A New Tool in the College Selection Game

November 07, 2014

With one daughter in college and two boys following her down that path over the next decade, the whole concept of “bang for your buck” regarding college costs hits rather close to home right now. Every parent would be pleased to learn that their child got accepted into Ivy League schools. Fewer would be pleased when the tuition payments came due!  And after graduation, when the total cost of the education was known and a child with a liberal arts degree went into a job market that isn’t currently rewarding, that type of degree from there would be even less joy. 

I have met far too many 20-something year old people over the last few years who have over $100,000 in student loan debt and almost no hope to pay it off in any time frame that seems rational to me.  Almost unanimously, they have regrets about their school choice and wish that they had been more strongly encouraged to factor cost into their school selection. As a parent, I try to encourage my kids to pursue their dreams and passions.  Fortunately, I also like to talk about parameters and boundaries so when my daughter was choosing a college, I brought the cost factor into the discussion.  She has known since age 4 that she wants to be a teacher and that she was going to be an early childhood education major in college. Because her starting salary isn’t going to be $1 different if she has a degree from Stanford or Harvard or a local state college, paying a premium for her education didn’t seem to make a whole lot of sense to me…or her.

I sense a shifting of the tide going on out there. Up until a few years ago, most parents I talked to wanted their children to be able to go to the school of their choice, regardless of cost. If student loans needed to be a part of the plan…so be it. Even when the loans could top $100,000 parents had very few objections to it.

Since the financial crisis of ’08, I am seeing fewer parents have a “you name the school, don’t worry about the price” philosophy.  A new reality is setting in and more parents are encouraging their children to explore many different options. Starting at a community college and then transferring to a 4 year school is one option. Starting at an inexpensive state school and then transferring to a more expensive/prestigious school for graduation is another option.

There is a Social Mobility Index ranking that intrigues me as well.  This ranks some very expensive, elite schools well toward the bottom of the rankings because of the cost.  Some more affordable schools that help students graduate with smaller debt burdens, better employment prospects and the ability to move from economically disadvantaged into a more economically mobile state show up toward the top of this set of college rankings.

It’s a relatively new ranking, so not all schools are represented and as they continue to gather data, these rankings will morph into an even bigger and more useful piece of information.  I’m excited to see that the economic reality of school choice is being addressed in a serious way.  Unlike Congress, individuals have a debt limit that they can’t exceed without it being disastrous.

As the cost of college continues to rise and the landscape of education evolves, one thing that parents and students both need to become more in tune with is the overall economics of school choice. Does the child’s major directly translate into a job opportunity and does a higher level of school equate to a higher post-graduation income? If that’s the case, as in engineering, spending more on the degree can be an economically sound decision.  Does the degree not matter so much until a master’s degree is attained? If so, then cutting the cost of the undergraduate degree and excelling in school in order to get accepted to a top tier grad school could be the strategy.

There are a lot of factors to consider when choosing a college. I’m still looking for the “perfect solution” that can help parents evaluate their children’s interests and aptitudes and help direct them to a college and major that would ensure that the child graduates with a useful degree, finds immediate employment and walks away without a crushing level of debt. I have not found that tool yet. But this Social Mobility Index ranking gives us all another tool to help us think through an important decision in the lives of our children.  Adding this or reviewing the leading candidate schools for you or your children can help you make the best choice possible for your family.