Guest post: 6 ways students can deal with rising tuition costs

Syndicated courtesy of Hat Toss

According to the Department of Education, if tuition costs continue to escalate, come 2016, the average price of tuition for a public college will have more than doubled in just 15 years. The New York Times recently reported that 94% of students who earn a bachelor’s degree borrowed money to pay for their education costs. And along with tuition costs, loan interest rates are rising as well. So, assuming you want to enroll or already are enrolled in a college and plan to borrow or already have borrowed money for your education, what are some ways you can deal with rising tuition costs and loan interest rates?

1. Realize that colleges are not going to warn you about student debt:

   
   
   When it comes to providing potential students with financial guidance, especially the total cost one can expect to pay in loans and interest after graduation, some schools are more straightforward than others, with for-profit schools being the least transparent. You will rarely see a warning about student debt in a university’s brochure or on its website. Be aware that both public and private universities are trying to sell you something, and that the information they provide regarding costs, financial aid, and even job prospects may be purposefully misleading.
   
   

2. Plan ahead:

   
   
   
   
   You have options for paying back a loan, and planning ahead how much you’ll need to pay monthly until your loans are zeroed out can help you determine which option is best for you. For federal student loan debt, the default standard repayment plan requires you to make 120 equal payments over 10 years. A guaranteed plan allows you to make lower payments in the first few years and higher ones later, with interest rising over the term of the loan. Extended, income-based, and income-contingent plans are other options available to those who take out a federal student loan. Before taking out a private loan, which will have a variable interest rate and can end up costing you more than you can afford, be sure you’ve investigated your options for scholarships, grants, and federal student loans.
   
   

3. Apply for aid every year:

   
   
   
   
   It’s in your best interest to apply every year for financial aid, even if you think you don’t qualify. Changes in your and your family’s financial circumstances, including a sibling enrolling in college as well, can impact your eligibility for financial aid. Be aware of and calendar out application deadlines so you can submit all the necessary paperwork in as timely a fashion as possible.
   
   

4. Create a post-graduation emergency savings fund:

   
   
   It’s never too early to begin an emergency fund, especially one for the first three, six, or 12 months after you graduate. Having savings in place that you can draw upon for rent, utilities, food, and other life expenses will allow you to use the money you’re earning at your first post-graduation job to begin paying back your student loans. If you don’t immediately find employment like so many college graduates, your emergency fund can help sustain you while you hunt for work.
   
   

5. Apply for Federal Student Aid:

   
   
   There are inexpensive federal funding options available to you through the Free Application for Federal Student Aid (FAFSA) website. Some federal funding options are not dependent upon financial need. Interest rates range from low to high, but there’s no charge to apply.
   
   

6. Federal loan forgiveness programs:

   
   
   
   
   Under certain conditions, the federal government will cancel part or all of a loan. To qualify for loan forgiveness, you must perform volunteer work, military service, teach or practice medicine in certain types of communities, or meet other criteria outlined by the program. The Federal Student Loan Repayment Program also allows federal agencies to establish loan repayment programs for their employees. Talk to your employer to see if they have such a program in place.

Why the cost of education should be marked to market

Image attribution: Lumaxart; CC BY SA-2.0

At the undergraduate level, a degree in accounting costs the same as a degree in journalism. Yet, according to the Daily Beast, a degree in Journalism is the most useless degree to have (wiping my forehead, good thing I have two degrees in philosophy!) Having said that, there is a real societal and economic issue underlying education costs. Basically, undergraduates are not getting an education marked to market, which basically means the value is not measured in terms of actual worth.

Skeptics would argue, if degree costs were measured in terms of worth, professors in low-valued fields would not work because the pay is so low. Really. Has that been proven or is that just speculation? From one perspective, life is more than just money, actually, much more than just money and some might just be passionate to share some things in life regardless of compensation. How do I know this? Quite simple, I've been writing for over five years and have a very low income.

What if education were marked to market, what then? For starters, the debt to income ratio of creative types who choose to learn about their fields would be more manageable. That isn't so bad is it? Oh, actually it is for those who only care about money. For those people, who I relate to at a substantial level, follow the smart money. Makes sense, following the arts is not typically being in the path of smart money, unless it's coming from George Lucas, Jean-Louis Gauthier, or William Shakespeare. So if you want to teach art and make a living, have a lot of faith in life. Otherwise, focus on the money ball.

There is another real economic problem to marking education to market however. Specifically, if all education costs were marked to market, only a handful of degrees would really be worth a great deal. In such case, and assuming many degrees would be valued at far less than their actual present costs, the economy would be affected significantly. For example, professors could be on food stamps, perceptions of education could lower enrollment causing the revenue of educational institutions, and the quality of educational programs to decline. If economics is the focal point, then yes, that is a big deal; but what if it isn't?

Economic models are not fool proof, and the field of economics is one of many that applies mathematical formulas to sociological constructs.  This is why economics is not considered a science, and what is not scientific is not absolute, therefore economics is not accurate. Also, measuring worth is not quite that simple as a survey of the career paths of thousands of former students would need to be tracked to create any sort of statistical significance to the valuations. It would also be challenging to isolate the exact influence education has on wealth apart from other variables such as luck, personality, motivation etc.

Even if economics were a science, which at basic levels it is, the scenario does not bode well materially. For example, Jeremy Grantham, a well known fund manager, thinks "grandchildren have no value" because of the unsustainable course of current economic practices according to John Elkington of the U.K. Guardian. Indeed, Grantham has clearly illustrated that constant growth is impossible with finite resources and demonstrates this using simple mathematics. This is reiterated by Henry Blodget of Business Insider who summarizes Grantham's reasoning as essentially this: "One cubic meter of possessions at a growth rate of 4.5 percent per year for 3000 years is equal to 10 to the 57th power."

The economy is a fragile mechanism that millions of people depend on to live and thrive. That's no small potato in an existential world where 'actual living' is a legitimate concern. In such case, humanity and common sense draw lines where economics might not. Specifically, minimum values of educational worth similar to minimum wage of labor. Makes sense doesn't it? No degree is worth nothing, and everybody is on Earth for a reason, so why stand in the way of life when it such a good thing? In other words, undervaluing education is just as bad as overvaluing it because it slows progress, and decreases the quality of education.