Is postponing college a smart financial move?
By Nicholas Pell/MainStreet.com
College costs more than ever and job prospects in your field are likely low. Unless you plan to major in a hard science, mathematics or engineering, its necessary to evaluate whether or not college is a sound investment. But you can save thousands or even tens of thousands of dollars simply by deferring college for a few years. What's more, you'll be more likely to spend the money you're spending on college on a major you'll end up using for gainful employment.
Breaking the automatic college cycle
"These days there's the expectation that everyone has to go to college right out of high school," says Chris Hogan, a personal finance expert and part of the Dave Ramsey Speaker Group. "People need to start thinking about whether or not college brings them closer to their goals." He notes that there are options beyond just going to college like trade school, attending college part time, apprenticing or just working for a few years until you have a better idea of what you want to do with your life.
Joe Kitterman, CEO of 180 Skills, agrees. "I went to IU in the '70s at the age of 18 and had no idea what I wanted to do," Kitterman says. "I had fun, but I flunked out twice." Kitterman says that when he made that mistake a credit hour cost $15. Of course, tuition has risen more than 1,000 percent across the nation in the ensuing decades."Now that would be a fatal decision you'll probably never make, right?" he said. "You'll walk away with nothing to show for it but a ton of debt."
There's one major problem with attending college right out of high school that Kitterman points out: "You're 18 -- how can you possibly know what you want to be?" he says. He cites his own daughter as an exception to the rule. "She was born to be a teacher," he says. "She has a mission, and that's what she's going to be. But think about where your life is going to be at 22. Is your degree going to get you anything, economically?"
The community College option
For people who are looking to get started on their education, but equally concerned with staying out of debt, Hogan points out the community college option. Credit hours are a fraction of what they cost even at state colleges. "Some people have this misconception that when they take classes at a community college that it's reflected in their diploma," he says. "When you transfer, your courses transfer with you. But your diploma is from where you graduated from.
So if you're hellbent on not waiting, you can always attend a community college and pay out of pocket. That way, you're spending as you go, rather than racking up tens of thousands of dollars in debt you might never pay off.
The advantages of getting an education later on
Kitterman's company helps people to get job-based skills for a fraction of a price of college. He thinks that it's a far better value proposition: Get skills, go to work, then consider going to college later in life. "Once you take on debt you have less choice. You won't have enough money to change your mind and take a different path," Kitterman says. What's more, we're in the perfect environment for people who want industrial and technical jobs. "The whole workforce is old," he says. "All kinds of employers say they just can't find anyone with skills. Anyone who makes stuff, fixes stuff or puts in the infrastructure is in high demand."
Once you've established yourself in a profession, you can increase how much you can pay for college or maybe even get more in the form of grants. However, Kitterman points out another path for those who choose to work instead of going to school: "If you have the right employer, they'll pay for college for you," he says. "The tuition reimbursement will cover all of that for you." In a lot of cases, if you want to move into management, you'll need a bachelor's degree, but your employer won't much care what that degree is in. And getting your employer to cover a sociology degree for you is a far wiser use of your time and potentially money than racking up a lot of student loan debt.
Aging means more money
Mark Kantrowitz, senior vice president and publisher with Edvisors.com, points out that you're automatically considered independent once you reach 24. Other ways to become independent include getting married, having dependents of your own, being on active duty or being an active duty veteran. All told, there are 13 ways to become independent, and people who are independent don't have to use their parents information on their free application for federal student aid or FAFSA form. That potentially means far more money in grants than if you're using your parents' income.
So if you've just graduated from high school don't feel like you have to run off to college right away. A lot of the time it makes far more sense from a financial point of view to wait and go later in life.