Many students’ favorite class is a lab science. On lab day you choose an outfit that you won’t mind if it gets a stain or perhaps even a hole from spilled acid. You pull your goggles over your head and make sure it’s not messing up your hair to the point where you’ll look ridiculous for the rest of the day. Now you dive right in.
The idea of the experiment is to play, attempt, try to get it right. Sometimes it works and sometimes you have an epic fail on your hands. While it’s fun in the classroom, experimenting with college majors can be costly in terms of time and money. Of course, colleges will encourage students to do the grand experiment of playing with different majors knowing the average student will change majors three times making it nearly impossible to graduate in four years and garnering the college much more revenue. Only 39% of freshman who start college graduate in four years. This is good news for the college and financially devastating news to parents.
While only 39% are graduating in four years, a staggering 60% have not finished in 6 years. This is why the US Department of Labor now tracks college completion in 4, 6 and 8 year increments abandoning their previous completion rates of 4, 5 and 6 years. There are just too many graduating at twice the expected four year rate parents for which parents have saved.
To see the financial impact of year 5 (let alone 6, 7 or 8), let’s take a look using the largest university in the United States – THE Ohio State University. A freshman starting in the fall 2015 had a Cost of Attendance of $25,579. Over the last decade, cost of college increases 5% annually. Our student then would have a college investment of $110,248.65 over four years of college. This assumes the student lives in Ohio; you don’t want to see the out-of-state numbers! Ohio State’s four year graduation rate is 61.5% - far above the national average. Still, almost 40% who started aren’t finished after investing over $100,000.
When this student stays for a 5th year, the cost of attendance is an additional unplanned for $31,091.41! Most families can handle unplanned expenses of a new dishwasher or water heater for under $1,000, but expenses as large as a 5th year of college simply aren’t in the budget for most families.
Wait! There’s more. Instead of making the average $50,556 per year that first year out of college, our student is spending money (http://time.com/money/3829776/heres-what-the-average-grad-makes-right-out-of-college/). The lost $50,556 earnings can never be recovered over our students’ lifetime. This is the definition of opportunity cost. On top of that, the average student will owe approximately $30,100 in college debt to be repaid over the first ten years in the workforce (http://ticas.org/posd/map-state-data).
The REAL COST of the OSU 5th year: $81,647.41.
Total college investment just jumped from $110,249 to $191,896.
Worse yet is the student who never graduates yet holds a bag of debt having also exhausted their parents’ savings and sacrificed their retirement. Often it is this student who becomes the basement dweller in the home in which they were raised. The parents’ dream of seeing their child happily, independently flourish is shattered. Why? Because they didn’t start with fit. They fired before aiming.
Contact EWS for college planning help. 708-771-7777. At EWS we take this very seriously. Selecting the wrong career and college is a major wealth leak. Let us know if we can help you get college planning done right.