a benefit to being on LinkedIn. Even better is having where I went to college (New York University or NYU) in my bio. I've also joined groups on LinkedIn related to NYU, which has led to paying work.
Don't believe me about alumni networks and the importance of getting a job after college? When you eventually make a campus visit, go on a college tour, or sit in on a college information session, find out how successful the school's graduates are and how successful the college is in getting them employed. "Are graduates getting a job, in what field, and what kind of success are they having," suggests Justin G. Roy, dean of admissions at Georgian Court University in Lakewood, New Jersey. "You want to find out about their earnings, job retention five years out, and their satisfaction rankings." If you are looking at a college with a 70 percent job placement rate versus a college with a 90 percent job placement rate, adds Roy, "It might be worth the investment of more money to go to the school with the 90 percent job placement rate."
If the ultimate goal of going to college is to make you better prepared to get a better-paying job, you want to ensure that a college can help you do that. Ask about its alumni network. Pop into the career services office and see what they can tell you about how they help graduates. Find out what percentage of graduates give money to their college. A recent survey found that 80 percent of donors give money because they believe their association with their alma mater has helped them professionally. So the rate that graduates give is often a clue as to how engaged (or not engaged) they are with their school and how satisfied (or unsatisfied) they were with their college experience.
This is all a way of saying that, though college may be expensive, overall it is a very good investment for your future. This is especially true if you aspire to work in an industry that requires at least a bachelor's degree.
That said, I do understand that college is expensive. Remember: I have two daughters in college right now. In order to cover their tuition, housing, fees, and other expenses, our family is using a combination of earnings (my husband's, mine, and my daughters' from their summer and on-campus jobs), scholarships, grants, and loans. True, my daughters will graduate with debt like many American college students do, but the debt will not be so overwhelming that they will have regretted going to college.
The whole idea behind this book isn't to convince why you should go to college, but more how you can afford to go to college. I believe that in picking up this book, you've already confirmed that you believe college is worthwhile. This chapter was designed just to solidify that idea in your mind. And to show you that, on the other side, when it comes time to find a job, all of this will have been worth it.
CHAPTER 2
Getting Your Financial House in Order
This chapter is for the parents, who likely know that preparing to pay for college happens years before your child graduates from high school. You may have started a savings account in your child's name and started funneling money toward it. Or perhaps relatives purchased U.S. Savings Bonds that will accrue to their full value by the time the first tuition bill arrives. But even if you're late to the game, you can still feel confident that you can find a way to pay for college, as long as your financial house is in order.
So what do I mean when I say your "financial house" and getting it in order? Well, let's be honest. If you haven't been squirreling money away since day one, you're going to have to rely on future scholarships to pay for college, or you're going to have to borrow to help cover costs.
Most experts would argue that borrowing to help pay for college is a bad idea. They would argue that you should have been saving all along. But here are two problems with that sentiment.
1. You do not own a time machine. And if you haven't been able to save money at a rate that would have college fully covered in a 529 college savings plan, you can't go back and change the past. So you need to look to what you can do now and into the future to pay for college.
2. Someone once said to me, "You can borrow to pay for college, but you can't borrow to pay for retirement." So if you are committed to helping your child pay for college, you should continue to save for retirement and, if necessary, take out loans to pay for college.
Of course, I don't want you to borrow so much that you put yourself in financial ruin. In fact, I expect that your child should be borrowing money, if necessary, to pay for college as well. Nearly 35 percent of undergraduate students take out federal loans to cover tuition. More about how that works — and how that won't necessarily leave your student broke — in Chapter 8: Scholarships, Grants, and Loans, Oh My!
But back to you, the parent. If none of the suggestions in this book uncover ways for you to get free money, and you're committed to sending your son or daughter to the best possible college, then you're likely going to be looking at borrowing some money. Surveys show that half of all parents find a way to pay for college out of current income. My guess is the other half are looking at financing options, such as loans. That's why the bulk of this chapter focuses on improving your creditworthiness because, let's face it, without it, you won't be getting any loans.
Cleaning up your credit score
Assuming you've ever applied for a credit card, bought a car, or purchased a home, you know that your credit score is important. It can be the golden ticket to a great interest rate, or it can be a black mark on your credit history that leaves you with only high-interest loans, or, worse, not able to get loans at all.
Before I get into how to clean up your credit score, you need to know what your credit history is. There are three companies, called credit bureaus or credit reporting agencies, responsible for collecting creditworthiness information on American consumers and creating what's called our credit history. Your credit score may also be referred to as a FICO score. Those credit-reporting companies are:
[??] Equifax
[??] Experian
[??] TransUnion
Getting your credit report
By law you can get a free credit report once every 12 months directly from each of the companies. This way you can review how banks and other financial companies see your credit history. You want to make sure that all of the information is accurate on your credit history. And you want to make sure that if there are any errors on the credit report, especially those that will reflect negatively on your creditworthiness, you get them fixed right away.
The Consumer Financial Protection Bureau (CFPB) (www.consumerfinance.gov) is a government agency formed in 2008 after the financial crisis. Its mission is to help Americans become smarter consumers. This increased knowledge includes dealing with and fixing your credit report.
According to the CFPB, there are a number of red flags that can show up on your credit report, which you'll need to fix right away. This includes someone else identified as you, which you would notice based on addresses where you've never lived or jobs you've never held being listed on your credit report.
Also, there might be financial errors on your credit report that you want cleared. For example, it might say that you were late in sending car payments for a Porsche when the only car you've ever owned is a Prius. And you know you paid those payments on time. In addition, if you've ever filed for bankruptcy, that is supposed to be dropped from your credit report after 10 years. If it's still there, you need to get it removed.
Adds the CFPB: "If you find errors, you should contact the credit reporting agency from whom you obtained the report, and the creditor or whoever provided the information (called the 'furnisher' of the information). The copy of your credit report will include information about how to dispute inaccurate or incomplete information."
You should also look for any delinquencies attached to your bills. In other words, paying bills late reflects poorly on your credit history. If you do see delinquencies, you need to start working hard to pay all of your bills on time now. Months of on-time bill paying can make any late payments less apparent on your credit report.
If you do find that you have a credit card, for example, that you've not done a great job paying in a timely manner, do not close the credit card once you've paid off the balance. I made this error a few years ago, and learned a hard lesson from it. I covered this on my blog in a post called "Do You Know Your FICO Score?" Here's a recap of what happened.
In May 2009 we missed one credit card payment. I found this out when reviewing our credit report. Somehow I didn't see this black mark until 2016. Every other month since May 2009 to now, there was an "OK" in the box on our credit report. This "OK" indicates that we'd paid every credit card on time. So, one mistake one month in 2009 dinged us. That's because a negative "mark" on your credit history is allowed to stay there for seven years.
Another mistake is we closed that credit card soon thereafter. When you close a credit card, it can stay on your credit report for up to 10 years. So it shows up, but it's not helping you by being there. Why? When those credit reporting agencies pull your credit score, one of the things they are looking at is something called your credit utilization ratio. Basically, they want to see how much of your available credit you are currently using.
(Continues…)
Excerpted from "The Complete Guide To Paying For College"
by .
Copyright © 2018 Leah Ingram.
Excerpted by permission of Red Wheel/Weiser, LLC.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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