College shopping is like…

Today we have a guest post by Michael A. Carlson on the subject of picking an appropriate university. Michael wrote this article for Vagabond Finances, a great site for learning about many aspects of personal finance and expat/missionary life.

What would you think of this conversation?

Hey, dad and mom. I know I just got my driver’s license last week, but I saw the cutest little Porsche Panamera today at the dealership down the road. Could you get it for me?

Stunned parental silence ensues. And then…

Well, dear, I’m not really sure you need quite that much of a car. I mean, doesn’t a Porsche Panama or Panera or…well…whatever you called it go for over $100,000? We can’t afford that.

Don’t get me wrong, your children will have their reasons. Here are three that will also relate to our college searches:

But it’s just so gorgeous in Sapphire Blue Metallic! Just think of the resale value! They offer financing with no payments for the first two years!

What parent in their right mind would say yes to a son or daughter asking for a luxury item way out of their price range because it was attractive looking, would have some future value, and offered delayed financing? Well, shopping for a college is a lot like shopping for a car, a very, very expensive car.

The College Marketing Trap

If you are planning to send your daughter to a US college, you have undoubtedly already been targeted by college marketers who want you to think about the beauty of the campus, the value of a degree from that specific school, and how much aid (which often secretly includes loans!) they can offer your family. We’ve been trained to evaluate colleges along those lines. More importantly, your daughter has been targetted by ads and school websites to get her thinking along those lines.

A college degree in a proper field can be a great thing for many people, but because of the costs involved and the financial value of each student who enrolls, it has also become a marketing game. Each school wants to be noticed and wants to look preferable in some specific category. You’ll find schools that are known as the cheapest, cutest, party-school, nicest campus, friendliest, city-center, nicely isolated, football school, and so on. Many of those descriptions are encouraged by the university itself to draw in people from their niche.

The problem, of course, is when your son who loves football but doesn’t play decides he’s got to go to Football U because that’s the “football school.” Or maybe your daughter reads period novels and loves arches, stone walls and clock towers, so she decides she has to go to that cute school on the other side of the state that has the gorgeous new clock tower.

Now that you know you have a target on your back, does that help you slow down and look at US universities with a little more objectivity? Remember those outrageously silly reasons for buying a Porsche? Well, they apply to colleges as well…

1. The Campus Visit: “It’s gorgeous!”

While I’m not completely against the idea of a campus visit, it can be a huge financial cost to a missionary living a continent away, and it could give your clock tower-loving daughter a reason to choose that school regardless of the quality of education and regardless of costs. Campus visits can be dangerous.

If you think I’m over exaggerating this issue, let me ask you one question:

Why did that college pay for the recent construction of that million dollar clock tower (which was made to look classically old, of course)?

Yep, the college is betting on more students enrolling and more money coming in because of the clock tower.

If you still think that the aesthetics of a college campus aren’t that important to their marketing, click on a few random college sites. You will find amazing professional photos that would make a rundown shack look like the Taj Mahal and you will see quotes like, “Voted the cutest school in the

Northeast” or “An Ivy-league feeling campus without the Ivy-league costs”.

My favorite new bit of technology being used by some schools is drone video photography. They send up a tiny drone with cameras on it on the most beautiful, sunny day to give you a close-up view of their chapel tower, followed by a long sweeping view of the greenest grass you’ve ever seen, a quick pass into the cafeteria to see the smiling faces of students eating cheesecake and then another pass into the chapel where students are worshipping with passion. There, in one professionally done, 5-minute video, they just gave you a fantastic campus visit whether you wanted to go there or not.

Don’t kid yourself. Your son and daughter are watching these things and judging the school because of them.

If you’ll be taking a college tour, it helps to stay focused on the academic life and spiritual life of the school rather than get caught up in cute arches and huge stadiums. Go in with a checklist. You can probably google up some checklists online or ask CollegeAssistancePlus if you can use theirs. Go in with your checklist, ask your questions, and fill in the chart. It will keep you a little less focused on the outside impact of the campus and a little more focused on its heart.

Just like, “But the Porsche is so cute” is not a reason to go into $100,000 of debt for a car, “But the college has such a nice clock tower” is not a reason to go into $100,000 of debt for a college education.

2. Name Recognition: “Resale value!”

Now, this is an interesting point. Everyone knows the name Porsche means quality, speed, and prestige. Its name really does have some intrinsic value. The same is true of names like Harvard, Yale, M.I.T., Princeton, Duke and so on. There is a “resale value” on those educations. Attending one of those schools might find you rubbing shoulders with future business owners, presidents, surgeon generals and so on. Everyone will respect your degree and understand it has an innate value. Having “Harvard U” stamped on your diploma is more valuable than having “U Who” stamped on.

Comparing the relative value of that prestige is very difficult. Both the Porshe and the Duke diploma will be more valuable in four years than the Ford and the “U Who” diploma, but they also both cost a lot more. Is it worth it?

There are entire forums on College Confidential Message Boards that argue that point: “My daughter got a full-ride at Alabama University and a partial scholarship at Yale. What should we do?” Many people “settle” for the full scholarship (I would in almost any circumstance!) while others “turn down the full-ride and opt for the Yale name and for the $100,000 in student loans.

My point here is not to decide who is always right or wrong. My point is to show that “resale value” of the Porsche is just that; it is “resale” value. You may get $50,000 for your used Porsche and only $10,000 for your used Ford, but you may also still owe the bank $90,000 on the Porsche while the Ford is paid off.

If you have an extreme need for the name recognition of your college, you should go ahead and consider it. If your kiddo plans to run for president, become a multimillion-dollar business owner or the like, there might be a good return on investment. Similarly, if your son happens to fit a niche that a prestigious school is trying to fill, he may very well get a tuition-free offer without having to get $100,000 in loans. Go for it!

However, if the Princeton offer or some other offer is going to leave your dear daughter with $100,000 in debt and she’s not going into big business or politics, dare I ask the questions: “Was it really worth it?” And “How will she ever pay it off?”

Just like you don’t go into debt to buy a Porsche you don’t need just because it has a great resale value, you usually shouldn’t be going $100,000 into debt just because the name of the school is more recognizable than others.

3. Postponed Debt is Still Debt: “Financing with no payments for the first two years!”

I hope this last one goes without saying by now, but I’ve seen it too many times. Just like buying a new car with “0 down and no payments for 2 years” sounds like a gift given out of the goodness of the dealer’s heart, so too college loans with deferred payment plans sound so generous.

I’ll explain in an upcoming post that we’ve got to learn to read and understand the offer letters the colleges send to our children. We’ve got to figure out what is a loan and what is not a loan, figure out how much and when payments are due, and figure out from whom we are taking the loan.

Don’t think of a loan as aid or a gift or free money. It is anything but that. If we’ve got to take on debt, I’m all for minimizing the interest rate and delaying the payments, but do you know what’s better than that? Not taking out loans at all or taking out loans for a lesser amount and paying them off quickly.

Don’t let delayed loan payments convince you to buy more of a car than you need or more of a college than your son or daughter truly needed. You or your beloved child will live to regret those loans.

Giving In to College Debt May Mean Giving Up on Future Dreams

I love my son deeply and if he came to me with tears in his eyes and pleaded with me to buy him that sweet little Sapphire Blue Metallic Porsche Panamera, I would want to say yes, but I would still find it easy and truly loving to tell him no. We would never say, “That’s not a great starter car, but I’ll get it for you anyway” or “We’ll have to get out $90,000 in loans, but if that’s what you need to be happy, we’ll do it” or “Nothing but the best for you!” Maybe the worst answer possible would be, “Well, ok, you can have it, but you’ll have to take on that $90,000 of debt in your own name and pay it off down the road.” We would never, ever make such flippant and financially irresponsible decisions about buying a new car. It would be bad parenting. It would cripple us financially or, worse still, it would cripple the financial future of our child.

So why is it any different with college? Many parents say, “That’s not a good financial fit for our family, but we’ll enroll you in that college anyway” or “We’ll have to take out $90,000 in loans, but if that’s what you need to be happy, we’ll do it” or “Nothing but the best for you!” or “Well, ok, you can go to that school, but you’ll have to take on that $90,000 of debt in your own name and pay it off down the road.”

Shame on me as a parent if I teach my children to reason this way and if I allow them to saddle themselves with so much debt right out of college.

No matter how you spin it, a loan is a subtraction on your (or on your students’) net worth no matter when you pay it or no matter what it’s for. It is lost money that your child cannot save, cannot earn interest on, can never invest, cannot add to his or her Mercy Mound and cannot give away to charity or to your grandchildren.

Yes, your daughter might think it would be nice to teach elementary school with an Ivy League diploma in her back pocket, but it probably isn’t really going to change her income or her chances of winning financial freedom some day. Allowing her to get $90,000 in debt for the Porsche of her dreams or even for the college of her dreams is not helping her reach financial freedom.

Perhaps worse than sacrificing her financial future, our complicity in obtaining her loans for school, may compromise her career plans as well. What if your daughter wants to go into missions or into teaching English overseas? That college debt might keep her from fulfilling her dream of even going. Our future missionaries may not become missionaries because of the debt they carry coming out of college.

What’s the Expat Solution?

Try something other than a US college like a college in your region of the world or a practical internship program. Look for non-resident options like online colleges and US community colleges. If you are set on going the traditional US residential route, then avoid or limit the debt by looking for better prices on schools using tools like US News, consider both public and private school options, find out if you qualify for an in-state public school price, and think about hiring a service like College Assistance Plus that specializes in finding better prices and helping you negotiate with the school you choose to obtain the best price possible.

Shop for a College Just Like You Would Shop for a Car

If we don’t have the money for it (and maybe even if we do), we shouldn’t be buying our kids a Sapphire Blue Metallic Porsche Panamera. We know that, don’t we? Similarly, for the good of our families, for the good of our children, and for the future of missions work, if we don’t have the money for it, we shouldn’t be buying our kids whatever college experience they want.

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