By Peter Mastrantuono
The lifetime value of a college education is not in dispute. It has, however, saddled many graduates with enormous debts and burdened their parents with deferred retirements.
There are a number of smart ideas to mitigate the financial burden of funding a child’s college education, like contributing to a 529 plan. One frequently overlooked strategy is attending a community college for the first two years and then transferring to a four-year college to obtain a bachelor’s degree. The financial savings can be significant.
The Cost of a Higher Education
The average cost of a four-year college education is $35,720 per year. The average four-year public school is a more affordable $25,864 (in-state students), while the average annual cost of a private college is nearly $54,000.
Compare that to the average cost of a community college–$10,300 per year. The potential for meaningful savings is readily obvious. College costs can be reduced by up to $50,000 or more by attending a community college and then transferring to a four-year school.
The Benefits and Downsides to the Community College Strategy
There are both advantages and drawbacks to the strategy of attending a community college for two years in pursuit of a four-year degree.
The community college offers several benefits, including:
- Basic course requirements can be met quickly and inexpensively.
- Smaller class sizes can lead to more personal attention.
- Proximity to home makes for greater convenience, an easier college transition and saves on room and board expenses. (Being close to home may be viewed as a disadvantage depending on the perspective of parents and child.)
- More flexible scheduling that often includes night and weekend options.
- Provides the undecided student a less expensive way to explore possible education and career options.
There are a number of disadvantages to the community college route, including:
- May not offer the prerequisite courses the student needs to complete before moving on to the advanced courses typical of the third and fourth year of school.
- The less academic and intellectual rigorous environment may be frustrating to some students.
- Limited curriculum and less workload may mean that the first two years of learning fall short of the education received at a four-year school.
- Less social and intellectual engagement than that found at a four-year college.
- The opportunity to develop networks that may benefit a student’s life and career are generally more limited at a community college.
In the end, students and parents will need to decide how these relative benefits and downsides apply to their own set of circumstances, goals and priorities.
Before making any decision to attend a community college, students and parents are advised to explore the ability to transfer credits and the acceptance qualifications between the community college and the four-year school of choice.
Parents and students should also understand that if their goal is a top public or private university, spending two years at a community college may not be a realistic option.
College affordability seems to grow more out of reach with each passing year. However, with early planning and smart investing, higher education doesn’t have to burden young adults with mountains of debt or require parents to choose between college funding and retirement. Begin a conversation with your financial advisor to find a path that works for you.
Peter Mastrantuono is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Peter worked for over 30 years in the wealth management industry, focusing on retirement planning, investing, asset allocation and financial planning.
