My dad, who normally didn't mind spending money, was appalled when I was accepted to Syracuse University in 1966 because the bill would be $3,000 a year -- compared to about $35,000 today. Most likely he was shocked because the Canadian government subsidized most or all of my dad's education at the University of Toronto, which is the case with every first-world country except the U.S.
He'd be even more shocked at not only how the bill for higher education has skyrocketed since then but the burden of paying that bill has shifted from the 1% to the 99%. As I pointed out in my book, America, Welcome to the Poorhouse, while federal grants accounted for 70 percent of the cost of a degree 30 years ago, loans now account for 65 percent of the cost. At the same time, the cost of college tuition and fees rose a whopping 439 percent from 1982-1984 to 2006, according to "Measuring Up 2008," a report by the National Center for Public Policy and Higher Education -- almost twice as fast as the cost of medical care. It's even more outrageous that most middle income households don't get any grants or scholarships. According to the report, the minority of students in households earning between $40,000 and $59,000 get federal, state and institutional grants.
To make matters worse, too many parents -- and I hate to say it but it's mostly moms -- are impressed when colleges compete for students by squandering their endowments on state of the art gyms or fancy dorms rather than competing on costs. Where is the college equivalent of Best Buy, Costco or Walmart? While the Department of Education and the Consumer Financial Protection Bureau have teamed up to launch the Know Before You Owe project, I'd like to propose a different approach: Lower What You Owe, especially since both you and your children have to save most of your income to bankroll your retirement. Some suggestions:
Best deal ever: Cut your kids college costs drastically by convincing them to attend a community college for the first two years of college. Tuition is typically around $4,000 a year, compared to AT LEAST $20,000-plus a year for tuition, room and board at a four year colleges. Increasingly, even affluent families are choosing community colleges. Nationwide, 22 percent of college students with annual family incomes over $100,000 attended community colleges last year, up from 16 percent four years ago, according to a study by Sallie Mae.
Very important: Make sure that the community college of your choice has an articulation agreement, which outlines the courses and letter grades than can be transferred -- the last thing you want to do is waste money on courses that won't be accepted. Increasingly, states are reaching out to help: As I pointed out in my book, California, Florida, Pennsylvania and other states guarantee that students who receive an associate's degree will be admitted into one of the state's public four-year colleges. What's more, some community colleges like the County College of Morris in my state of New Jersey, will help you take enough credits in two years that you can complete three year's worth of work. It gets even better: Seventeen states have allowed community colleges to award bachelor's degrees so you could save big bucks for all four years of schooling. A great resource is Community College Week magazine If you click on "Top 100," you will see how your local community college stacks up.
If community college isn't an option, convince your kids to graduate from a four-year school in three years. One way to do this is for your kids to take advance placement classes in high school, which can slice a year off your child's education and cut your expenses by 25 percent. What's more, taking AP classes will likely result in a lower price because your son or daughter will qualify for a scholarship, according to Kiplinger's Personal Finance . A 2007 Crux Research Report found that 31 percent of colleges and universities value AP scores when making scholarship decisions and over 85 percent said AP scores have favorable impact on a student's admission. A three-year degree is also an option for those who didn't take AP courses; instead they take courses during the summer to speed up their degrees. Needless to say, the three-year approach is NOT an option if your kid hasn't picked his or her major, since these programs often require students to choose it during their freshman year.
One of the best deals are that's rarely talked about: If your kid is a smart cookie, consider one of the 73 Ivy League/public school that are now free or at least discounted --replacing loans with grants even if your household income is more than $200,000 in some cases. This is one area where Congress has tried to do right and basically shame some of the richer private colleges into shaking their money trees. Colleges that have eliminated loans from the financial aid packages include Princeton University, Davidson College, Amherst College, Harvard University, Pomona College, Swarthmore College, Haverford College, University of Pennsylvania, Yale University, Bowdoin College, Stanford University, Wellesley College, Columbia University, Claremont McKenna College and Vanderbilt University. Other non-Ivy League colleges offer deals as well. For example, Boston University basically offers a free ride to Boston residents who graduate from Boston pubic schools. To find out current offerings, visit Fastweb.