There is no doubt that College costs are souring, with the average 4-year private college costing in the excess of $40,000 a year. Whilst this figure is inclusive of tuition fees, accommodation and food it is still a huge outlay. For the majority of people this will be the biggest investment that they make in their life apart from buying a home, and as such they are going to want to get the highest possible return, however this does have to be planned carefully.
Whenever you make an investment you make sure that you evaluate the costs and the risk involved, therefore by answering the following three questions you can evaluate your College education and determine the potential return on your investment.
The initial cost
The price that you are going to pay for your education will have an impact on the future worth. This is why your selection of college is one of the most important parts of planning. So that you can work out what you may have to pay you should research the schools to see where you will fit in and how your academic profile matches to that of current students. There is an excellent free tool on the College Navigator site that will be invaluable. Obviously the more desirable you can make yourself the more likely you are to be accepted and even offered financial aid or scholarships.
As soon as you receive your award letters back you can then determine your net price, as in the difference between the standard college price minus any assistance you may be awarded. Do not deduct student loans as these will actually increase your total college costs. Prior to taking any loans be sure to calculate the interest for the entire life of the loan and add this to your costs, now you are able to determine the initial cost that you are going to have to make on your college investment.
There are other ways in which you can reduce your initial college costs, such as the American Opportunity Tax Credit which reduces your tax liability and effectively helps with college funding. Providing you qualify, you or your parents can claim this and if can provide a total of $10,000 over the four years.
What are the risks for you?
No investment is risk free and this is the same for your college education. One of the largest risks is that you may end up staying for longer than the initial 4 years which obviously increases your costs or that you do not graduate whereby your return will be seriously diminished.
In order to address the risks, it may be worth working with a college professional who can advise you on what courses may be the best it for you. Additionally, you can look at the resource College Scorecard as this will show you the graduation rates for all the schools and this can give you a good indication of the support and guidance the students have available to you.
There is also the risk that the college may reduce the grant or scholarship that they awarded you and therefore you will have the increased cost for making up the short fall. Just be sure to question the award amounts and ask what you can expect to receive a year, plus anything that could reduce this amount, this way you will know that you have your figures right.
Your potential return
You cannot value everything in monetary terms however when focusing on the financial aspect of the return on your investment in your education, there is research to show that those attending college earn a lot more than those who don’t. It is the decades of higher earning ability that you need to be looking at to see whether your degree will be an investment that keeps on paying you back.
Keep on track
The last thought when I was selecting a college was what return I would get on my investment. I remembered choosing what looked the best and what I was unable to fund with my student loan I borrowed from my parents. However, if I had known them what I know now, I wouldn’t have wasted thousands of dollars through missed financial aid. Do not fall into the same trap, choose your college wisely and be sure to find out what you can claim, and also try and work out what your degree will be worth to you in monetary terms. Take your time and with proper planning your degree can be the very best investment that you will ever have the opportunity to make.