College Tuition- Rising Faster Than Ever

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Colorado where I live hefty hikes in the cost of college tuition at state schools in recent months.  Many other states have been doing the same thing since the economic crises began.  It is unfortunate that some of the protests in California and Wisconsin became violent.

These huge increases in college tuition come on the heels of 30 years of price hikes that have been double the rate of inflation.  Even before this latest round of price increases in college tuition were announced, the cost of attending a state sponsored institution of higher learning has reached $20,000 per year, and the cost of attending a private college averages $50,000 per year.  These are levels that would have been unthinkable 20 years ago. 

Of course the question that younger people who are planning to attend college and their parents must ask is “how am I going to pay for this?”  In many cases the answer will be: with student loans.  The problem with this is that more and more people are getting into big financial trouble because of student loans.  In fact it has been reported that about 20% of students who borrowed more than $15,000 have let their loans go into default at the 10 year mark of repayment.  And that is not a lot of money to borrow, since the average person leaving school today who has student loan debt is carrying loans of $20,000.  With all these large increases in college tuition that are being announced, these figures are bound to increase in years to come.  And it should be noted that once a person lets a student loan go into default, there are huge penalties added to the loan principle.  In fact up to 40% of the amount borrowed can be added to the loan just for collection fees.  And on top of paying those fees the borrower gets to deal with collection agencies which can be very pushy and even abusive, despite laws against such actions.  This kind of problem can happen to almost anyone.  A recent striking example is that of a 41 year old woman who is a doctor.  She borrowed about $250,000 to pay for medical school, and she thought that as a doctor she would earn more than enough to pay this off.  To make a long story short, she got careless and let her loans go into default, and today she owes $555,000 despite having paid back quite a lot.  She has put off getting married and starting a family, and at her current rate of repayment, her loans will be paid off when she is 70 years old.  And pay them off she must- student loans cannot be dismissed by bankruptcy as can other types of debt, like credit card or gambling debt, for example.

Are there any solutions to this problem?  It turns out that if a person is intelligent and persistent, the answer is yes.  There are thousands and thousands of merit scholarships available that can be applied for.  Many of these are hard to identify, but with proper planning and the right approach a person can earn a number of scholarships and offset the costs of college tuition and other expenses to a large degree.  You can’t just fill out the application form and write another boring essay, you need to be clever and strategic about the process.  To understand how to approach the merit scholarship game, it is recommended that students and their parents read the book “How To Go To College Almost For Free” by Ben Kaplan, who financed his Harvard education with various merit scholarships.

Going after merit scholarships the correct way is almost like taking on a second job.  The payoffs for the effort, however, can be very large indeed.  And with the cost of college tuition on a seemingly never ending increase, more people will be seeking out this solution.  Learn the ropes of applying for merit scholarships and start early to prepare.  Parents should begin the quest even while their children are in high school, or even junior high.  Who knows what the cost of college tuition will be when today’s 6^th graders reach college age?  And stay away from student loans as much as possible.