For most individuals, the investment in a college education provides a better quality of life. Potential for higher income, better health, and job security are just a few reasons for pursuing a college degree. The biggest change in the past few years is the increasing college cost and incurring student debt due to the lack of financial transparency when achieving this goal.
Many students and parents overlook the financial impact and cost of this goal resulting in high student debt. Pursuing a college degree is one of the few major purchases that families make without knowing the final cost. Currently, colleges only provide financial information one year at a time. Students and parents have no easy way to project their total cost or debt at graduation. As more families are questioning this cost, especially as we end the year with online courses, the colleges will need to react.
College Investment is Different Now
Here are some important facts that have been changing from an economic supply-side regarding college. Our children face a much more competitive environment than many parents faced when they received their college degrees. The facts below are just changes in the US. Our children are also competing in a global economy that also puts more pressure on wages and competition.
Managing the New Environment
Some of the numbers in the chart are alarming. In the US, we have more people with college educations and master’s degrees than ever before. These facts indicate that more thought needs to go into college selection and projected outcomes. Parents and students need to make more informed decisions on the total cost of the education, evaluate job potential, and understand how this affects the repayment of student loan debt incurred. The simple perception of having a college degree is over.
The total impact on the economy from the COVID 19 virus is not known. States are already announcing tax revenues are down significantly. This will result in reduced funding for higher education, making the tuition expense possibly a bigger expense and problem.
The marketing of the college experience will need to change to a focus on the financial outcome. To do this correctly, families will need to have tools like the PayForED College planning software that generates customized financial numbers for each college and helps families understand projected student debt. When comparing colleges, students will also need to consider alumni networking opportunities, graduation rates, and the college reputation in specific majors.
College is A Series of Decisions
The proper college plan does not end with college selection. Students and parents will need to have better tools in place while in college. This strategy is missing in the current process. As with life, changes happen but under the current process colleges do not provide any help on the financial side when this occurs.
The PayForED In-College Payer helps families react to changes like a college transfer or college major change by showing the student the financial consequence of these decisions. These decisions are often minimized and not recognized until after graduation. In most cases, they will impact the student’s financial future and life for 10 to 20 years.
In this new normal, students will need the ability to estimate their financial future. It is critical for both the students’ and colleges’ financial success. Students will need customized tools to project their student loan repayment options, lifestyle decisions, and salary. Having the ability to see the financial consequence of various decisions will improve their outcomes and future.
COVID 19 Impact on College Summary
There is a famous Chinese proverb: “May We Live in Interesting Times”. It appears that we have gotten our wish. There will be significant changes in the college admission and affordability environment for the next few years at a minimum. The entire educational ecosystem will need to change from high school to employers.
High Schools and colleges will need to more focus on outcomes and affordability and not just access. The traditional financial aid night and college financial aid offices will need to add more information and transparency for students to be successful.
Employers have already started to address the financial stress of student debt. A growing number of employers are now offering a student loan assistance benefit to attract and retain the right employees.
The combination of more information and better transparency will be a significant change for many universities but mandatory for students to be successful in this very competitive world we live in.