Maximizing the “Value” of a College Education

And I wish that I spoke to you sooner before I started this journey and trying to sock some money away for college. So I would love to hear some of your thoughts about this topic. So I'm just going to jump right into the questions. So tell me, when it comes to college savings, will the field of study provide the ability to amortize the cost of college?
RK:Matt, it's a great question. And so making it, like you just said personal, I have a daughter and her goal in life was to be an elementary school teacher and she is successfully doing that. And when we got into college discussions, we talked about whether private or public school would be best. And we talked about the finances. Right?

If it's a private school and it's $80,000 per year, it's much tougher to amortize that over a teacher's salary than if it's $30,000 per year. And you can take that to, again, it's as noble a profession as there is. Social work, the same thing. So when I talk to parents and kids, it's whatever you're going to do, can the job you're going to get, the career you're going, can it pay for itself? And if you have a career that includes graduate school, you take that into account too.
MK:So amazing. I read your article. You had an article that got into preparing for cost savings for college. And in your article, you discussed what's called the skin in the game and how it can influence decisions. Can you explain the importance of having skin in the game? And what's the best approach to actually talk to your children about this?
RK:I always say is like with handling clients the best way is to start out for the beginning and establish expectations. And so when I think about at it again, friends of ours where I said, look, I had, when I went to college, I had to take out a loan. And so generally I advise students as well as parents and mine too. I said to both my kids, "You're going to take out loan, right?

Fortunately you don't have to, or the parents don't have to, but I want you to have skin in the game." I said, "Who pays it back we'll talk about after your four years and how well you do. But for the moment, you should see it as yours." And the best example, when you talk about early responsibility is again, you go for registration. If you don't sign your loan at whatever university, they'll cancel your registration.

So if the parent makes their payment and there's still the loan outstanding, and this student doesn't, they'll cancel the registration. And I've said to students when I get a frantic call, I said, "Look, unless you want that 7:30 or 8:00 AM class, I suggest you make your way to the financial aid office. They'll help you. They're set up to do that. But you have to find it because your parents have paid their share. It's now up to you."
MK:So important, right? That skin in the game. So I appreciate that dialogue. Getting into parents here, and in your article, you mentioned something about out of the box thinking specifically when it comes to scholarships.

So how can parents and students think about out of the box thinking when they're looking for scholarships, right? Because college payments are so important today and scholarships are out there. So how do parents and students think about out of the box thinking when it comes to scholarships?
RK:I find the youth today because I'm now very experienced and less youthful have a better understanding of what to try and seek out better than I did. And so at any university, whether it's for foreign aid or if you want to travel abroad, there are scholarship programs and endowments to help students do that.

It's finding the time and making the ask to do. And then it goes to, if you're going to study abroad, right? Are there other places you'd like to go and is there a funding source to do it? And then is it the parent that's going to fund it, the student, do you do a matching, right? If your student finds a scholarship for $2,000, will you match it?

When I think about diving back a moment, when we talked earlier about amortizing the cost of college, right? I think about again, an example for me is you want to be a nurse and there are programs that are double the cost. You can't study abroad because you may not have the money and you'd love to do it.

It's like taking out a budget to seeing what can you afford and how much do you want to contribute and where do you want to contribute it. Matt, one other thing too. And to me, it goes to whether the parents can afford to or not. And it's always debatable in a good way. Just because a parent can afford to pay four years, hopefully that's really great, again, sometimes it doesn't mean they should.
MK:Yeah. I think it's important. When I have conversations with my daughter, when I use the word skin in the game or out of the box thinking, it's really to kind of get her to take on some of the responsibility in navigating this process because she is choosing her study, right?

She chose the school that she wants to go to. She made a choice to actually go to a private school over a public universe because of the field of study. So looking for those additional monies, like scholarships is so critical to reduce the burden on parents, as well as the students. So I love what you were talking about the skin in the game.
RK:But a lot of times too, if you think about the way a college loan works, right? That everything is fine and then now you're at your fourth year, you've taken out the loans, you get an email from whatever governmental agency that says, "Congratulations on your graduation. It's now time to pay back your loan." And you'd be amazed how many times a student has no clue that they actually have a loan and what does that mean and how are they going to pay it back.
MK:The article talked a little bit about close to home versus taking flight, right? And my interpretation of that is a student staying close to home, possibly living at home versus going farther away from school. What's your thoughts on that? Can you explain a little bit of that?
RK:I can. And again, I can use some of the dynamics and examples where the people that I've spoken to, including my son, right? He thought initially when he started the process fall of his senior year, we go on college visits. Jumping on the plane, being away was really a cool thing in his mind.

And as he thought about it, as he did his research, all of a sudden being close to home was a much better fit for him. And close meant far enough away that mom and dad couldn't drop in unannounced, but close enough where he could easily get home by car or train. And it's just really important that students understand that.

And again, living at home, right? I always say people find their own way, right? Living away allows you to grow up very quickly. Some students are good for that, some students are not. And it's just looking at the decision tree on all accounts. And so when your student says I'm ready to go to Arizona and they live on the East coast, that's always fine. Just to me, it's to make sure they really understand what that entails.
MK:I think it's so important. When we did college visits with my daughter, we live in Connecticut, we went to Florida, we went to other places. We did the whole New England tri-state area. And at the end of the day, she actually chose Connecticut, which is close to home for all the reasons that you mentioned.

And I do think it's important before parents and students choose the school that they're going to go to, that they do take trips and they understand the timing that it takes either car, train or a flight to go to school and the comfort level around that. So that's really good.
RK:And especially if the climate where a student is going is different than the climate they live in. So for instance, if you grew up in Georgia or Florida and you love the Big Ten and looking at Indiana or Michigan, because you're a Big Ten person, right? To me, you really want to go there like in February. So you can really understand what cold and 32 inches of snow is about.
MK:Very good point, Robert. Very good point. And in your article you mentioned the not shaking community colleges here. So I know it really helped me starting my educational journey. What is your thought regarding community colleges? Is it a viable option worth consideration for both parents and students?
RK:So I think it's a tremendous option. I think because the way community colleges have worked when I was much younger and continue to work is they allow as a fair price as anything, right? A reasonable way because all the credits transfer to wherever somewhere else within that state. And that's what makes it so attractive, right?

If credits, so in Pennsylvania, they will transfer it to every state school just about all of them. Because it's a feeder system and if they didn't transfer, then it would not support the mission. So you can go, it's a fraction. And at the end of the four years, I remember this in starting out my career where people that I started in an accounting firm with started at community college transferred to.

Again, I'm from Pennsylvania. So they transferred to La Salle, they transferred to Villanova. And instead of paying at the time 45,000 per year, their first year or two of college was five to $8,000 per year. They start at the same spot. And so it's as valuable and cost effective as you'll never find.

And then the one other thing which also goes to, I think, a parental, the pressures of life that we're all under and sometimes in Ivy league school may not be the best fit for the student. And understanding that there are many alternatives for a variety of reason. That you may get into an Ivy league school and that's got all the cache, but there may be better fits along the way and they end up in the same place.
MK:I think that's great. Robert, first of all, I want to thank you. You brought up so many important topics here, right? Look at the college expense and work with your accountant to maybe amortize the cost of education. So important. Think about skin in the game and getting your children involved in paying for college so they take it extremely serious.

Think out of the box when it comes to scholarships, right? And don't just think of tuition, but think of the other things like going overseas to experience other things. And then close to home versus flight, what does that mean, what is the cost involved, the comfort level of the children and traveling.

And the last piece that you talked about is community college and looking at that as a viable option for cost savings when it comes to college tuition. So Robert, I want to thank you so much for taking the time out and talking about this and being part of our podcast series. It was a pleasure talking with you today. And if you would like to have more information, we have plenty of information on our website. So please visit EisnerAmper.com/ciop or EisnerAmper.com for more information.

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