It’s National 529 College Savings Plan Day! Time to talk about…how to pay for college instead.
Consider Ronald Nelson.
Four years ago, the then high school senior made headlines for saying, “no thanks” to eight pricey Ivy League acceptances, and “yes, please” to a free ride at University of Alabama, where he’d be studying pre-med.
Today we presume he’s doing something few students can even dream of – graduating without debt.
It was an inspired choice (budget over brand name). And one more people should be making.
The Cost of Choosing Brand Name Over Budget
Unfortunately, in today’s world, people aren’t schooled to think that way. The prevailing theory (unlike any other big budget item) is to choose your school and then work backwards to pay for it – no negotiating, no comparison shopping, no nothing. So families take the $18,000 (the average) they’ve saved; put it toward the $200,000 potential sticker-price for that name-brand school; and then borrow excessively to pay for the rest. The result reverberates across generations; new graduates paying $30,000 or more for 20 years; parents shouldering an additional $11,000; grandparents paying a share well into retirement; all affecting financial wellness, and so productivity.
Employers could help change that. They could reframe the search to consider price as much as brand. They could guide people to look at schools that will give kids money as well as a “yes.” They could advise families to think not just about the best schools; but the best schools they can afford. They could urge caution against taking on insurmountable piles of personal debt today, so they can avoid insurmountable economic problems tomorrow.
Access to college advisors could help with it all.
Guiding People Toward More Economical Decisions
"It [debt] wasn't a burden that Ronald wanted to take on and it wasn't a burden that we wanted to deal with for a number of years," Ronald's father told Business Insider four years ago. “We can put that money away and spend it on his medical school, or any other graduate school."
We can’t say for sure whether Ronald made it all the way through school debt free. But we can say he got a great start.
So on 529 day, let’s remember that a good college savings plan can only get us all so far.
But a smart college buying program? That could save even more.