Clark Howard: A college degree shouldn’t leave you broke

Consumer expert Clark Howard’s column appears here each Thursday in conjunction with Deal Spotter, a weekly print section in The Atlanta Journal-Constitution.

Listen to Clark's live radio show 8-10 p.m. weekdays on AM750 and 95.5FM News/Talk WSB.

Listen to Clark's live radio show 8-10 p.m. weekdays on AM750 and 95.5FM News/Talk WSB.

The state of Texas has come up with a solution to the high cost of college that I’m hoping will be a model for other states to follow.

Gov. Rick Perry remains on target with a promise he made in his State of the State address: To allow the state’s university system to deliver a standard four-year degree for a total cost of $10,000.

The Texas Tribune  reports that the first degree available for $10,000 is in information technology. Four-year degrees in business administration and organizational leadership are next on tap.

Among the 10 participating Texas colleges are Angelo State University, University of Texas at Arlington and Texas A&M University-Commerce.

Florida has a different way to get to the same goal. It’s converted almost all of the two-year community colleges to offer four-year bachelor degree programs. In the process, many of these schools have changed their status from community colleges to state schools.

The question I pose to any head of any state university system is, do you know what’s going on with the families that are coming to your school? We are in a time when there is no money to pay for a Rolls Royce degree.

We are looking down the barrel of a calamity with student loan debt levels as a society and on the individual level with all the horror stories I’m hearing.

For parents, don’t borrow yourself into oblivion to pay for college. Your child can go to a local community college for the first two years and then finish up at a four-year school. And if you as a student are responsible for the bill, don’t over-borrow for four years of college. Your entire school debt for four years shouldn’t exceed your likely first year earnings in your desired field of study.

Find more answers to your consumer questions at Clark’s website. And get more savings tips from Clark’s previous blog posts.

– Clark Howard — Save More, Spend Less, Avoid Rip-offs — for the Atlanta Bargain Hunter blog

34 comments Add your comment

successfulHSgrad

January 3rd, 2013
7:21 am

College also should not be considered the only path to a successful and happy life in this country. Tossing very intelligent and motivated workers aside because they lack a piece of paper is absurd. With everyone lined up going to colleges that are pumping out grads with the same old degrees perhaps employers should take an extra look at folks who are not afraid to go against the grain by going another route. People who obtain knowledge and skills from tech schools, military exp, certifications and other unconventional routes, you may be surprised how dedicated and skillful these people can be. Too bad the HR filter will never give these potential hires the time of day.

Miller

January 3rd, 2013
7:37 am

I agree with you successfulHSgrad. Plenty of very qualified folks that don’t need a piece of paper to produce great work. What we need to do is flush HR!

KatyMay

January 3rd, 2013
7:47 am

If you are low income,(and) high achieving, make sure you take advantage of scholarship programs such as Coke Cola, Gates or QuestBridge. These are GIANT financial packages that pay full costs for the most expensive schools in America. Also, there are a number of universities which grant full tuition as long as a student meets a minimum GPA/SAT/ACT threshold. (Alabama, LSU, UPitts etc.)

Deb K

January 3rd, 2013
7:47 am

The ONLY reason colleges are so expensive because they keep jacking up the fees for no apparent reason! They can get away with this because they know the students WILL GET LOANS to pay there high jacked up fees. If there were no students loans the colleges would be empty because where the an average student cannot cough up 50K to 100K! So the colleges have no choice but to reduce there fees to affordable levels. As far as they keep giving out Federal loans the colleges will get more & more expensive every year!

Old Sarge

January 3rd, 2013
8:43 am

Take it from a military retiree, HR hates a GI. After 23 years as an Air Force radio maintainer some jerk kept asking me what civilian experience I had installing antennas. None, now how many applicants have you interviewed that can honestly say they can and have installed antennas 75 feet in the air while taking sniper fire? Just me then huh? I won’t even allow an HR twit to sit next to me at a bar.

Progress

January 3rd, 2013
9:01 am

Deb K- You’ll need to check your facts. Yes, college fees have been increasing, but it’s not “for no apparent reason”. The states have consistently been reducing the amount of funds they send to state schools, so much so that the term “state school” is almost a misnomer today and most state schools are now on a similar financial model to private schools. At state universities it actually costs more to educate a student than they pay in tuition. For instance, if they pay $3,000 in tuition per semester, the actual cost of offering the classes is usually around $4,000 (keeping electricity, heat, and A/C on; necessary technology; paying for the building; professors’ salaries [which are not much higher than public school teachers, by the way]; etc.).

Talk to your legislators. The less they fund higher ed, the higher tuition will be. There’s no way around it.

[...] From Atlanta Blogs News Source: http://blogs.ajc.com/atlanta-bargain-hunter/2013/01/03/clark-howard-... ____________________________________________________   [...]

Progress

January 3rd, 2013
9:11 am

The University of Virginia, for instance, now gets almost no public funding at all. But because it’s one of the oldest and most prestigious colleges in the country, it can survive on grants and donations. How many colleges in Georgia could do that?

successfulHSgrad

January 3rd, 2013
9:17 am

Old Sarge I hear you loud and clear…after I finished my tour in Iraq providing secure network communications and video teleconferencing for a building full of generals and full birds I couldn’t even get a call back from 1 civilian communication company. 3 years of experience providing commo in Korea and Iraq in high stress situations plus an additional 4 years of exp while in the states setting up mobile networks after jumping out of an airplane wasn’t enough to allow me to climb a telephone pole according to civilian telecom companies. Luckily I ditched it and went into another field with a great boss who who understands skilled employees come from a variety of backgrounds. I can’t imagine the frustration you had after 23 years of experience and knowledge brushed off. Yes your skills may not have transferred perfectly just like mine did not but the key is “TRAIN-ABILITY” No company wants to invest in that though…

zeke

January 3rd, 2013
10:21 am

And not everyone should go to college! The absurd demands for whatever job that you must have a college degree is extremely stupid! Only if you are in a highly technical field like medicine, engineering, or, architecture, should a valid 4+ year degree be required!

Old Sarge

January 3rd, 2013
10:24 am

I feel compelled to also mention that I have 4 university degrees in electronic, management and legal specialties. I have on a couple of occasions had a person with a GED by my side doing the same job for the same pay and doing it just as well as me. Sometimes an evil barbarian with a wrench in his pocket and dirt under the finger nails sneaks past HR and world is a better place for it! It is never easy for them to get the job they deserve though.

Ghost

January 3rd, 2013
10:26 am

We’ll see if Clark takes his own advice and sends his kids to community college for two years.

[...] Clark Howard: A college degree shouldn’t leave you broke. [...]

Tiptoe89

January 3rd, 2013
10:32 am

@Ghost – Clark’s advice is to NOT over-extend yourself when financing a college degree. He doesn’t say where to send your child to college. If he has the money (and after all these years of his savings advice I’m sure he does) he can send his children anywhere they want to go and pay cash.

Ghost

January 3rd, 2013
10:42 am

@ zeke

Architecture majors have the highest unemployment rate of all recent college grads (almost 14%).

kym

January 3rd, 2013
10:58 am

Local and State colleges have been requird to raise fees for several reasons. But the overall reason for absurd college debt is the choice of college and residing on campus. For profit colleges are expensive!!! Those degree mills leave adults swimming in debt. State universities have lost enrollment to for profit schools and technical schools. Many people choose to attend for profit schools because they are easy and accesible. Its more difficult for adult learners to take the traditional approach to college when they have a family and work full time, therfore they are forced to attend school online. In addition to this. more local universities have began to offer online programs to compete but must increase tution costs.. Atlanta is a degree mill . I have met so many people in school for a PHD but yet only work an Administrative job….People are either in school to defer loans or to gain a status quo. ..What is the point in having a PHD if you are not any medical doctor or intend to be a college professor.

Rafe Hollister preparing for an Obamanist America

January 3rd, 2013
11:00 am

Students, do not assume that a degree comes with a job, not even an advanced degree. Our economy is so screwed up, that it is a new world out there, from the days your parents entered the workforce.

I would seriously look at something that I could do independent of others and make a living, like a skilled trade.

kym

January 3rd, 2013
11:01 am

As a graduate degree holder ,working FT in a job that I am OVER qualified for and working internships just to gain experience with agencies I have an interest in ..I wish I had put more thought into college. cost and major. Dont get me started on this job market…I will be typing all day!!

Pay your Own Way

January 3rd, 2013
11:25 am

I agree with kym….

I did not have a rich mommy and daddy to help with my college fund.

I joined the military…got the GI bill, received scholorship funds, got some grants and my last two quarters…I had to get a loan to finish…
Five years after I graduated..I paid that load off in full.

If I can do it anyone can…Why do we keep thinking we can borrow our way to success and never have to own up to the fact that we have to pay this mony back.

Can anyone out there tell me why?

1. There’s no limit on the amount of $ you can borrow for college.
2. why can’t the banks consider your ability to pay these loans back as a factor in granting or denying these loans.
3. Why can you defer payment (seems like forever) of your student loan as long as your enrolled in school..

STOP THE MADNESS ——USE COMMON SENSE AND FIGURE OUT A WAY TO PAY FOR SCHOOL WITHOUT THE STUDENT LOANS OR USE THESE LOANS AS A LAST RESORT ….AND PLEASE REMEMBER YOU HAVE TO PAY THIS MONEY BACK…..!!!!!!!!!!

Laurie

January 3rd, 2013
11:30 am

I do IT programming support for HR, and I fully agree, HR is full of fluff, and most companies would be better off without all the crap they create to give themselves “value”. As a matter of fact, my manager circumvented that department to hire the group of programmers he has because our HR group are so incompetent.

Pay your Own Way

January 3rd, 2013
11:35 am

“A College Degree should not leave you broke.”

No it should not but God gave all of us a brain…

Would you use buy a car using a “Title Loan?” Would you buy a car without shoping around for a pretty good interst rate?

Well guess what it should be the same for your college.

Shop around…see what grants or scholorships you may qualify for…basically use some common sense….

It’s not that hard………

Pay your Own Way

January 3rd, 2013
11:44 am

One last comment.

When you’re choosing a major…select the ones that are the most in demand..

Don’t spend a hugh amount of money get a masters and PHD if you can even find a job with our BA or BS…guess what getting those degrees may make you over qualified the the small amount of jobs that are left….

Use the brain…………….

jarvis

January 3rd, 2013
12:00 pm

Guess I’m on the other side of the fence. I hold two degrees and can honestly say that I’ve seen a signifcant payoff after the acquisition of each.

I had to borrow money for my MBA, but the salary increase I’ve seen post-graduate from the program will easily make up the additional funds I’ve had to pay in interest.

a22matic

January 3rd, 2013
12:07 pm

“For parents, don’t borrow yourself into oblivion to pay for college. Your child can go to a local community college for the first two years and then finish up at a four-year school. ”

That’s what I did and it worked for me. I worked during college, and I graduated with $-0- student loans. I went to a local ATL College and local ATL Univ. I’ve hesitated going back mainly b/c of the cost…

Kelly

January 3rd, 2013
12:08 pm

I agree that borrowing should never be a first resort. No one ever really explained that to me or my sister when we got to university, because neither of our parents have four-year degrees. The financial aid officers just give you the loan applications and tell you to take out the full amount.

Additionally, people need to consider the return on investment of a student loan based on the type of education they receive. If you get anthropology and music degrees but graduate with $75K in loans, you are gonna be in a world of hurts.

MoFaux

January 3rd, 2013
12:10 pm

Easy solution: Legalize gambling and add to the HOPE. The same could be done with legalizing other victimless “crime”, such as marijuana and prostitution, although neither of those would bring the profits that gambling would. These things will continue to happen, so we might as well tax and regulate them, and use the proceeds to further causes like education. IMHO.

BW

January 3rd, 2013
12:29 pm

Pay Your Own Way

I borrowed $25,000 between 1998 and 2003 to finance an engineering degree from Tech. Absolutely the best investment I’ve made and without sacrificing eight years in the military to be behind my peers in the civilian market….no one pays their own way for everything. If someone has a mortgage, car loan, or credit cards with a balance, they are not paying their own way. Smart financial decision making is key…in the case of college, choose an in demand major that will enable you to pay back your loan money. Military is a great route for some but if a student has great academic acheivement in high school and can go to great colleges they should absolutely invest in their education by getting a student loan if lack of money is the only thing holding them back.

Just....Whatever

January 3rd, 2013
12:33 pm

The real problem, as someone above mentioned, is the seemingly unlimited supply of student loans. Kids signing up each year for tens of thousands of dollars worth of debt that for many isn’t “real” until 4/5 years later. Colleges keep upping tuition because students don’t feel the pain until it is too late – they paid using Uncle Sam’s money and now can’t find a job to pay it back. One reason for the crappy economy is that we have an entire generation right now saddled with non-bankruptable student loan debt in amounts that are incredibly high in comparison to their salaries (assuming they can even find work…which even then is probably not in their field) – these kids cannot fully participate in our consumer driven economy because they come out of school in their early to mid-20s with the equivalent of a mortgage hanging over their heads already. So the government offers programs like IBR, ICR and PAYE to take a percentage of their income for 25 years and then forgive the rest (eaten by the taxpayers)…wait until the IRS knocks on your door with a bill for $300k (when you include interest over 25 years) of forgiven debt. And don’t even start with grad school. Law schools graduate 45k new JDs per year and the BLS estimates that there might be 20k jobs available to them (the reality is that there are fewer than that…and a LOT of unemployed 40something lawyers to boot). Most law schools cost at least $30k in tuition per year nowadays, so these kids are well over $100k in debt by the time they get out and realize there are no jobs for them – and those who find them are usually making a lot less than the stupid TV shows lead you to believe (we’re talking $30k a year people….search “law school scam” if you don’t believe me). Just….arghhhh…..we are screwed as a nation if we don’t get this under control.

Call It Like It Is

January 3rd, 2013
12:37 pm

Complete utter scam! I put most of our schools right up there with the banks. They have no interest in the little people, just how much money can we get. Some on here say, check your facts, well I say no need to, just ride north to KSU. Since Hope that campus has grown 10 fold. Fees are silly, parking fees for students that don’t park, force kids to buy into their lunch program, and the list goes on and on. The rest of us struggle to make ends meets, companies are cutting back, but the schools grow and grow. Why is that? Our state says HOPE is running out and less kids will get the money, how about you make the schools cut back on fees, stop making them buy $150 books and so on. Of course this will never happen.

Jedcvampet

January 3rd, 2013
12:48 pm

College’s are expensive because its a bubble and students have been told to be successful you need a college degree. This depends on your aptitude and career choice. I agree that military and tech schools are good choices also as many mentioned on this post. College administrators have blotted salaries while staff routinely gets the shaft in pay and perks.

One of the biggest scams are text books which can cost hundreds of $$$$ for a semester then when you sell it back you get pennies on the $$$.

kym

January 3rd, 2013
2:31 pm

Jarvis..Im happy that you can use your degrees and @BW…that was 1998-2003. I can guarentee the same university tuition costs have tripled. Now I know, but its too late. Moving forward I can not make those same mistakes and share my lesson with others. A key problem is the lack of jobs..and jobs not paying much. The public sector in Atlanta is saturated with workers who are not going anywhere…and continuing school without actual work experience is only making you overqualified for the job.

kym

January 3rd, 2013
2:33 pm

Oh.. one last commen Since everyone thinks HR is fluff..I agree. HR should be held liable in civil court and subject to an investigation by the EEOC..!! HR are the biggest set of jerks on the planet..You have to play games just to get a job..its easier to get a gun than it is to get a job..and thats a huge problem!

Just....Whatever

January 3rd, 2013
2:58 pm

Google “Chris Fletcher” and “Wall Street Journal” for an article on how bad it is for recent law grads.

“With $169,000 in law-school debt and an annual salary of $55,000 (which is within the average range for a small firm), I cannot start paying off my debt in a responsible and timely manner, much less afford to have a wedding, start a family, buy a home, etc.”

“prompted James G. Leipold, executive director of the National Association for Law Placement, to describe the current entry-level job market as “the weakest . . . that NALP has measured in nearly 40 years of doing this work.”

Not PC and a HS math teacher

January 3rd, 2013
9:17 pm

Too few high school student in Georgia take advantage of the technical college career preparation and then use the earnings of a job to go to college and pay as they go.

This has been done by several of my past students. They have a business that they built themselves and an education that they paid for with their own achievement.

The student loan route seems easy but teenagers don’t appreciate the pile-up of interest on top of the principal amount of the loan.