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Five Considerations in Maximizing the Value of the College Education (Both for the Parents and the Students!)

Feb 11, 2022

So, your child or children has received a college acceptance or hopefully multiple ones. Congratulations! Determining how to “maximize value” can be tricky, especially since the parents’ or guardians’ concept of value is not necessarily the same as the student’s. Having put two students through college and advised multitude of parents through similar mazes, I offer these five thoughts.

1. Will the Field of Study Provide the Ability to Amortize the Cost?

So many times, I see constituencies fall in love with a college or university that costs in the $50k-to-$70k range per year, all inclusive. However, given the student’s choice of major, it may take a long, long, loooong time cover the costs. For example, social work and teaching are two of the most noble and awesome professions around, but, given the current state of salaries, it will be hard to pay for cost of an institution outlined above. There are so many colleges and universities that cost less than half of that and, depending on the state and possibilities of in-state tuitions, some possibly around $10,000 or $15,000.

2. Skin in the Game Can Influence Decisions

If your student doesn’t have a clear first choice and one choice is significantly less than others, why not offer to enable the student to share in the savings? As an example: If the state school is $20,000 per year and the out-of-state or private school is $38,000, consider sharing some of the savings. So, if you save $19,000 per year, share some of those savings (say $5,000 per year) with the student. This serves two purposes, if not more: 1) it enables the student to have skin in the game and understand the cost of education, and 2) it gives them some money at the end of the (hopefully) four years to either have in their savings, or to begin to pay down any student loans. What could be better a better gift than having little-to-no debt upon graduation?

3. Out-of-the-Box Thinking

Many, if not all schools, have scholarships and study abroad funding programs that maybe aren’t well advertised. I find that students today are significantly better than I ever was at seeking these opportunities out. Never was I made more aware of this than when my daughter wanted to do some extra traveling from her study abroad program and found a scholarship to fund the travel and research. She found the opportunity by speaking to a mentor where she studied. So encourage the students to reach out – there usually are solutions; it pays to think creatively.

4. Close to Home Versus Taking Flight

My experience suggests that, as the college search begins, the thought and concept for most teenagers is ‘jumping on a plane to attend college far away sounds exciting and cool.’ But, as the search process continues, suddenly many determine that being a few hours by car or train from home is preferable. It’s also important to do your best to give this the attention it needs before enrollment. Suggest your student to speak to friends who have had both good and less-than-stellar experiences in attending a college a distance away. What I noticed is a big and at-times unstated consideration: Maybe the solution is a proximity that isn’t so close that parents/guardians can drop in unannounced. It’s all about managing expectations (for both parents/guardians and students), which is okay.

5. Community College - A Viable Option Exceptionally Worthy of Consideration

For teenagers, making a decision that could affect their entire future can potentially be overwhelming. Some students are just not ready as a graduating senior to make that decision, and there is nothing wrong with that. We all make our way at our own pace. Community college offers students and their families the opportunity to dip their toes in the pool, as little or as much as they’d like and are comfortable doing. And at a cost that is a fraction of what a four-year college costs. One of the best and most important features of community college is that they have arrangements with most colleges and universities in their state where all the credits will transfer.

Next Steps and Two Final Thoughts

We as parents and guardians all have different approaches in discussing finances with our kids. I always believe being upfront serves everybody best. If there is a certain cap on the funds available, let the student know early so great strategies can be developed and considered. There are an enormous number of schools to fill all budgets.
Enjoy all the campus visits! Considering the costs at the outset will hopefully offer more enjoyment-- and a few more sweatshirts and college souvenirs in the budget.

And, in honor of mine/ours: We Are! And: Go Terps!

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Robert D. Katz

Robert Katz CPA is a Managing Director of EisnerAmper Financial Advisory Services Group, and works with public and private companies, in and out of bankruptcy, to create and execute the strategy needed to restructure or improve operating performance.

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