MONEY College

12 Things We Wish We’d Known When We Were 18

Girl moving off to college
Eric Raptosh Photography—Corbis

Suze Orman and other experts share their financial advice for the Class of 2018. Follow these tips to keep your college experience from becoming a major money mistake.

Prepping for freshman year at college typically includes activities like shopping for dorm essentials, reviewing orientation packets, and Googling your new roommate.

Most students don’t spend a lot of time thinking about how they’ll manage their money in this new phase of their lives.

And yet, what you do in those first few years of parental emancipation can affect you for years—or decades—to come. Students graduated last year with an average $35,200 in college-related debt, including federal, state and private loans, as well as debt owed to family and accumulated via credit cards, according to a Fidelity study. Half of those students said they were surprised by just how much debt they’d accumulated.

To make sure the class of 2018 gets off on the right foot, MONEY gathered sage advice from top financial experts about the lessons they wish they, their kids, or their friends had known before starting school.

1. Limit your loans. “Do not take out more in student loans than what you are projected to earn in your first year after college. If you only expect to make $40,000, you better not take out more than $40,000. The chances of you being able to pay it back is close to nil. If you need to take a private loan, you’re going to a college you can’t afford. Remember, going to an expensive school doesn’t guarantee success. The school never makes you, you make the school.” —Suze Orman, host of The Suze Orman Show and author of The Money Book for the Young, Fabulous & Broke

2. Finish in four. “Many kids are finishing school in five or six years. But every extra year is potentially an extra $30,000 to 40,000 in expenses. Map out your coursework and figure out exactly what you’ll need to do each semester. Be vigilant about sticking to your plan. Try to catch up on any credits by taking classes at a community college over the summer.” —Farnoosh Torabi, author of You’re So Money

3. Study money 101. “Sign up for an economics or personal finance course. This way, when you graduate, you’ll be better equipped to manage money for the rest of your life.” —Brittney Castro, CEO of Financially Wise Women

4. Leave the car at home. “Everyone feels like they need a car, but with the combination of sharing services like Uber, Lyft, Zipcar and public transport, that isn’t always the case. If you’re living in a major metropolitan center or on campus, consider leaving your car behind. It’s much cheaper to use one of these car services than it is to pay for insurance, gas, parking, car maintenance and car payments.” —Daniel Solin, author of The Smartest Money Book You’ll Ever Read

5. Lead rather than follow. “Especially in college, you’re going to be surrounded by people doing dumb things financially. You’ll see people financing their lifestyle with student loans or their parents’ money. Don’t feel bad if you can’t afford the same things as others. I knew a student who was financing his whole college experience with debt and he was always asking people to go shopping with him. If I’d tried to keep pace, I’d have ended up in the same debt-ridden place as him.”—Zac Bissonnette, author of Debt-Free U

6. Find free fun. “You can still do fun things at school, without spending a lot of money. You’re paying an activity fee in your tuition, so you ought to make sure you’re taking full advantage of whatever the school offers for free—be it concerts, trips, lectures. The school I went to provided grants to help students travel abroad and offered free plays and trips through different clubs.” —Farnoosh Torabi

7. Be purposeful with plastic. “The idea that you need to build credit in college is wildly overrated. It’s not a bad idea to build credit, but having built up a bad credit history will hurt you more than having no credit history. You don’t need to feel pressure to get a credit card. You can get by just fine with cash and a debit card; no one is expecting you to have a ton of borrowing history when you’re getting your first apartment anyway.” —Zac Bissonnette

8. Put your budget on autopilot. “Keep track of the money you’re getting in from loans and your parents, as well as your expenses. Use an app like Mint.com, which lets you link your debit and credit cards to your online account to track your spending and easily help you keep on budget.” —Daniel Solin

9. Enlist Mom and Dad. “Check in with your parents once a month and review your spending with them. Talking about this will help you to avoid what I call ‘budget creep,’ where all of a sudden you’re spending $30 a day on food and entertainment. All those little extras add up and you could be spending over a hundred a week… on what?”—Neale Godfrey, chairwoman of Children’s Financial Inc.

10. Protect your stuff. “College students may not think they have a lot of valuable possessions. But think about the value of electronic devices alone, not to mention textbooks, clothes, even that ratty futon. The good news is that renters insurance is typically inexpensive and can protect you from fires, theft and other incidents. The even better news is that students’ stuff may be covered by their parents’ homeowners insurance. Check the policy prior to hitting the books.”—Kara McGuire, author of The Teen Money Manual

11. Establish rules with roomies. “If you’re renting an apartment with friends, be sure everyone and their parents sign the lease. Try to have everyone’s name on the utilities bills as well. Kids will take advantage of other kids, and you don’t want to be the one who is stuck being responsible for everything. If you can’t attach everyone’s names to all the bills, have them prepay. Also, make sure everyone chips in for general expenses like cleaning supplies and toilet paper, so you don’t end up paying for all of that as well.” —Neale Godfrey

12. Share with discretion. “Social networks are a public record. Your future employers will look you up on your social sites and judge you based on what they see. So something that you thought was cute in college could keep you from getting the job. Know that every move you make on those sites could have a direct consequence on your ability to land a job.” —Suze Orman

 

MONEY College

Two New Proposals Would Make College Free Nationwide

140715_HO_FreeCollege_1.jpg
Michael Burrell / Alamy

With student loan debt crippling students, education advocates are suggesting ways to change how federal financial aid money is distributed.

Adele Williams often hears her friends from high school talking about their struggles to afford college.

But she can’t relate—she doesn’t pay any tuition at all. At the school she attends, Alice Lloyd College in Kentucky, students attend for free in exchange for working.

Her friends at other schools, she says, “are mostly jealous.”

At a time when the cost of attending many private colleges exceeds the national median household income, the idea of paying no tuition at all seems so unrealistic that one higher-education economist refers to it as “la-la land.” But there are a handful of schools—such as Alice Lloyd and others—that don’t charge students a penny. Meanwhile, Tennessee will make all of its community colleges free for state residents beginning next year, and Oregon is moving forward with a study considering the same thing.

Now two new proposals go even farther, both aiming to make no-cost college a nationwide standard. A report from the Lumina Foundation recommends that the first two years of public universities and colleges be free, and a new nonprofit called Redeeming America’s Promise has come out with a proposal to give every lower- and middle-class student a full ride.

“The rising millennial generation has been so deeply affected by student debt that they’re driving a conversation about this challenge,” says Morley Winograd, the president of Redeeming America’s Promise, who worked as an advisor to Vice President Al Gore during the Clinton Administration. She added that “well-meaning but what I would call Band-Aid solutions” aren’t enough to fix the problem.

Existing financial aid was created to help the lowest-income students at a time when middle-class and wealthier families had little trouble paying for college on their own, notes University of Wisconsin-Madison sociologist and higher-education policy expert Sara Goldrick-Rab, who co-authored the other proposal. “But the people who are struggling to pay for college today go way beyond poor people,” she says. “There’s a need for a universal program.”

The Full Ride Proposal

Redeeming America’s Promise proposes redirecting existing federal and state financial aid and tuition tax breaks to give full tuition scholarships in specified amounts. It says the amount of money the government already spends for those purposes is enough to provide $2,500 per academic year for community college and $8,500 for four-year universities to every student from a family earning $180,000 a year or less.

That would just about cover the entire average advertised full cost of public college and university tuitions for everyone, the organization says.

Under the plan, which is backed by several Republican and Democratic former governors, Cabinet members, and members of Congress, the students could take out loans to cover their living expenses and repay them based on their incomes after graduation.

The scholarships would be limited to two years for an associate’s degree and four years for a bachelor’s degree to encourage students to graduate on time—which only a fifth of those at four-year institutions currently do and 4% at two-year schools.

Colleges and universities generally wouldn’t be allowed to raise their prices higher than the scholarship amounts, forcing them to control their costs.

The 50% Plan

Goldrick-Rab and her colleague, Nancy Kendall urge in their report that the billions of dollars in federal financial aid money and some state money be redirected to make tuition, fees, books, and supplies free for the first two years of any two- or four-year public university or college and that students be given stipends and jobs to help them pay their living expenses.

Goldrick-Rab and Kendall call this the free two-year college option, or F2CO.

The Reality Check

The Redeeming America’s Promise scholarships would cover the full cost of tuition at public universities and colleges not private ones, the influential lobbies of which are likely to oppose the idea on the grounds that it would divert students from them.

But public institutions might oppose as well, on the basis that the plan would be a form of price control or that they wouldn’t be able to handle, at the amount they are allowed to charge, the flood of students projected to descend on them. Tennessee universities opposed making community colleges free in that state, for example, until lawmakers agreed to make some changes in funding for them.

“We had four-year schools that were going, ‘Wow, it’s going to be hard for us to compete with free,’” said Tennessee Governor Bill Haslam.

And the sweeping, dramatic changes suggested in either proposal would face an uphill battle in a divided government that has been challenged to make even marginal policy decisions.

“It’s very difficult to separate the politics from the economics,” said David Breneman, a professor in the economics of education at the University of Virginia.

Breneman pronounced both free-college proposals “not realistic,” especially at four-year institutions (“That’s just La-La Land”), though he said they might stir up a helpful conversation about untangling the way the government helps students pay for college.

“When you look at what a mess we’ve made of student aid and how complicated it’s gotten and the loan craziness, it’s not surprising that people look back at those days when we just had low tuition,” he said.

Even the free-college crusaders are not optimistic about these plans being adopted in the immediate future.

“No way is it happening today,” said Goldrick Rab. “To me the question is, will enough groundwork be laid today that it becomes something groups are working on for the next 10 to 12 years, and that eventually becomes a litmus test for people we elect.”

Winograd said more states could make public colleges and universities free sooner than that, mostly without federal involvement. Advocates in some already have proposed it, and many states are watching the free-college experiment in Tennessee, where the $34 million-a-year cost is to be underwritten by a $300 million endowment paid for from lottery proceeds. (In Oregon, the annual cost is estimated at $100 million to $200 million.)

“The political will to do it does exist, not necessarily in Washington, but throughout the country,” Winograd said.

__________

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University.

Related stories:

Colleges try to speed up pace at which students earn degrees

Testing your way to a degree

Residents are crowded out of college by out-of-state and foreign students

Just as it wants students to speed up, government won’t pay for summer courses

MONEY college costs

Starbucks Steps In to Pay for College — Because the States Are Stepping Out

Are programs like this a serious answer to college affordability?

Today Starbucks and Arizona State University announced that the coffee shop chain will help its baristas pay for online courses at ASU. It looks like an attractive deal for Starbucks employees in a position to take advantage of it. The company will cover the cost, after other aid, for junior- and senior-year courses of anyone working 20 hours per week. Getting to junior year will be a bit trickier: For freshmen and sophomores, students will be eligible for smaller scholarships to help cover ASU’s online tuition. Many Starbucks employees are likely eligible for Federal Pell grants to help cover the rest.

It’s worth stepping back, though, to look at the big picture of college funding in the United States. Especially in the years since the financial crisis, public universities are relying less and less on state funding, and more on student tuition. In other words, they are becoming less public.

image(24)
SOURCE: State Higher Education Executive Officer Association

Although there’s plenty of debate about whether colleges are doing enough to control costs—especially on administrative salaries—much of this shift seem to be driven by a drop of in per-student aid from states.

ASU has kept in-state tuition lower than many other public schools around the country. The Arizona Republic reports that the online program is part of how they’ve done that: Online courses make money for the school. That’s because the courses are comparatively cheap to run, while tuition (both in-state and out-of-state) is about the same as what traditional resident students pay.

So are programs like Starbucks’ an answer to college affordability? It may work for some, but there’s evidence that online programs are a poor fit for many students, as Kim Clark reported in MONEY in 2013:

Researchers at Columbia University have found that community college online students got lower grades and dropped out more often than those in regular classes.

“If we know community college students don’t do as well in online education, does it really make sense to be funneling [more] students into online classes?” asks Shanna Smith Jaggars, one of the Columbia researchers.

Jaggars says younger and struggling students are the least suited to online classes; they need the structure and time-management discipline of a classroom.

By targeting its most generous funding on juniors and seniors, the program is betting on students who already have a college track record and thus a better chance of succeeding online. It will be a big test of the much-hyped online model to see how many Starbucks employees actually graduate with an ASU degree.

This story has been corrected to reflect new information about details of the the Starbucks/ASU plan.

MONEY College

How to Tell Your Kid You Can’t Afford Her Dream College

You meant it when you said, "Study hard in high school, and we'll send you to the best college you get into." But now you're looking at the cost of Dream U -- and panicking.

Sticker prices at the top private colleges exceed $60,000. Even with scholarships, typical middle-class families face bills totaling $24,500 a year at private colleges, and $16,500 at public ones, the Department of Education reports.

Think you’ll have to tell your kid that her top prospect isn’t a possibility? Better to do it sooner than later. “Ideally, parents would have the affordability conversation when the child is starting high school so he or she can be realistic,” says Mark Montgomery, a college-admissions adviser in Denver.

The Ground Rules

Get the facts. Prepare a summary of your family’s financial situation along with the amount you can afford to contribute to college expenses vs. the net prices provided by the colleges’ aid letters or their net price calculators, says Deborah Fox, a college-funding adviser in San Diego.

Be the grownup. Don’t let your kid’s anger and disappointment cause you to do something you’ll regret, like fighting back or taking loans you can’t afford. “Hold your line,” says Mashpee, Mass., social worker Beth Wechsler.

When You’re Face to Face

1. Show, don’t tell: “Honey, we are so proud of you. But you’ve heard how the prices of some colleges have gone crazy. Let’s look at our family finances to see whether your top picks are in our reach.”

Why this works: “Saying no without explanation may cause kids to shut down,” says Nathan Dungan, a Minneapolis family wealth consultant and founder of ShareSaveSpend.com. Instead, treat your child as the adult he or she is becoming: Explain what you can afford, what the school will cost, and the impact of any gap.

Related: How to ace your annual review

2. Apologize: “We’re sorry. We should have looked at the numbers before promising that you could go to any school you wanted.”

Why this works: Some children will become upset at parents who change the terms of a commitment, says psychologist Laura Markham, author of Peaceful Parent, Happy Kids.

You won’t be able to move the conversation forward until you acknowledge the mistake, she adds. Apologize without getting defensive about past spending. “Don’t say, ‘But the old car was breaking down.’ Say, ‘I know how you had your heart set on going there. I understand why you’re so upset,'” Markham advises.

3. Allow for grief: “Let’s take a break and reconvene later.”

Why this works: A child who is fixated on a particular college “will go through all the grieving stages, including denial, rage, and acceptance” when that dream dies, Markham says. To have a productive conversation, wait until the emotions on both sides calm down.

Related: Baby on the way? Time to make a budget

4. Ask open-ended questions: “What about this school made it so attractive to you?”

Why this works: By pinning down what the student is seeking, families can focus on lower-cost alternatives that still match the student’s dreams, says Wechsler.

5. Make a game plan: “Let’s figure out what our options are.”

Why this works: “You’re getting the family working together as a team” while nudging the child to take responsibility for charting his own future, says Montgomery. Offer help with options that won’t harm the family’s finances, such as applying for more aid, starting out at a lower-cost school, or deferring for a year to allow Junior to work and save.

MONEY College

Busting the 5 Myths of College Costs

Much of the playbook for taking on the $40,000 average stick price of a private school is out-of-date or just plain wrong. Learn the right moves now.

You’ve pored through financial aid forms, knocked the priciest schools off your list, reviewed borrowing options, and nudged your kid to think more about engineering and less about English lit.

So you figure you’ve got this college thing under control. Not quite. Those expensive schools you ruled out? They might actually cost you less in the long run than some cheaper private or public institutions.

The federal loans for parents you’re looking at so your kid doesn’t graduate with debt? They may not be a better choice after all. As for thinking a technical major will be more helpful to Junior than a liberal arts degree … sorry, it doesn’t always turn out that way.

Even among savvy parents, myths and misinformation abound. Yet with the average four-year tab ranging from $71,500 at in-state public colleges to $240,000 at elite private schools, the last thing you need is to pay more than necessary, borrow more than you can handle, or pass up a college that can provide a great education at an affordable price.

What follow are the straight facts you need to make smart college choices.

MYTH NO. 1

The myth: Saving for college will hurt your chances of getting financial aid.

The reality: Any money you’re able to save probably won’t appreciably affect your chances for aid. Here’s why: Under the federal financial aid formula, what matters most is your income, which is assessed up to 47%.

By contrast, a maximum of just 5.64% of savings in your name will be counted — after excluding retirement accounts, any small business you own, and your home equity. A savings allowance based on your age and marital status ($30,700 for a married parent age 45 for 2014-15) will also be deducted.

As a result, parental savings typically have little impact in the government calculation of expected family contribution, says financial aid expert Mark Kantrowitz of Edvisor.com. Those savings will come in handy, though, to help pay that high expected contribution from your income.

True, nearly 400 private schools additionally use their own aid formula, which may factor in home and business equity. A high earner with substantial assets might qualify for less or no need-based aid at those schools as a result. Chances are, though, any aid you’d get would be in the form of loans, not grants, so you’re still better off saving. Research from T. Rowe Price shows that each dollar you sock away could save you twice that amount in future borrowing costs.

What to do

Make friends with a 529. Only about one in four parents who save for college uses a 529 plan, says student lender Sallie Mae. Big mistake. You get more bang for your buck in a 529, since the money grows tax-free and withdrawals are tax-free, too, as long as the cash is used for school.

Look first to your state’s plan; more than half offer a tax break to residents. Other low-fee options include New York’s 529, Ohio College Advantage, and Wisconsin Edvest.

Shelter your shelter. “All schools will assess real estate that isn’t your primary residence,” says financial aid expert Kal Chany at Campus Consultants in New York City. If you own a second home or investment property, taking out a home-equity line of credit and using the money to pay down consumer debt (to avoid having loan proceeds count as assets) will temporarily reduce your equity — just make sure you can repay the loan.

Play the name game. Have assets in a taxable account in your kid’s name? Uh-oh. They’ll be assessed at a 20% rate. Fix: Use the account over time to buy stuff for your child that you’d get anyway, such as a new laptop or SAT tutoring. Then put an equivalent amount into a 529 in your name, where it will be counted at the lower parent rate, says Joe Hurley, head of Savingforcollege.com.

MYTH NO. 2

The myth: You can’t afford a private college.

The reality: Don’t confuse the eye-popping sticker prices at private schools — $39,500 a year on average vs. $18,000 for the typical public college — with the price you’d actually pay. Discounting by private colleges, especially for good students, has become the norm.

These discounts are typically awarded as merit aid and are given regardless of financial need. As the college-age population drops, schools are increasingly competing for students, sparking an awards arms race. In fact, today more students receive merit grants (44%) than get need-based aid (42%). Last year the average discount hit 45%, a record high, says the National Association of College and University Business Officers.

To be sure, Ivy League universities and some other top private schools still offer mainly need-based aid, but their definition of need often extends to higher-income families. And merit aid is available at many other high-quality colleges. For instance, Rice University offers academic grants averaging $15,000 to 22% of students; at Denison, about 46% of students get merit awards, which average $16,300.

What to do

Look for largesse. As your child begins to evaluate colleges, you’ll want to assess how generous each is with handouts. To find the percentage of students who get merit money, go to collegedata.com. For details about a specific college’s grants, check MeritAid.com.

Run a price check. Get a sense of what a certain private college will cost your family in particular, factoring in aid, by using the school’s net price calculator. (Colleges are now required to offer this tool on their websites.)

Some schools load in merit awards based on your student’s academic profile, while others give only a rough estimate. Either way, the results will be a good starting point for a discussion with the school’s aid officer. Also compare the results with net prices at any state colleges your child is interested in; merit awards are on the rise at public schools too.

Improve your odds. Most private colleges are secretive about the formulas used to award merit aid. In general, your child has a better shot if her grades and SAT scores rank higher than the averages for a particular school, says Lynn O’Shaughnessy, head of Thecollegesolution.com.

Other factors that may provide an edge: intended major (a less popular one can help), community service, and musical talent. Some colleges even rate your child’s interest in attending — has yours taken a campus tour?

MYTH NO. 3

The myth: A liberal arts degree won’t pay the bills.

The reality: Sure, grads with business or STEM (science, technology, engineering, and math) degrees tend to earn above-average salaries. But many liberal arts majors do as well or better.

Case in point: The top-earning 25% of history majors earned a median annual lifetime income of $85,000 vs. $82,000 for computer-programming majors, per a recent analysis by the Georgetown Center on Education and the Workforce.

And in some careers, lower salaries are offset by better job security. The typical education major earns $42,000, but only 4% are out of work. Biomedical engineers pull in $68,000, but 11% are unemployed.

Major isn’t the only determinant of pay, either, notes Anthony Carnevale, the Georgetown Center’s director: “Whether your child attends grad school, changes careers, gets promoted, or loses a job has a big impact on lifetime earnings.”

Besides, many people end up in fields unrelated to their major — an analysis of alumni by Williams College math professor Satyan Devadoss found that some arts majors went into banking, engineering, and tech, while some chem majors ended up in government and education. Also, a Chronicle of Higher Education survey of employers found that previous work experience was more important than one’s major in hiring recent grads.

What to do

Focus on practical help. When comparing colleges, see what each offers to assist your child in developing work skills, says Andy Chan, VP of career development at Wake Forest University. Find out if the career office reaches out to freshmen, offers courses in résumé building, and helps students land paid internships. Some 60% of 2012 grads who held a paid internship got a job offer, according to the National Association of Colleges and Employers.

MYTH NO. 4

The myth: Student loans will cripple your child financially.

The reality: You’ve heard the horror stories about college grads hobbled by debt, and the facts can indeed be scary: The typical student at schools such as American University and NYU leaves with over $35,000 in loans; 2% of all student borrowers owe more than $50,000.

Rising costs are one reason for those hefty debt loads, but a less obvious problem is the increasing time young people are taking to get their degrees. Just 32% of public college students and 52% who attend a typical private school get out in four years — taking six years is more common.

At more selective schools like Davidson and Lafayette, on the other hand, 85% or more of students finish in four years. Plus, such schools tend to offer strong alumni networks that can help with job leads.

“If you can attend a good school that helps you graduate on time with great skills and contacts, borrowing can be worth it,” says O’Shaughnessy. That’s especially true if taking on a manageable amount of debt will help your child attend a better school than your family could otherwise afford. “Manageable” is the operative word.

What to do

Get your kid’s stats. Check graduation rates for the schools your child is interested in at collegenavigator.gov. Find the likely salary of careers he might pursue and the typical income of students who graduate from schools on his list at PayScale.com.

Use the right benchmark. To ensure payments will be bearable, your child should borrow less than what she can expect to make in her first job, says Kantrowitz. The average grad’s $27,000 in loans would total $33,000 with interest over 10 years, if the 3.9% rate recently worked out by Congress goes into effect. (That rate is tied to 10-year Treasuries and is likely to rise in coming years for future borrowers.) If your child earns a typical starting salary of $45,000, she could afford that debt.

Don’t fight the feds. For student borrowers, government Stafford loans, which limit debt to $31,000 over four years, are the best bet. Unlike private loans, the federal program offers income-based payment and public-service debt forgiveness, says Lauren Asher, head of the Project on Student Debt.

See PLUS as a minus. Parent borrowers should just say no to federal loans. PLUS loans let you borrow the full cost of college regardless of income, at expected rates of about 7.21% (plus fees of at least 4%), which can rise to 10.5% for future borrowers under the new rate formula. “You can borrow more than you can afford at a high rate — what can possibly go wrong?” says policy analyst Rachel Fishman at the New American Foundation. A lower-rate option that limits how much you can borrow: a home-equity line of credit (4.5% to 5%).

MYTH NO. 5

The myth: Starting at community college, then transferring, is a great way to cut the cost of a BA.

The reality: Sure, community college is a lot cheaper than a four-year school, but students who start there are less likely to earn their bachelor’s degree..

Part of the problem: Many four-year colleges make transferring credits tough. While two-thirds of states have articulation agreements to ensure that community-college courses are accepted at specific four-year schools, loopholes abound — some allow discretion about which credits to accept, or a certain GPA may be required. And articulation agreements shouldn’t be confused with a guarantee that your child will get an open slot at a four-year college, says Stephen Handel, a College Board specialist in community colleges.

For many teens, the lack of a strong peer group also makes it hard to stay focused, says Tatiana Melguizo, a USC associate education professor; community college students tend to be older and attend part-time.

What to do

Go for ironclad. See if any community colleges in your area offer a guaranteed transfer to a four-year school. In Virginia, 23 community colleges guarantee admission for students with high GPAs into certain programs at 20 state four-year schools. Others, such as Portland Community and Portland State University in Oregon, offer co-enrollment programs that allow students to shift seamlessly into the four-year program after earning a two-year degree.

Talk to the target. Ask the admissions office at the four-year school your child wants to attend about the transfer requirements and how many two-year college students it accepts. The good news: “If your child does transfer, her odds of getting a BA are as good as those for four-year college students,” Melguizo says. Savings and a degree? Maybe you can afford grad school after all.

This story has been updated to reflect an increase in the PLUS loan rate.

MONEY College

Get Your Kid to Graduate in 4 Years

Taking five years to earn a B.A. is common—and costly. Here's how to get out in four.

Stressing out about how you’ll pay for four years of college? You should be so lucky. Most students take five to six years to earn an undergraduate degree, the Department of Education reports. That adds about $35,000 to the sticker price of attending a typical in-state public university and much more to the cost of most private colleges. These moves will help your child get to the finish line in four years.

Pick a Supportive School

Colleges with much-better-than-average graduation rates — look for 50% and up at public colleges, 70% at private schools — often have adopted strategies to help students finish in four years, says Tom Sugar of Complete College America, which works to boost the number of Americans with degrees. Among them: capping graduation requirements for most majors at 120 credit hours; making sure students aren’t crowded out of required courses; and identifying kids in danger of falling behind early on and assigning advisers to help them. Still unproved are the graduation “guarantees” that a growing number of schools offer—essentially, if your kid doesn’t earn a degree in four years, the remaining tuition is on us. Be skeptical, Sugar says. To identify schools with superior track records, search for your target college’s four-year grad rate at collegeresults.org. Then hit the “similar colleges” tab to find competitors with better outcomes.

Don’t Lighten the Load

Your student’s first college math lesson: Divide the 120 credits typically required for graduation into eight academic semesters, and he’ll see that he needs to take at least 15 credits per semester, not the minimum 12 usually allowed. To make sure Junior has plenty of time for academics, have him limit jobs to 12 hours or less a week. Changing majors, which can involve a new set of required courses, may also set a student back. A possible solution: Go with a related major that will accept many of his existing credits.

Get Back on Track Cheaply

If a change of major or overcrowded courses threaten to delay graduation, your child may be able to fulfill requirements by taking summer or community college classes or a growing number of accredited online tests and courses. Hundreds of colleges give credit for passing grades on the College Board’s 33 College Level Examination Program (CLEP) tests or the competing DSST’s 38 exams. Cost: $80 per test. Traditional colleges have been slow to grant credit for online or alternative tests or courses, so students should check with their registrar and department head before committing time or money to an off-campus class.

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