The following is a guest post from Bryan Maltier, a personal finance blogger and entrepreneur who focuses on saving, investing, credit/debt, real estate, career/education advice, and insurance at Gajizmo.com.
Coming from a family where my father is an electrical engineer with an MBA and my mother has an accounting degree, it’s a given that I would feel strongly about education growing up. I’ve always believed that education is the fundamental source of change, one that can uplift civilizations and improve the standard of living for its citizens. When I use the term “education”, I don’t just mean “book smarts”. It can be argued that even a monkey can learn sign language with enough repetition and hard work, so anyone can probably learn math, science, reading skills, history, etc. with enough studying. As Mark Twain said, “I have never let my schooling interfere with my education.” Instead, I believe that a commitment to education, including school, encompasses a commitment to learning, innovating, creativity, hard work, time management, and discipline. The bottom line is, investing in your education can be the best investment you’ll ever make, which is why I firmly believe that students should attend the best university they can, regardless of tuition costs, assuming they are majoring in a high-potential, high-salary field such as engineering, business, computer science, nursing, medicine, law, etc. Essentially, I am referring to majors that result in professional careers. When it comes to spending the money on your child’s college education, or in some cases, personally taking on loans to put yourself through school, the amount of money shouldn’t be the primary metric for the basis of your decision. Instead, consider the return on investment – tangible and intangible.
A $100,000 Art Degree vs. Engineering/Business/Nursing Degree
The internet is littered with stories of art, education, English, or history majors with more than $100,000 in student’s loans, and most families use these examples as the basis for not sending their kids to high-tuition schools. Unfortunately, this is the most skewed and unfair example the opposing side can make. I completely agree with the fact that, unless that English or history major is the first step toward applying to law school, or that Bachelor’s degree in education is a stepping stone to a Master’s and a top administrative position at a high school, university, or school district, then getting a $100,000 degree to make $35,000, before taxes, is ridiculous (and that’s if you actually find a steady job). That makes about as much sense as Meg Whitman spending $141 million of her own money for the gubernatorial election in California, a position that pays $206,500 per year.
However, for a professional or technical degree within a profitable and growing industry, the figures change completely. If the difference for the average post-graduate salary between the number one business school, Harvard University, and the 24th program in the country, University of Notre Dame, is $120,000 versus $86,000, respectively, imagine what the difference is between top and mediocre schools.
Furthermore, let’s consider other great schools such as UCLA, USC, Berkeley (can you tell I live in California?), University of Texas–Austin, University of Wisconsin–Madison, Penn State, University of Washington, and Boston University: all things being equal between two job applicants, if one attended a well-known university while the other attended a random school you’ve never heard of, who would you hire?
Additionally, the fact that more talent comes from better schools means that you or your child will have a strong, well-connected alumni network to help facilitate progress in a career. I can’t tell you how many times I’ve landed an interview just because I attended a top-ranked university, whether it’s specifically because the interviewer is also a graduate or the school has a good reputation and a perceived expectation of quality. Obviously your school’s laurels will not be enough to get you the job, but at least you’ve got your foot in the door and the opportunity to impress the firm with your skills and knowledge. Sometimes, an opportunity is all you need to shine.
If you are committed to getting the best education and money is still a major concern, here are a few financial aid tips that may help. This advice has been compiled after countless hours of research into how the financial aid process works.
First, no matter what, fill out the FAFSA. The government is quite generous with its calculations of estimated family contribution, taking into account allowances on annual income, the number of exemptions and household members, the number of dependents in school, and only incorporating approximately 12% of your parent’s net assets. It is also essential that, as a student or child, you do not leave any assets under your name, since 100% of your personal assets will be counted towards lowering your financial need. Lastly, according to the United State’s tax law, you only need to file a tax return if any of the following apply:
- Self-employed, any age: $400
- Children and Teens classified as a dependent: $5,700
- Single, under 65: $9,350
- Married, filing separately, any age: $3,650
Although you may want to file a tax return as a child or dependent just to recoup part of your taxes paid, don’t do it. Again, the FAFSA uses 100% of a child’s or dependent’s income towards your expected family contribution and this will lower your financial award. Instead of getting back a few dollars in a tax refund check, you will be setting yourself up to spending hundreds, if not thousands, to cover unmet need.
University Financial Aid Office
After filling out the FAFSA or CollegeBoard Profile, the financial aid office at your school will use the numbers to calculate their own financial aid award for you. In addition to subsidized or unsubsidized Stafford Loans from the federal government, students may receive a Perkins loan, which is a federal loan administered by the school itself. Finally, the biggest reward you may receive comes from the school itself, and is part academic scholarship and part based on financial need. If the total financial aid package you’ve received still makes it prohibitively expensive for you to attend your school of choice, ask for more. Write a letter explaining your situation, your strong desire to attend that particularly university, and support it with your academic achievements. Be sincere, honest, and humble. As other admitted students decline attendance and their financial aid awards go unused, money will free up. If you’ve made a good enough case for them to recruit you by sweetening the offer, you’ll get additional assistance.