Category Archives: affordology

OK, But What Does “Afford” Mean?

OK, But What Does “Afford” Mean?

I tend to catch a certain sort of article that comes across my radar with fair regularity, such as : “Four Steps to a Debt Free Degree” by financial blogger Jeanie Ahn, which is a rehash of the included video by Rachel Cruze.

According to Mrs. Cruze, specifically to get through college debt-free a student needs to:

  1. Choose a College You can Afford
  2. Seek out all Opportunities for Financial Aid
  3. Work Your Way Through School
  4. Ask Your Parents for Help

I take no issues with articles like these in that they provide a little bit of food for thought to those who haven’t explored even the most basic options to save and earn money for school. I would highly encourage any student to seek out these opportunities in addition to dozens and dozens more that would shave one’s out-of-pocket costs down to reasonable levels. I’m hoping this upstart blog and upcoming book can shed more specific light on some of these over the next few months.

I also wholeheartedly agree with the article’s #1 being #1. Your first step toward an affordable education should be to stay within your means. That much seems obvious. But it brings up a question: Just what does “can afford” mean?

Continue reading OK, But What Does “Afford” Mean?

Understanding How Work Works

Understanding How Work Works

landscapers II

Al & Alicia

Work is Not a Four Letter Word

To this point we’ve focused on the resources available to college students that don’t directly involve any “I work, you pay” transactions. This not because a student should avoid work but because college students uniquely have access to other forms of money not readily available to the population at large. It therefore makes sense to explore those first. Whether or not those avenues succeed I highly encourage college students to pursue work with vigor for several reasons. Continue reading Understanding How Work Works

Family Help: Intro

Family Help: Intro

family

The Temptation & The Fall

Perhaps no single set of financial issues vexes parents of teens more those regarding the funding of college. Decisions to help someone in big ways never come easy, and in this arena parents face immense pressures, internal and external, in addition to their innate desires to get their newly adult kids to a good place.

As a result too many parents fuel their kids’ college careers without much regard to their own needs. In doing so they often ensure their kids don’t have to move back in with them later only to find that later they have to move in with their kids. When parents want to help, how do we know how much is too much? Continue reading Family Help: Intro

School Loans 101 (And a Little Wisdom Thrown In)

School Loans 101 (And a Little Wisdom Thrown In)

overloaded donkey

The Easy Fix 

How are you paying for school? Ask that question to any handful of college students and you will inevitably hear the answer “with loans” from not a few of them. To some degree this makes sense. Said students are broke, college is expensive, and signing a sheet of paper will provide the money to resolve this little dilemma. Scratch, scratch, problem gone. Continue reading School Loans 101 (And a Little Wisdom Thrown In)

Let the Filtration Begin

Let the Filtration Begin

Conversion funnel

What We Now Know and What We Soon Will 

Thanks to the exercises in the previous chapters , you now know three very important things (things most college students have no clue of):

1. The specific experience and environment you want college to provide you…the Rank filter,

2. How much you can pay before you run out of money…the Resource filter and

3. The maximum you should pay in total for the experience to prove financially worthwhile…the Return filter.

Now you can begin the process of searching for colleges or programs that will satisfy all your criteria. Fortunately for us in the internet age students armed with foundational objectives can now turn to a number of free websites to begin the otherwise daunting process of filtering through all their college options. Continue reading Let the Filtration Begin

Projecting Payoffs

Projecting Payoffs

The words Pain and Gain on a matrix of choices showing how to minimize pain or sacrifice in order to maximize returns and results

The Last “R”

So far we’ve explored ensuring affordability by running two sets of necessary filters: how to narrow down your college choices by priority so as to not run afoul of opportunity costs (Rank), and how to know how much college you can your income and assets will allow you (Resources). Now we’ll explore a critical third component to affordability/affordology: that of Return. 

This exercise will help you make two critical financial determinations:

For one, you’ll note in the previous discussions we didn’t address a major funding component of college in this day and age: the loan. Before counting loans as a resource, we must know whether that loan will count as “good debt” or “bad debt.”

For two, even if a student has plenty of available cash resources and thus doesn’t need loans, it still helps considerably when choosing colleges to understand the tipping point at which the cost of a college is worth it or not. Continue reading Projecting Payoffs

Plotting Resources

Plotting Resources

Automated grains food packaging machine production line

Previously in these pages we’ve witnessed the high costs of college, the increasing rate at which for student/family contributions cover these expenses, and the all-too-common specter of fund shortage induced dropout levels. So how do we not fall short ourselves? Here’s what I recommend: Continue reading Plotting Resources

A Prioritized Pursuit

A Prioritized Pursuit

Pinnwand

Rank: Priority of Priorities 

In another posting related to a Chart, I encouraged you to look into colleges with monetary costs as a secondary consideration. That might sound funny coming from a blog dealing with keeping college affordable.

But remember, while you can get anything in life you want, you can’t have it all. Prioritization must be your first priority. Before we get into the actual dollar cost aspects of affordology, let’s firstly address the opportunity cost considerations. Even a cheap experience (money-wise) at the wrong place may prove unaffordable (opportunity-wise). Besides, as we’ve noted, costs are highly negotiable while the other aspects of an experience at a particular college are relatively fixed.

Continue reading A Prioritized Pursuit

Chart: College is a No-Brainer, Right?

Chart: College is a No-Brainer, Right?

NY FED

Above is the sort of chart that drives seventeen million students to college each year and why the rising costs of tuition haven’t put a damper on enrollment numbers. Recently the Federal Reserve of New York published it as part of their paper, “Do the Benefits of Education Outweigh Their Costs?“.

This sort of statistical outlay makes it only seem obvious that going to college pays off. In fact, as the Fed pointed out, on average college graduates will out-earn non-graduates by $1 million dollars over one’s lifetime.

But be careful. Note the word AVERAGE. Any time you see that word, beware the potential effects of the flaw of averages. Continue reading Chart: College is a No-Brainer, Right?

Chart: The Total Costs of College

Chart: The Total Costs of College

Total Cost Graphic

This chart comes courtesy of Adam Zoll, assistant site editor of Morningstar.com, who has been on a tear lately with a number of quality articles related to college finances. His informative series is not only packed with quantitative insights into higher education and related savings vehicles but also the sort of good, broad, and level-headed guidance lacking elsewhere. If you’re in the hunt for money saving ideas, and I suspect you are if you’re reading this blog, you can get some pretty compact advice by checking out his recent articles.

In this chart and article, titled And You Thought Just Tuition Was Expensive, Mr. Zoll points to a major problem for the affordologist: the fact that we cannot overlook the high and ever-rising costs in all things college. According to his sources, the additional costs of college- books, room and board, transportation, and incidentals- tack on an additional $14,000 per year per student on average. That’s not insignificant given that in-state public school tuition tends to run about $9,000 per year. Continue reading Chart: The Total Costs of College