The Consumer Finance Protection Bureau is offering a new tool for families to compare up to 3 different colleges’ costs at a time. (Seniors can also add specific information from their financial aid award letters for further comparison. ) The comparison tool provides average indebtedness of graduates from that college and the likelihood of a student having to assume loans to pay for the college. While these are general averages, the more information families have about the expense of college the more reasonable decisions they can make for their student’s future educational achievement.
What I find helpful about the tool is its long term financial planning framework. While families may actually pay dollars from their accounts for 4-5 years, debt payments typically extend 10 or more years after college. Knowing a forecast amount of debt, families and students can work backwards, asking if the “return on investment” given the “opportunity costs” of student loans is worthy. The long term view also spurs questions about major choice and possible careers that would also increase the likelihood of repaying all student loans.
Give us any feedback about how the tool helped (or didn’t) in your family’s college decision making or leave any questions about how to use the information once you review the estimates.
Personal finance education can also help teens transitioning to adulthood, as a college student, reduce the costs of college. Knowing the pitfalls of credit card debt and how to manage a budget will help teens make responsible choices during college.