College Finance 101: There’s no free college
Posted by Michael VanErdewyk
Founder and CEO at YourLoanAdviser
It’s that time of year when thousands of families are settling their kids into their college dorms and apartments. A semester’s worth of bills piles up quickly. The tab at the campus bookstore alone is staggering.
No wonder the idea of making public college educations free is so appealing. But it won’t work.
I make my case for why free college isn’t feasible in an article, There’s no free college (but here’s how to make it affordable again), written for American City Business Journals. I discuss how “free college” will never cover the full cost of a student’s higher education and the fact that it could — ironically — lead to higher college costs. Talk about unintended consequences.
Click here to read the article, published today.
Without some relief from rising college costs, parents are tempted to finance college with high-interest credit cards or taking on second mortgage. They might even raid their retirement nest egg. But that’s not the answer either.
As I write in my article, instead of free tuition, we need structural change. Everyone, not just the federal government, needs to take initiative in making higher education pay off. Schools should make tuition more reasonable. States should return to properly funding their education systems. In-state universities should create competitive programs that lead to jobs, innovation and entrepreneurship, which are the pillars on which our country is built.
The private student lending market has a role, too. It ensures that students have the freedom to choose the school and program that’s right for their needs, and that families can finance their child’s education at rates that work for them — without having to take on higher-rate credit card loans or fritter away their retirement savings, income or other assets.
No matter what anyone promises, college will never be free; somebody has to pay. But the system can and should work better for families trying to make sure the next generation gets a solid start in life.