Selecting a College the Fiscally Smart Way Posted on:Friday, September 7th, 2012

If you are like most students in America, it will serve you well to consider the return on investment (ROI) in making your college selections. Learning how to select colleges the fiscally smart way is perhaps the most important step to enrolling in college.

Consider this recent New York Magazine article entitled, The Kids are Actually Sort of Alright. The article looks at how the latest generation of college graduates is faring given our economic state. Did you know that nearly 14 percent of college graduates from the classes of 2006 through 2010 can’t find full-time work, and overall just 55.3 percent of people ages 16 to 29 have jobs? Almost a quarter more people ages 25 to 34 are living with their parents since the beginning of the recession.  And shockingly, student loans, which averaged $24,000 for 2009 graduates, have now surpassed credit cards as the number one source of debt.

I say all of this not to scare you, rather to arm you with a college going mentality that is more suited for the 21^st century: One that is more discerning and ultimately more self-sustaining. Understanding the facts, may help you to make the most of your college investment.   If you are like most students who are pursuing their post-secondary education on a budget, here are some things that you should consider:

There’s More to College than a Name

Studies show that attending big name private colleges does not result in significantly higher starting salaries for Ivy League graduates versus students who attended public colleges. In fact a 2009 BusinessWeek report found that the ROI for undergraduate students attending business school at in-state public institutions was exceedingly higher than for those students attending top-ranked private schools like Notre Dame or Wharton.  Princeton economics professor Alan Krueger, who has done extensive research comparing the marginal impact of graduating from prestigious schools versus lesser known schools had this to say to prospective college students: “Don’t believe that the only school worth attending is one that would not admit you.  That you go to college is more important than where you go.  Find a school whose academic strengths match your interests and which devotes resources to instruction on those fields. Recognize that your own motivation, ambition and talents will determine your success more than the college name on your diploma.”

There is definitely something to be said to choosing a school that is the “right fit.” But making a fiscally smart selection is equally important in the long run.  Consider the worthwhile benefits to attending a state university or lesser known private college, or even starting at a community college. For example, did you know that some employers actually consider GPA and ranking when hiring new graduates? One study found that students who are accepted to more competitive colleges, but attend less selective ones tend to graduate with higher GPA’s and class rank, thereby increasing the marketability of some students.

Realizing that your college experience is 90% what you make it gives you more reason to think outside of the box.

When researching colleges, consider the school’s generosity level–percentage of financial need met,  percentage in merit-based and need-based aid versus loan, the amount of aid distributed over 4 years (some schools significantly reduce aid beyond freshman year). Collegedata is a great site for finding this information.  To learn more about ROI for different colleges check out payscale.com, which provides College ROI Reports.