College Myths

Gray Easterling
Gray Easterling

The September, 2013 Money Magazine had an article on “busting the Five Myths of College Costs” that I thought might be of interest to parents and students close to graduation. Myth #1: Saving for college will hurt your chances of getting financial aid. According to the author, savings will/should not appreciably hurt your chances for aid. What matters more is income, which is assessed up to 47% in the college aid formula; savings only count for a maximum of 5.64%, after excluding retirement accounts, small business savings accounts and home equity. A savings allowance based on age and marital status will also be deducted. Accordingly, parental savings may have little effect on eligibility for aid. Also, bear in mind that parental savings can contribute mightily to college costs not covered by aid, which will reduce future student loan burdens.


Myth # 2 is that you cannot afford a private college. The “list price” for private colleges is typically much higher than the amount actually paid. Discounting has become the norm as student populations drop. Schools are competing for students, producing an awards arms race. More students receive merit grants than need-based grants, says the National Association of College and University Business Officers. For example, Rice University offers academic grants averaging $15,000 to 22% of their students.


Myth # 3 is that student loans will cripple your child financially. There are horror stories for some students, and it is not unusual to graduate with over $35,000 in loans. Rising costs account for some of the loan balance, but the time our kids are taking to get out of college is another important factor. Finding a school that encourages and pushes toward a four year finish can save substantial tuition and related costs. Some of these same schools have strong alumni networks that may help the graduate find a job. Locating one of these schools, even if borrowing is required, may work out better in the long run.


Myth # 4 is that starting at a community college and transferring to the main campus will cut the cost of a degree. Here is the problem: only 30% of those planning to transfer to a four year school actually follow through on that plan. Part of the problem is the transfer of credits. Also, the lack of a strong peer group may factor into the equation. Students at community colleges tend to be older and attend part time.


I enjoy the #5 myth the most: A liberal arts degree won’t pay the bills. When I started college, I was in a pre-med curriculum. I wrestled with the coursework for almost two years when it dawned on me that chemistry and me did not mix; my highest grade in a chemistry class was a “C” and that was probably a gift to a college jock. Although I continued to take enough courses to allow me to apply to med school, I shifted my major to English and graduated with a BA and a decent GPA. After a tour in Vietnam, I returned for an MBA and found a job with a CPA firm in Houston. I later joined friends to start a CPA practice in Alexandria, followed by a new career in 1986 as a financial advisor. I found a job I love and enjoy coming to work every day. How many doctors can say that?


As we approach the Christmas season, it is easy to find “nay-sayers” that deny the virgin birth, the miracle of Christ coming into the world. Perhaps we can make a pledge to be more bold, more obvious with our witness to the true God. Rev. J. Barrington Bates wrote in a sermon that “the journey of faith is not a life without doubt or questions. The life of a Christian is not one without trial or travail, and the earthly pilgrimage is not about control or power. It is about truth, hope and, above all, love. And all this begins not with ‘I insist’ or ‘I own’ or ‘I want’, but with the simple, elegant and hopeful proclamation ‘I believe’.” Psalm 27: “What if I had not believed that I should see the goodness of the Lord in the land of the living?”


Securities, insurance and investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment advisor 3416 North Blvd, Alexandria, LA 71301, (318) 448-3201.  The views expressed are not necessarily the opinion of FSC Securities Corporation.