Personal finance: The best way to make college affordable

Families committed to college, but with the good sense to also know that cost matters, have long had motivation to consider community college. The case for community college is even stronger today, with the economic impact of the coronavirus crisis upending household finances.

And this is so not about settling. There are plenty of great careers that require only a two-year associate degree. Or, if the end goal is a bachelor’s degree, spending two years at a community college and then transferring to finish up a bachelor’s at a four-year public university can be a financially wily move, especially if your kid lives at home for the first two years.

Here is a cheat sheet for this decision:

• Yep, college pays off, but that doesn’t mean it must be from a four-year school. The median entry-level salary for someone with a high school degree last year was $38,000, according to official government data. The median entry level salary for someone with a two-year associate degree was $55,000.

Sure, a four-year bachelor’s degree will typically lead to an even higher salary: $75,000 median starting salary. But here’s where parents need to push themselves rather than their kid: If you’re insisting on a four-year school, and your kid is resistant, are you sure you are doing right by them? A two-year associate degree might be the goldilocks. Or it might be the right choice now if your household is juggling new financial challenges in this new recession.

• You might be surprised what careers don’t require a bachelor’s degree. Nurses, radiation therapists, software engineers, IT specialists, project managers, diagnostic med techs, to name a few.

If a goal is future earnings potential, it should not be a surprise that certain majors are the better route (yes, this would be true for bachelor’s degrees as well). A study released this year by the Georgetown Center on Education and the Workforce found that engineering and architecture, law enforcement, firefighting and health care-related associate degrees earn the highest median salaries.

• Your family might be able to emerge without any debt. Net price is the key variable to focus on; it’s the actual average cost families pay after factoring in grants and financial aid (but not loans). Get the details from a prior column:

www.rate.com/research/news/price-private-college

According to the Department of Education, the average net price for students at a four-year private nonprofit college in the 2017/18 academic year was $27,000. For four-year public schools the typical net price was $13,700. And for a two-year public community college the average cost was $7,200 a year.

That works out to less than $150 a week, spread out over an entire year. Might your family be able to absorb that cost with some budget trimming, and expecting your kid to work part time?

If that’s not possible, a federal undergraduate student loan should be able to carry the bulk of the load. The maximum loan amount for the first year of school is $5,500 and rises to $6,500 in the second year. For the upcoming academic year, the fixed interest rate is $2.75%.

• Hatch a transfer strategy now. Spending the first two years at a community college can be an economical way to earn a bachelor’s degree. Best-case scenario is that you can transfer all your community college credits and enter as a junior pursuing a bachelor’s degree.

Pulling that off will take serious planning from the earliest days of starting at a community college. A 2017 General Accountability Office report estimated that among community college students who transferred to an in-state public four-year school, about 26% of credits were lost/denied. That said, even when accounting for the extra cost of having to make up for those credits, families still saved money compared to having spent the entire four years at the in-state public school.

To reduce the risk of losing credits, as soon as possible identify the four-year public school where your kid would like to end up. Then dig into the website of that school to get the official details on credit transfers. Search for the “articulation agreement” list. These are the community colleges that the school has a formal transfer policy with. If the info isn’t on the website, start calling and bugging. Once you confirm a community college is on the list, also directly check with that school.

Then comes the harder part: What credits are transferable is going to be in part determined by the bachelor’s degree the student will be pursuing. At the point your kid has an inkling what the major might be, you want to connect with the four-year college that is the transfer target and get a rundown of specific credits/classes needed to transfer in as a junior. Or as close to a junior as possible.

Many community colleges have advisers ready to help with this, as will the in-state public school where you want to transfer. But given crunched public-school budgets – at two- and four-year schools – your family will likely need to put in some time nailing things down.

Another project: Search for scholarships specifically designed for community colleges, as well as scholarships for students who will transfer to a four-year school. Yep, they exist. But you need to go after ’em. Given the payoff, it seems a worthwhile effort.