Why You Should Consider a Community College Education

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

The cost of college, as we all know, has done nothing but skyrocket over the past 20 years.  According to data by the U.S. Labor Department, the price index for college tuition grew nearly 80% between August 2003 and August 2013 as reported by US News & World Report. Just look at the chart below from that report comparing costs like housing, medical care and college tuition.

In recent years, however, tuition has slowed a tad, but is still rising faster than wages.  The thought of funding college for one child -- let alone multiple children -- is enough to give any parent an ulcer.  But what if there was a more cost effective option that still yielded the same degree?  Community college is something more and more students are considering and for good reason when you take into consideration a college education at a Michigan public university will run close to $100,000 (or more) when you account for room and board!

The Community College Reputation

Our society has done a good job of making community college into almost a four-letter word. These are a few reasons community college is a hard sell for some families. You might:

  • Have parents or family who are all alumni from one school
  • Look at college as a socioeconomic “status symbol”
  • View it as an option for kids who didn’t excel as much in high school

While these are all understandable, I encourage clients to be open to it as an option.  The vast majority of classes students take in the first two years of college are very basic and aren’t very different than those you pay $80/credit vs. $250/credit.

The Community College Advantage

I was raised by a single mother who worked tirelessly and sacrificed to do whatever she could to provide for us. She was not in a position to fully fund a four-year tuition bill at an MSU or U of M.  In my senior year of high school, I decided to attend Livonia’s Schoolcraft College for the first two years of my studies and then transfer to Eastern Michigan University.  I was able to transfer just over 80 credit hours to EMU which allowed me to graduate with my bachelor degree in finance with EMU’s name on my diploma. And my total tuition bill was about $15,000.   Granted this was back in 2008, so the equivalent in today’s dollars would probably be closer to $20,000. But that’s still far less than I would have spent if I went away to school for the full four years.  Looking back, attending community college for the first two years was one of the best decisions I’ve ever personally made.  It kept me far more focused on my studies. It allowed me to begin working part-time at my first financial planning gig. I was still able to visit friends on the weekend who were away at school to get plenty of the fun college times in. And I saved a TON of money.  Not having a large student loan burden was the only reason I was able to purchase my first house two years after graduating -- which has since been sold and went towards the home my wife and I just built for our growing family. 

As an expectant father, I can already clearly see why parents want to provide nothing but the best for their children.  There comes a point, however, where we need to take a step back and look at what’s realistic and what’s not.  We never want to see clients abandon their retirement savings to fully fund college for children. Loans can be taken out for education but unfortunately they don’t exist for retirement.  The earlier you can start saving for your child’s education the better, even if it’s small.  Education planning is something we do for hundreds of our clients, don’t ever hesitate to contact us and let us know how we can help!    

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blog.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.