Over and over again, our individual financial counseling sessions with families about college uncover a sense of entitlement that some teenagers possess. These teenagers seem to believe that excelling in high school means that their parents should bankroll a bachelor’s degree in an elite university regardless of how much it costs.
When you couple that with the guilt and emotion that many parents are feeling about their child leaving home or not feeling comfortable about saying no to their child when they’ve worked so hard, the cost of college can actually be a financial disaster for many families.
Back in 1999, there was an extensive study conducted by Stacy Berg Dale and Alan Kruger of whether there was a “payoff” to attending a more selective college. Despite what you might think, it concluded that for the vast majority, it made no difference as far as future earning power.
Admission to elite schools typically only make a difference for low income and first-generation students. These underprivileged students usually attend community colleges and nearby state universities.
The Best Strategy?
- Parents should set their children’s college expectation early. Parents should tell their teenagers that excelling in high school doesn’t mean they can attend whatever expensive college they can get into.
- Here is the wrong message to tell kids: “honey, apply to the schools that you want, and will find a way to make it happen”. Only take this approach if you are willing to accept that this could ultimately turn into a six-figure mistake.
- If money is an issue, the potential net cost of college must be a factor before a child starts the college hunt. No school should be considered as a serious candidate unless parents have run the college’s net price calculator.
- Some parents are just as mesmerized by elite schools as their children. The recent college admissions scandal is an ugly example of that. Some parents crave the bragging rights and will jeopardize their own retirement plans to pay or borrow for an elite school. Seriously examine your motivations if this resonates with you.
- All of the above requires that you start this process well before the fall of your child’s senior year in high school. Start early and make a plan, or the financial consequences could be dire.