Page 162 - Crisis in Higher Education

Changing Attitudes and Expectations • 133

pursuing a double major. When borrowing is easy, students are more
likely to accept these outcomes.
4. Universities encourage borrowing: “Everyone is doing it,” so bor-
rowing is becoming normal behavior, at least in the minds of many
parents and students. Universities encourage and benefit from this
viewpoint. They are quick to suggest that students, who are con-
cerned about cost, borrow more. Universities use loans as a way to
deflect criticism about the high cost of education, which is rising
much more rapidly than the rate of inflation.

Families should have a financial plan that includes a budget for daily,
weekly, and monthly operating expenses as well as for longer term expen-
ditures such as automobiles, retirement, and higher education. Specifically,
a budgeting for higher education should include the following:

1. Cost estimation: It begins with descriptions of what is required to
attain a bachelor’s degree: tuition, fees, learning materials, room and
board, transportation, and miscellaneous expenses. These are dis-
cussed and presented in Chapter 1, Table 1.1 for the different types of
institutions.
2. Spend less on higher education: These ideas are discussed earlier in
this chapter.
3. Spend less on other purchases: Because higher education is only
one part of the household budget, there are opportunities to spend
less on other aspects of the operating and capital budgets. Cutting
back on things like leisure, entertainment, clothing, and household
expenses can over time generate substantial savings. Refinancing a
house to lower the interest rate and mortgage payment, making cars
last longer, and avoiding luxuries like hot tubs and power boats are a
few of many ways to reduce capital expenses.
4. Earn more: Find a better job or secure part-time work to generate
more income.
5. Start early: Financial consultants strongly suggest that planning
begins as soon as possible. It is easier to pay for major purchases
without borrowing, including higher education, when there are
15 or 20 years to save and invest.

Budgeting, planning, earning more, and spending less are all useful
tools in becoming debt-free, but there are other important tips that can