Deb and I are about to become grandparents for the second time. Being the financial advisor that I am, when we got the happy call from the kids, my thoughts immediately turned to college, and what it will cost this yet unborn little girl to obtain a higher education.
Having Kayla in college now, I can confirm that for a year at the University of Colorado in Boulder, it is costing us around $28,000 and some change. College costs have been rising at a 7% per year rate for some time now, so assuming this rate of increase continues, our granddaughters first year at an in state college could cost around $95,000. So, a four year college education could end up costing her just south of $400,000! Now, she also has an older brother who is 15 years away from his first year, which could be around $77,000. He might be facing a four year bill of $320,000 or so.
Those numbers are not only unconscionable but also unsustainable. Who can afford to shell out that kind of money for college for two kids? And why would anyone want to start out their adult lives with that amount of student loan debt hanging over their heads?
Higher education is going to have to reinvent itself if it is to remain viable for the average person. The days of needing so many hours of general education classes to graduate are numbered. You can’t spend your first two years taking classes like composition, or biology or algebra at the prices they are charging per hour. If you don’t know how to write, do math or have some understanding of the human body before college, then our public schools aren’t doing their jobs. Electives are also going to disappear. Unless they are free, taking courses like Modern Dance or Sketching are going to be too expensive for people to afford. College is going to have to become “major” focused and bachelor degrees are going to have to be attainable in two years rather than four.
Technology is also going to have to play a part in reducing costs. Why can’t several universities share one professor? The technology is there today to have a professor in one university deliver a lecture to students all over the country at the same time. At most major universities professors deliver the lectures and TA’s (teaching assistants, usually grad students) meet with the students in smaller classes to provide further understanding of the lecture. Keep the TA’s, share the professor and save professor salary costs.
Room and board costs are more than tuition and books. I think that the “living away from home” experience is good and after living at home for 18 years most of us are ready for our kids to move out anyway. Colleges are in the business of educating, not the business of lodging or food service. Why not turn that part of college over to someone who knows that side of the business. I believe that Marriott could run the on campus housing and food service cheaper and better than any university can. I know in many places, food service is contracted out so why not the lodging too?
Unfortunately, changes won’t come until costs hit the point where parents don’t see the value and stop sending their kids to college. Once attendance starts dropping, then these institutions will begin taking a look at themselves and the product they are providing and make the necessary changes to bring college costs back to a level most people can afford.
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
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