A friend, Peg, works at a small liberal arts college. Her son is entering his Sophomore year at another small liberal arts school. She weighed in on our college plans:

I am aware of your family position about funding college, and I’m not going to try and change your minds.

I just wanted to play research librarian here for a minute and supply you guys with some information about college costs and what that might mean for Tannah’s future. I imagine that some of this background information isn’t something you are necessarily aware of, especially as Tannah’s is your first experience with the crazy college process. I know I had to educate myself about it when we began this process with my son.

As you guys know, I’ve been informally helping Tannah with some of her college process.  We’ve been discussing her financial options, which is a good conversation to be having at this point in the game. I am aware of your family position about funding college, and I’m not going to try and change your minds.

So first, a little historical perspective. In August, Bloomberg reported that college costs during the last 30 years have risen many times faster than the rate of the consumer price index, far outpacing inflation of consumer goods, medical expenses and food (http://www.bloomberg.com/news/2013-08-26/college-costs-surge-500-in-u-s-since-1985-chart-of-the-day.html).

The current cost of a college education is over 500% higher than it was in 1985, according to their data. As an example, in 1992 (which Tannah informs me is your year of graduation) the yearly University of Nebraska-Lincoln in-state tuition was $2,040, at a four year cost of ~$9,000 (Nebraska Wesleyan was almost $5000 more).  UNL’s current four year cost of attendance is $72,624, for in-state students–a nearly 1000% increase (not that Tannah is interested in attending UNL, but as a point of comparison).

When I graduated in 1987, I had about $2000 in student loans to pay off, my husband had a similar amount. Average student loan debt in 2012 was around $27,000 (see this Money page for particular numbers–http://money.cnn.com/2012/10/18/pf/college/student-loan-debt/index.html). With some of the schools Tannah is looking at, she could easily, even with the full amount of scholarships, graduate with $80,000 debt for four years.

The implications of having college graduates weighed down by this amount of debt as they enter a very tough job market (unlike the tech boom we graduated into in the 90’s) are, as I’m sure you can imagine, kind of scary. According to the Bureau of Labor Statistics, the August 2013 unemployment rate for recent college grads is 4.5% (for high school grads it’s more like 11%).

The typical starting salary for humanities and social sciences graduates—which is where linguistics, what Tannah is planning on studying lives– is $36,988. – See more at: http://money.cnn.com/2013/01/10/pf/college/graduate-salaries/index.html#sthash.ZbF1ujv5.dpuf

Costs of living in Chicago being what they are, a student like Tannah won’t be able to give over a large amount of that income to repaying those loans, which will drag the process (and the interest costs) out for a long time.

Even with relatively low interest rates, it can take students many years to pay off that debt. This is a factor in many students living with their parents after graduation, especially if they have trouble finding paid work.  There’s been a recent backlash against unpaid internships, as an aside, because many employers are using them as a way to have labor that they don’t have to pay salaries (or benefits) for.

In the current environment it’s very difficult for grads to find jobs in their chosen fields (even “lucrative” ones like computer science and business) right after graduation.  Many grads have to take what jobs they can find, sometimes working one of those unpaid internships and a minimum wage job at the same time while they wait for a “real” job to open up.

It’s not unreasonable to think that Tannah can fund part of her tuition with scholarships. UNL (as an example), being a state university, does offer full-ride scholarships, but only to high achieving in-state students. The other scholarship offerings they have (again, as an example) appear to cover a third to a half of that cost, which is pretty typical these days of colleges and universities. Elmhurst’s highest scholarship amount is $20,000 per year (offered to students with a 29 or higher ACT), which is a little more than half of our total cost of attendance.

Lawrence University’s highest scholarship is also $20,000, which is less than half of their total cost. Lawrence (and to degree Knox and Beloit) is a little cryptic about their scholarship-granting criteria, but they also usually give them out to kids with high ACT/SAT scores, kids with perfect or near-perfect GPA’s, or kids with something unusually interesting about them—they contribute to campus diversity, or have some artistic contribution to make (which is one reason I have been encouraging Tannah to submit an acting video with her applications) or another one of those ineffable factors.

To be frank, and this is nothing new to Tannah, her GPA and test scores aren’t going to sit in that upper tier for scholarship consideration. Here at at my school, for example, Tannah may qualify for the smallest scholarship we grant—The Founders—which is $8,000-$13,000 a year, depending on where her last SAT score ends up. Tannah also informs me that she is seeking outside sources of scholarship money, which is a great idea. But even a best-case scenario will not get her a “full ride” anywhere.

Tannah’s financial aid package from the schools where she gets accepted is likely to consist of a small scholarship or two, at Knox I think she should qualify for their Chicago Scholarship, plus Federal Student Loans (not really “financial aid”, in the traditional sense). Most of the liberal arts colleges Tannah is applying to are in the $38K-$49K cost of attendance price range. She will need to look at other funding sources, most of which will be federally guaranteed loans.

Let’s say Tannah gets a job to help supplement her costs. After all, I worked part-time jobs during college, as I am sure you both did as well. Speaking as someone who advises freshmen, I usually tell students who need to work that they should stick to fewer than 20 hours a week, especially their first couple of semesters.

In my experience, adjusting to college is a full-time job in and of itself — students need to learn to manage their time, learn to study, and get connected to their school culture (a very important part of being a successful student). Trying to have a job on top of that adds a level of stress that, frankly, some students can’t handle.

Many of the students I have taught/advised over the years here who are struggling (or failing) are the ones who are trying to hold down full time (or nearly full time) jobs outside of school. Tannah won’t qualify for Federal Work Study, which is need-based, and most campus jobs go to Federal Work Study students first, with other students considered if there are still openings.

If Tannah gets a 20 hour per week minimum wage ($8.25 in Illinois) job (either on campus or off) she will net about $150 (roughly) per week. I’m not sure what the monthly installment payment would be for Lawrence, but it’s surely a great deal more than $600 a month. Tannah might be able to pay for part of her costs this way, but realistically speaking she will still be looking at a great deal of debt. Plus, if she works off campus, she will have the added stress of an employer who may not be supportive of her putting her education first. If she does qualify for scholarships, they will likely require her to maintain a particular GPA to keep them.

That can get tough when balancing a job and classes etc. I’d also reference the unemployment number for high school grads I mentioned earlier. Her odds of actually finding a part-time retail etc. job are not all that great.

My last point here is going to be a little bit of a pitch for a liberal arts education. Because I can imagine you looking at these numbers and thinking, hey, maybe Tannah should just go to ITT Tech or something :) –or a state university—I’ll get to that in a minute. Liberal arts colleges are pricey.

But my experience—both working for one and sending my son to one—is that they are definitely worth it. Liberal arts colleges provide the optimal environment for kids like Tannah to thrive—they are small, personal, and allow students to really learn the important things in life—how to read, how to write, how to engage. Employers, when questioned, want the skillset that a liberal arts degree gives, even more than some specific training in a particular set of job skills. I’ve attached a report (“Raising the Bar: Employers’ Views on College Learning in the Wake of the Economic Downturn”) which sums this up nicely.

That said, last night I advised Tannah to take a look at Illinois State University (in Bloomington) as an option. I think that school would be the best fit out of the other state schools, especially since she was turned off by the size and impersonal feel of U of I. ISU is smaller and more liberal-artsy.

I know kids who go there and they have a good theater program as well as options for Tannah to study Linguistics. They are less pricey than her other options ($22K in-state), and although that amount will not guarantee her graduating with no debt, it would be less. I think she can do the major/emphasis that she is interested in, and it’s a two hour train ride from Chicago. If you guys get a chance to visit I would recommend it.

College isn’t really an optional path anymore. For people of our generation, it was, still, more or less—you could still have a decent job/career in fields that didn’t require a college degree. That’s’ not really true anymore, and while a college degree is no guarantee of prosperity, not having one is a serious detriment. David and I have decided that paying for college is an investment in our kids’ futures.  So they can take care of us when Social Security gets used up by the boomers. :P

As I said when this “white paper” :) started—I’m not trying to change your minds about your family decisions. I just want to make sure you have as much information as possible. If you have any questions or would like to talk to me about my sources (I included as many links as I could) or my perspective on what a liberal arts education has to offer students, please let me know. Tannah is a bright, good kid with a ton of potential and I care about her also and want to help make sure she has the best start possible in whatever small way I can.

Warm regards,

Peg

2009 Survey of Employers about College Grad Preparedness

About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

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