Not all surprises are good. For example, Fidelity Investments just revealed the results of a survey that showed that a surprisingly high percentage of recent college graduates have no idea how much debt they accrued to obtain their coveted sheepskin. Much too late for these graduates, the study concluded that nearly 40 percent of the respondents would have made different choices regarding their college education if they had a better understanding of the costs involved.
In this national sample of 750 graduates, Fidelity found that 70 percent had racked up an average of about $35,000 in federal and state loans, credit card debt, and private loans. When confronted with these figures and an estimation of just how long and how much it might take to pay those loans, the new debtors expressed surprise and even a bit of remorse. Although most still don't regret the college decision, they now say it could have affected their choices if they had truly understood the costs involved.
Some strategies they thought might help their younger college-bound colleagues included researching more scholarships and grants, accumulating more college savings, controlling costs better while in school, having more open discussions with parents about college costs, and acquiring a better understanding of financial aid. A professional college financial aid adviser would be helpful in all of these situations.
A Better Way to Evaluate Colleges
Another tip offered was to evaluate schools based on the majors they offer and the career options that might be opened up by a particular course of study. For many parents with high school juniors who are about to embark on a summer and fall of college exploration, this is great advice, but the difficulty has always been in comparing colleges on an apples to apples basis. Fortunately there is a new tool available, College Reality Check.
Produced by The Chronicle of Higher Education, this website provides a useful comparative foundation that will be helpful to parents, students and professional college financial aid advisors in answering the three most fundamental questions involved with college selection:
• How much will it really cost?
• Will I be able to graduate?
• Will I be able to get a job that will help me pay back my student loans?
These are some very basic issues that should be clearly understood before the final choice is made. For example, the net price calculator estimates what a student can realistically expect to pay at a particular college after subtracting any grants and scholarships that do not need to be repaid. If your student is actually planning on graduating it's also important to know what the graduation rates are at each of the possible universities. Finally there is an estimation of debt payment and earnings so you will be able to calculate how long it will take to pay for this education.
This resource can be accessed at any time during the college decision-making process to point out whether students and their parents are on the right track. You start by selecting two colleges for comparison, and can then share information with others regarding results.
It's about time parents and students took a hard look at the reality of college costs. While college is still considered to be a good investment, it should not be a decision that is made lightly. Parents don't want to sink themselves or their children into a lifetime of debt based on unrealistic expectations. Give yourself a solid reality check now and you won't be surprised in a few years when your now-high school senior becomes a college graduate.