The current debate in Congress about hiking the student loan interest rates has once again raised questions for America's families about the affordability of higher education. Families' concerns are real--an investment in higher education is one of the largest commitments they will make for their children's future. And private higher education, in particular, is often singled out as being too costly--and presumably out of reach--for most.
However, the facts say otherwise. A private college education remains affordable for students from all backgrounds because these institutions offer significant help through grants and scholarships, including scholarships that are not based on financial need. So for the majority of families, the net cost is far less than the listed "sticker price" for attendance. According to the College Board, in 2012-13, the average for net tuition and fees at private four-year colleges was $13,380, less than half of the average published tuition and fees of $29,056. Furthermore, grant aid and tax benefits averaged approximately $15,680 for full-time undergraduates at private colleges.
In spite of what is often presented in the media about student loan burdens, with stories quoting debt figures as high as $100,000, a 2012 study by the Federal Reserve Bank of New York found that only 5.4 percent of all borrowers (undergraduate and graduate students across all sectors of higher education) had student debt of more than $75,000 and only 11.3 percent had debt of more than $50,000. Among bachelor's graduates from private colleges, the total average debt per borrower in 2011 was $29,900, compared to $23,800 for borrowers from public universities, according to the College Board.
Factor in that 78 percent of students who received a bachelor's degree from a private college graduated in four years (compared to 60 percent of their peers at state universities), and a private higher education is an even sounder investment. Private college graduates have the advantage of avoiding extra years of tuition and getting on with their careers.
What can a family do to ensure that a higher education, and especially a private education, will be possible for their student?
- Start saving for college early through investment in programs such as 529 plans, which also include some significant tax benefits. By creating an account while your child is still small and adding to it regularly, these funds will grow and provide substantial support for paying college costs.
- Conduct a thorough search for scholarships for which your student is eligible. The U.S. Department of Education's scholarship website, one of many such sites available, lists a free scholarship search tool and other advice on applying for these awards.
- Check out the Net Price Calculator on every college's web site. This financial aid estimating tool helps you determine how much you may be expected to pay and your eligibility for aid, a good starting point for creating a college financing plan.
- Openly discuss your family's financial realities and expectations for your student's role in paying for his or her education. Student earnings from work during the summer and the academic year are an important contribution in making college affordable.
As your college search gets under way, you should look for those institutions that will be the best fit for your student in terms of academic offerings, enrollment size, and special opportunities available--regardless of sticker price. Once the list of prospective colleges has been narrowed and the applications have been sent in, you should file for financial aid and then carefully compare the financial aid awards, evaluating what is offered in scholarships and grant aid and what is offered in loans.
When you have questions during the financial aid application process, ask for help and advice from the colleges' financial aid staffs. At Albion College, where I am president, our financial aid staff sees this process as a partnership and will work individually with families on reviewing all of the college financing options available and determining what works best in their particular circumstances. Such personalized help is readily available at most private colleges.
The value of a private education, of course, extends far beyond the financial investment families make and even beyond our graduates' career success. The quality and depth of the relationships among students, faculty, and staff at small private institutions is especially evident at commencement time. At Albion's commencement ceremony, our faculty and students share handshakes, hugs, and smiles over what has been accomplished in the past four years. And in the years ahead, these students will invite their faculty mentors to their weddings, share their latest news via social media, and return often to campus for visits. You can't put a price tag on rewards like that.