Powers also points to trade or vocational/technical training schools and to online or part-time schools that allow you to work and study at the same time. Another option is ROTC programs, in which the military subsidizes higher education in return for a commitment to some military service after graduation.
“Each branch—Army, Navy, Air Force, Marines, and Coast Guard—has its own programs depending on what the student wants to study,” he says.
The Case For Community Colleges
Ric Edelman, founder of Edelman Financial Engines in Fairfax, Va., suggests that students should consider earning college credits in high school and then attending a community college for two years before transferring to a state school for the final two years to earn a bachelor’s. “They’d save massive amounts of money—as much as half or more of the total cost of the degree,” he says.
Even on their own, associate’s degrees from two-year colleges are worthwhile. Between 1991 and 2015, says Martin Van Der Werf, associate director at Georgetown University’s Center on Education and the Workforce, the number of jobs that paid at least $35,000 a year declined by 8% for high school grads but increased by 83% for holders of associate’s degrees. “We are reaching the point where 14 years of education is the expected minimum,” he says.
The Case Against Community Colleges
But the right choice depends on the individual student’s objectives. “If your goal is to obtain a bachelor’s degree, taking a detour through a community college may cause you to miss your destination,” cautions Mark Kantrowitz, a student loan and financial aid expert.
Only a fifth of students who start at a community college go on to graduate with a bachelor’s degree within six years, he says, compared to two-thirds of those who start at a four-year college. Kantrowitz notes that dropouts suffer the most because they are left with debt but no income-boosting degree. They are “four times more likely to default,” he says.
He suggests a formula for calculating risks and rewards: “So long as your total student loan debt at graduation is less than your annual starting salary, college is still a worthwhile investment,” he says.
Creative Accounting
If your plans have suddenly changed, though, what happens to funds already squirreled away for college? Jack Furlong, advisor at Ameriprise Financial Services in Hibbing, Minn., says he has clients who “spent many years building massive college savings funds and now their children are going to community college or taking online classes for less money.”
Because they’ve shifted their focus from accumulating funds in 529 plans to taking distributions for other purposes, they’ve had to “get creative and figure out ways to get money out of these specialized accounts without incurring penalties and significant tax consequences,” he says.
That might not be a bad thing. “Other than on the Las Vegas strip, I don’t know if you could find a business that’s more expensive, cutthroat, or desperate to bring people in the doors than [four-year] colleges,” says Furlong.
To him, the pandemic just illuminated what college skeptics have been saying for a while—that four-year colleges are overpriced, and you can get a quality education from smaller and less expensive schools.
“It’s no different than purchasing a Cadillac over an Impala,” he says. “Both can be very nice cars and get you to the same place.”