It is time to think about college selection like a business decision
Our eighteen-year-old brains are not equipped to make huge decisions that could have serious consequences for years to come. Especially when it comes to big, long-term financial commitments. For many, emotion tends to grab the wheel and drive many of our college choice decisions. It’s time that we help our kids make a good decision on college, one based on non-emotional concepts like return on investment. And certainly, one that will not become a near lifelong financial burden on them or their future families.
With so many college options available, we need to treat this like a business decision. I know I have written about this before, but for me, baseball was my most important factor in picking out a college. This might surprise you to learn that that was not a great way to do it. There are many different schools of all shapes, sizes and price ranges out there. You need to do some research and find something that fits not only your child’s interests, but one that is in yours and your child’s budget.
Sitting on a lot of webinars with college experts, the best explainer I have heard is that you can semi-easily divide colleges into two categories, buyers and sellers. The buyers are the colleges that are more likely to need your business (think small to medium sized, lesser-known schools). Therefore, they will be more likely to offer you scholarships and/or be aggressive in recruiting your student to attend. The sellers are the colleges that are already in high demand (think Ivies and large well-known schools), and they have no need to be aggressive in their offers to the average applicant. If value for your money is important to you, unless you are looking for something very specialized from a top tier university, the seller group is probably going to be out of your range.
If you have more money than you know what to do with, congratulations, none of this applies to you. For the rest of us, at a minimum, this is what I recommend. Grab a piece of paper and write down the name of the school, with a few extra columns. Label the columns “sticker price, expected actual cost (sticker price – scholarships/financial aid), and loans needed.” You can do this for one year of college and then multiply the loans needed column by four. Now take this figure and compare it to the projected first-year salary of your child’s intended major as a graduate of that school. If the amount of loans needed is larger than the first year’s salary, I would keep looking.
College was so much more to me than just training for a career. College taught me how to think. It opened my eyes to so much more than I experienced in my high school alone. College taught me how to survive on my own, and in a weird way, it was the first big financial blunder I ever made. My goal now is to help you to avoid that same mistake. Do not go there just because you got in. Run the numbers and make sure that they make sense.
