After the joy of acceptance wears off, the daunting reality of paying for your child’s college education sets in. For those lucky students who were admitted to highly selective colleges, the euphoria of being admitted can last a lifetime. Yet, if you’re a parent or guardian of these select few students, it is hard not to spend a couple of sleepless nights considering the big financial picture. /p>
Although the Ivy League and several other prestigious colleges have generous scholarship programs, their scholarships are awarded based only on a family’s financial need. Many students admitted to such schools would easily win merit scholarships at other colleges.
Understandably, you may now be asking yourself if it’s a wise idea to have your child turn down a merit scholarship from another institution and, instead, enroll at his or her top choice school. If you do not qualify for financial aid, you will be expected to invest up to $200,000 in your child’s college education. This daunting figure seems impossibly high, especially when considered alongside the thirty years it usually takes to pay off a mortgage of a comparable amount. Indeed, the price tag of a private, selective college education is equivalent to the national median price of a single-family home.
In 1998, Princeton based researchers Alan Krueger and Stacy Berg Dale concluded that attending an elite college does not always pay off in higher earnings. Focusing on students who decided not to attend an Ivy League school, they found that one’s future earnings correlated most with personal traits like tenacity, networking abilities and intelligence, rather than whether or not one attended an Ivy League institution. Still, Ronald Ehrenberg, Director of the Cornell Higher Education Research Institute, disagrees. He argues that there is a significant economic return in attending an Ivy League institution, a return that only increases over time. With this in mind, here are two questions I ask parents to consider when they cannot decide if paying $50,000 annually for a prestigious college education is really worth it.
1. What will your child’s earning potential be?
If you are considering a selective college only because you believe your child will earn lots of money in the future, I hope you’ll expand your viewpoint. In this tight labor market, having a degree from a prestigious institution may lead to networking opportunities and name recognition that could open doors and lead to increased employment opportunities. On the other hand, there are certain professions where starting salaries and future income potential are controlled by the labor market, unions or government policies.
2. Does your child plan to pursue graduate/professional school?
In this case, you need to expand your timeline to better finance your child’s entire education. Graduate and professional schools rarely give students significant sums of scholarship. With the exception of a lucky few who win fellowships, a student largely pays for their own graduate/professional school education out of pocket or with loans. If you intend to help your child with these expenses, it might be helpful to plan accordingly.
If your child was admitted to a highly selective college, take time to celebrate! When the euphoria wears off and anxiety sets in, take a minute to ask your children these personal questions about their futures and be honest with them about your short and long-term financial plans. Although this conversation may be sobering, it will bring clarity to their college selection. Then, speak with your child’s financial aid officer. This professional can guide you on how to make an investment in the four transformative years your child will spend at college. Without a crystal ball to predict the future, it is hard to assess how your child will grow and change in the next few years—and you cannot put a dollar figure on their intellectual, social and emotional development. Good luck!
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Article by Rod M. Bugarin, Jr., former admissions & financial aid officer at Brown and Columbia Universities, advisor at IvyWise, LLC and ApplyWise