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Students parents Be realistic about the college payoff
MADISON, Wis. (10/18/10)--“It’s time to puncture the myth that the more you pay for college, the more you earn upon graduation," said Vince Passione, CEO and founder of Fynanz, a technology provider of turn-key private student lending networks and solutions and a CUNA Strategic Services provider. While it’s never been more important for young people to have a college degree to earn a living that will enable them to have an opportunity to be a middle-income or more wage earner, too many students are spending a fortune on college but choosing--or winding up with--jobs that will never make it possible for them to pay off their student loans, Fynanz said. “The average tuition and fees for one year of private education is $27,000 and has been rising faster than the cost of living. At this cost, potential student borrowers must ask themselves what type of income they will derive from their course of study and if there is a positive return,” Passione said. But the question parents and students have to ask themselves is: Does it make sense to spend that kind of money on just any degree? Seven of the jobs listed in CNN/Money Magazine's (Oct. 4) top 10 paying jobs are in the medical field, for example. "I spent $50,000 a year sending my daughter to the University of Chicago--a great, great school,” a parent said during a recent college tour. “She graduated and took a journalism job that paid her $18,000 annually. She would have been better off financially going to a state school where we invested that kind of money into a house." Well aware of the Sallie Mae study released a week ago that reported one out of four parents saving for their child's college costs plan to raid their retirement savings accounts, Passione said it's important parents and students be realistic about their futures. For one thing, parents dipping into their retirement nest egg are potentially triggering bigger tax penalties than if they tapped into other investment options. Even taking out a loan against a 401(k) can be dangerous because it must be paid back within five years, or immediately when the borrower changes jobs. Also, tapping a retirement account for college reduces the amount of potential financial aid a family qualifies for in the following year by as much as 47%, according to Fastweb.com and FinAid.org. Passione and Fynanz are so convinced that consumers need help with their personal finance matters that they recently launched a personal finance column called “Ken's Corner,” dealing primarily with financial aid issues for college students and their parents.
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