By Mitchell D. Weiss
Suppose for a moment that the student loan crisis is painstakingly addressed the way it should, the ideological debate about interest rates -- subsidized or not -- is exposed as the sham it is, and folks everywhere gain a better understanding of why the private student lenders continue to earn outsized returns relative to the risks they run. We'd still be left with college costs that keep going up, a dropout rate that hovers around 50% and graduates who are unable to find jobs that pay enough to cover the bills.
The fundamental business model for higher education is a melting ice cube as fewer and fewer families are able to afford the increasingly expensive product this country's colleges and universities continue to pitch. And while the schools are slowly waking to this unpleasant reality and beginning to make the necessary changes for their own survival, the evolution to a better state continues to be slow and fitful.
Parents and students often ask me about ways to maximize financial aid or how to borrow money more cost-effectively, when they should instead be asking about comprehensive strategies to cut their overall college costs.
For example, I was able to test out of 12 non-core credits thanks to the College Level Examination Program. I also pushed the boundaries and took as many credits as I could each semester. The combination of the two helped me to finish a year ahead of time, which, when you're paying your own way through night school, was a pretty big deal.
My son was equally ambitious about testing or comping out of his own core-course requirements when he was pursing his two grad degrees while working a full time job.
My daughter's approach will be a variation on the theme. She's currently applying to graduate schools and, as it turns out, there's only one university locally that offers the program she needs. Unfortunately, it requires a two-year full-time commitment and the cost is $90,000 -- for a degree that will likely translate into a job that pays $35,000 per year. (Don't laugh, it's social work.) So she decided to explore her online alternatives and discovered several equally fine programs offered by nationally recognized public and private institutions. Moreover, because these are online programs, she'll be able to do her coursework without sacrificing the career she's worked hard to develop these past few years. As important, the cost will end up at just under $25,000.
The point is, parents and students have several options that are worth serious consideration when it comes to managing the cost of higher education. Some may require more effort and flexibility than others, but the following six strategies have the potential to save a year or more of the cost of a college education today:
- School choice. Consider beginning your educational endeavors at a community college or state school nearby and transferring the credits you earn to the institution whose name you want printed on your degree. Speaking as an employer, if I hire for a position that requires a college degree, it matters less to me where the candidate starts out than where he or she ends up.
- Testing out. Most people have heard of AP tests and even SAT subject exams, but what about CLEPs? Surprisingly, the majority of the college students and parents I meet are unaware of the 33 exams the College Board administers and the more than 2900 colleges that accept the scores for credit. Also, don't overlook the growing roster of affordable and accredited online courses.
- Intersession credits. Semester breaks are an opportunity to take a few courses at less expensive schools close to home and transferring-in the credits you earn. Look into your school's policy governing this.
- Cost per credit. Many schools distinguish between full- and part-time students via tuition pricing. For example, the school where I teach charges a set price for 12 to 18 credits. On a cost-per-credit basis, this makes taking 12 credits 50 percent more expensive than taking 18. Consider scheduling one heavy semester (say, 18 versus 15 credits) per year.
- Grants and scholarships. One of my students told me that he applied for every $250 and smaller scholarship that he could find because he knew that all his classmates had gone elephant hunting. With good writing skills and scant competition, he was awarded more than $3,000 for his first year of school.
- Everything else. Moving out of the dorm after the first year, scaling back the meal plan, sharing textbooks, foregoing the car: these are all things that students and parents can also do to control costs.
As parents and students become better at finding, pricing and negotiating more cost-effective higher education alternatives, the schools will have no choice but to reconstitute their failing business models if they hope to compete for a piece of that other melting ice cube -- the shrinking pool of tuition dollars that consumers are willing to pay.
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates. It originally appeared on Credit.com. Mitchell D. Weiss is a contributor to Credit.com, experienced financial services industry executive, entrepreneur and adjunct professor of finance at the University of Hartford. He is also the author of the recently published College Happens: A Practical Handbook for Parents and Students and Life Happens: A Practical Guide to Personal Finance from College to Career-2nd Edition.