Fortunately, there are ways to combat this risk. Some high quality educational options still exist in the form of small, public universities, often found in non-metropolitan areas—and many families are starting to recognize their quality and value. These small public schools often provide high-quality faculty, low student-teacher ratios, a breadth of majors, programs, clubs, extra-curricular activities and sports with a level of intimacy difficult to achieve in the world of larger flagship universities and their 500-person lecture halls.
Costs at these smaller public universities are often significantly less. Colorado has several of these public options, and they cost about $18,000 annually for in-state residents, and about $28,000 annually for non-residents. For these schools, a common four-year total debt load for those who borrow is about $24,000, which translates into a $247 per month (or $2,960 per year) loan repayment over 10 years, assuming a 5 percent interest rate. For students who must borrow to graduate from a larger flagship school, it is not uncommon to receive $60,000 or more in total loans, which translates into at least $617 per month (or $7,400 per year) over ten years.
Lastly, more families are starting to realize that spending more on college does not necessarily equate to greater value. In fact, studies conducted by the National Bureau of Economic Research have repeatedly shown that spending more on a college education does not necessarily correlate with a better job or higher paycheck. With all of that in mind, families should not feel guilty about making the choice to send their children to a reasonably priced college.
By making the smart choice to send their children to an affordable institution, middle-class and upper-middle class families can still provide their children with a great education while not falling victim to SORR. In some cases, they may be saving their own retirements—because the last time I checked, it was pretty difficult to get a loan or scholarship to pay for retirement.
Dr. Gregory B. Salsbury is president of Western State Colorado University following a 25-year career in the financial service industry.