Blog | 3 Min Read

Choosing a College You Can’t Afford

This title seems to go against everything we share at Capstone. We always talk about the importance of choosing a college a family CAN afford. Occasionally though, we come across a case where a family really should choose a college they can’t afford, and we help them make the careful adjustments to make it a reality.

What do we mean? When should a student pick a college they can’t afford?

Well, we don’t mean merely choosing an expensive college based solely on name-brand alone. Going to Harvard to obtain an education degree is not worth the investment if you are paying full price (over $73,000 per year in 2019). An elementary teacher’s salary averaging $45,248 will not be enough to justify the cost to attend Harvard and will likely leave a student in massive debt.

Families need to understand the payoffs and the benefits of their school choice.

We’ll say it again…don’t be blinded by the name. However, a few expensive colleges may be worth the extra cost depending on the outcome a student is seeking. For instance, students interested in working on Wall Street that attend Harvard have a better shot at getting into a very lucrative field because of the connections they form at Harvard and its name recognition in the financial sector.

Engineering students at MIT also will have the potential for a more lucrative path ahead. Bottom line, certain institutions are worth the premium, but families need to do some serious contemplation to make sure they couldn’t receive a similar outcome somewhere else.

What is the desired outcome of a college education?

Answer this question truthfully. If the priority is an education at an expensive college because the career goals are best met by that college, understand families will have to make trade-offs in other areas to make it happen.

Recently, the federal government’s College Scorecard tool incorporated top fields of study at each school along with the median earnings in those degrees one year after graduation. Only data from students who received federal financial aid like student loans or federal grants is included in the calculation–so keep that in mind. The Scorecard can be a tool to get an idea about earnings after graduation from the schools you are interested in.

Think about the value quotient.

Advisors need to help families understand the value quotient of their decision…the combined effect of the quality and the cost. It is the ratio of a solution’s desired effect (a specific career) to its undesired outcome (the cost). We can’t decide for them. Our goal is to make them understand the impact of that decision.

Hope is not a strategy.

Families need to understand that money has to be part of the equation. Parental financial needs (retirement!) must be weighed against a student’s desire. Too often, we see parents steamrolled by their kids into making a poor choice. Parents must have the money conversation with their child. With clarity on the process, they can both be on the same page to make smart choices.

Still going with the expensive college?

We understand. We get it. The student has been accepted to Harvard. (An amazing accomplishment…over 1,800 valedictorians are turned down by Harvard each year.) The student wants to be a Wall Street whiz. The family has trust that the value of the financial degree will outweigh the cost now.

They still need a plan.

We still want to minimize the student loan debt and ensure a comfortable retirement. In the context of a comprehensive financial plan, we sometimes find that parents are in great shape for retirement, but have a big gap when it comes to paying for college.

Most financial advisors would tell you “there is only one way to pay for retirement and lots of ways to pay for college.” We couldn’t agree more. But if helping kiddos get a great education is paramount, perhaps families can reduce their annual 401k investment and decide to work for a few more years instead of retiring early as they hoped. We can help families understand where they are as a whole, and incorporate the college choice into the larger financial plan.

One last soapbox from us…

If a gifted student is accepted into Harvard, practically every school would love to have that student attend their college instead. And many will have lots of money to offer them. Harvard and other exclusive colleges do not provide merit scholarships. If a family earns more than $200,000, they will probably not be eligible for any financial assistance from Harvard. We encourage families to visit the net price calculator on the institution’s website to get an idea of what the out of pocket cost will be to attend.

We hear stories all the time about students who were accepted to those exclusive schools, but chose to attend a state school or less well known private colleges instead because of full ride scholarship offers. (Nice little piece from a student about how he chose Ohio State over Harvard.)

Struggling with the draw of the name brand versus the pull of the more affordable price tag? A great book to read is “Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania,” by Frank Bruni.

Ok…off our soapbox.

We can help families understand all the intricacies of making the best choice for them and their student.

Originally published 11/2017
Updated 3/2020