College Choice 101

Continuing your education after high school is a major decision. There are many options to choose from, including apprenticeship programs, military service, community and technical colleges, or four-year public and private universities, among others. It’s true there are many things to consider, such as:

• What are the academic programs like?
• How did you like the campus when you visited?
• Is it far enough from (or close enough to) home?
• How much does it cost?
• What kinds of scholarships are available?
• What kind of a job can you get when you’re done?

Additional education is a big investment of your time and money, so it’s important to select a program of study that allows you to utilize your strengths, find opportunities to do work you find satisfying, grow professionally and personally, and, of course, obtain employment. In this episode, we’ll focus on some aspects of choosing a four-year college or university.

One of the first things to consider when choosing a college is what you’d like to study. Knowing your skills, interests, and aspirations will help you choose a major and program that’s a good fit for you.

The Bureau of Labor Statistics Occupational Outlook Handbook (BLS OOH) is an excellent source of information on jobs, including education requirements, work environment, median income, projected growth rates of occupations, and other data.

It’s a good idea to think about your interests and to take some skills assessments and interest inventories if you can.

After that, you’ll want to compare the cost of a four-year degree at all of the schools you’re considering, and then compare those costs with the projected future income for majors you’re interested in pursuing. This can help you predict what portion of your future income you will need to allocate to student loan payments after you graduate. We’ll compare salaries later, but first let’s look at tuition at two, four-year universities: one private and one.

The College Board publishes information about the costs of college and the changes over time.

(Source: The College Board’s Trends in College Pricing 2017.)

We’ll use the College Board data for our example. The private university’s tuition, with room and board, is about $49,870 per year—which is $199,480 for all four years.

On the other hand, the state university is about $21,950 a year for tuition, with room and board–or $87,800 for four years, still a lot of money.

The totals don’t mean you’ll pay the full amount out of pocket at either college, though. Few students pay full price…and few students pay nothing at all. This is because most qualify for or earn some financial aid in the form of scholarships, grants, or work-study. Private schools often have more money to offer students in the form of grants and scholarships than public universities do—often this can make the actual cost to attend similar for most students.

To help potential students, most colleges have a tool called a Net Price Calculator on their website that will help you estimate what it will cost to attend that school, based on your particular information. In addition, the U.S. Department of Education has a terrific website called the College Scorecard.

There, you will be able to figure out

• how much the average student pays at a given school,
• the school’s graduation rate, and
• the average rate at which students are able to repay their student loans.

The tuition price is only part of the story, though, so let’s talk about the other side of this equation—your projected future income. Evaluating projected income will give you an idea of how long it’ll take to repay a loan and how much interest you’ll wind up paying over the loan term. When you do your own research, you can use the BLS Occupational Outlook Handbook, or other sources, to find specific salary information for jobs. For this example, we’ll assume your chosen occupations are computer science, social work, and art & design. We’ll say you would earn an average income of $80,000, $45,000, and $50,000, respectively.

When people borrow to fund their education, they typically have to begin making loan payments when they graduate or stop attending school. According to Experian, one of the major consumer credit reporting companies, the average American carries $35,000 in student loan debt. We’ll create a chart using $35,000 as the principal or initial loan amount. We’ll show the payoff period and interest paid if you devote 10% of your estimated monthly income to paying off your loan. We’re going to assume a typical 5% student loan interest rate and use an online calculator to figure out the total interest paid and the time it will take to pay back the loan.

You may wonder how this information is helpful. For one thing, it can help you evaluate the options when you get your financial-aid package from colleges, and it can give you a sense of what college is actually going to cost.

Now that you know how to do some “cost of college math,” you might want to use some of the great calculators available online.

A pretty campus and awesome intramurals are nice, but when it comes to the bottom line, you’ll be wise to prepare with research so you know what college is going to cost, and what you’re likely to see as a return on that investment.

Be sure to check out our video on different types of college loans and grants.