A colleague shared a dramatic graphic with me a couple of days ago. While we know that the cost of college is growing faster than inflation, it is still a bit of a shock to see it graphically. And, the interesting thing is that the cost of TVs dropped dramatically in that same decade.
So, how can families continue to afford college which is growing at nearly eight times the rate of wages? We need to approach the selection of college for our students very differently than we did twenty or so years ago.
To reduce the cost of college, families need to understand how much a college is likely to cost before your student even applies. Remember, colleges are businesses that are trying to maximize profits. Admissions offices have very clear strategies for getting the most profit out of each incoming class. So, unless you want to pay full retail for college, you need some knowledge on your side to make a good decision.
Strategic College Spending
Ideally, you want your student to apply to schools where he or she will be in the upper quartile (25%) of the incoming class. That is when your student is likely to get the maximum amount of financial and merit-based aid. If your student is in the lower half of the class, your family will be paying full retail and often more than your Expected Family Contribution (EFC).
That is why “stretch schools” are such a bad idea for most students. Getting into one (which your child will almost certainly want to attend) practically guarantees you will pay more than your family can “afford” according to the federal government.
Strategies for Spending Less on College
If you want to learn more about strategies for spending less on college, please check out my new book: Never Pay Retail for College. You will learn the 12 critical elements for a successful college plan and how you may be able to reduce the cost of college by 25% to 50%.