Attending college in the United States is awfully expensive, which is one reason that we have $1.2 trillion in student loan debt outstanding in America.
The average four-year public school in the U.S. is about $20,000 and the average four-year private college or university carries a price tag north of $40,000, according to the College Board.
As if those prices aren’t high enough, some families are struggling to pay even bigger college bills. That’s because dozens of the country’s top schools are now well above $60,000 per year.
What exactly is going on here?
There are at least 3 reasons for the growing cost of college in the U.S., as well as the ever-rising student loan debt problem in America:
First, there’s the supply and demand issue.
Most U.S. families place a premium on education and getting a degree is part of the American Dream.
Colleges know this, so they keep jacking up prices because they can; they know that parents will sacrifice almost anything to send their kids to “good” schools.
In other words, top U.S. schools are in high demand, therefore they can charge high prices.
Second, there are a lot of “hidden” costs of college.
Everyone knows about tuition, fees, room and board.
But most families don’t account for living expenses – like the price of having a car on campus, which can run anywhere from $500 to $1,000 a year.
Other hidden costs range from tuition inflation each year to the cost of a 5th year of study to tuition differential charges and what I call “sucker” fees … things like late charges, so-called one-time fees and other expenses colleges impose on students.
In my new book, College Secrets, I explain dozens of hidden costs of higher education. College Secrets reveals how to save $20,000 to $200,000 over the course of a four-year education.
Schools are constantly trying to one-up each other.
American schools always trying to hire the “best and brightest” faculty members, staff and administrators — all of whom are very expensive.
Plus, U.S. colleges and universities have major construction campaigns going on all the time. They’re building new dorms, athletic stadiums, auditoriums, class facilities and more.
Who pays for this? Students and their parents, of course.
Alternatives to Student Loans
The good news is that in order to avoid student loan debt, students have 5 good alternatives/options:
– Paid Internships
– Work Study Programs
– Family Resources
Scholarships and grants don’t have to be repaid. Internships and work study programs require some sweat equity on the part of the student; and that’s a good thing. The education is for the student’s benefit, after all. So it’s not unreasonable for him or her to have some skin in the game.
And then the family’s resources – think money from Grandma or your nice Uncle Billy – can also come in handy when it’s time to pay for college.
A word to the wise: when planning for college, tell those nice relatives to help out with the college fund you might have (a 529 plan is a good start), rather than sending money or buying gifts for birthdays and the holidays.
Other Creative Solutions to Lower College Costs
If a student or family still can’t afford college, there are some creative solutions:
Use the “two step” option: start at a community college, then transfer to a 4-year school. It’s a lot cheaper that way. But just be sure you credits will transfer.
Consider going overseas; you can earn a degree at much less cost than the U.S. or even go to college free of charge in places like Germany.
Investigate “tuition free” colleges or “work colleges.” Both can help families save a ton of money on tuition and fees.
When it comes to paying for college, you don’t simply have to fork over a ton of money or take out loans. Good options exist for those willing to put in the time, research and effort it takes to minimize higher education expenses.
Don’t Forget to Apply for Financial Aid for College
One final tip: never, ever fail to fill out financial aid applications, like the FAFSA or the CSS Profile.
Even if you think you won’t qualify for aid, fill out those forms!
Some schools won’t even give you merit-based scholarships unless you’ve applied for need-based financial aid.