Paying for Education

Learning how to finance your tuition is an education in itself.

By the time you finish paying for college, you may have shelled out enough money to buy a luxury car, a small yacht, or perhaps even a house. And that doesn't count the cost of graduate or professional school.

The car won't last, however, while education affects your earning power for the rest of your life. So the short-term sacrifice is generally worth the potential long-term gain. But how on Earth are you going to pay for it?

Decisions, Decisions

The hard facts about paying for college are these: even after adjusting for inflation, the average cost of tuition at public and private universities nearly doubled between 1990 and 2005, while average salaries rose only slightly. Tuition is the cost of enrolling in courses. In recent years, schools have added on many other costly fees. Second, financial aid rose to meet the increased need, but mostly in terms of loans, not scholarships. How can you achieve your educational goals without jeopardizing your financial future? Start by thinking about the type of school you want to attend. For example:

• What school do you want to attend, and why? Examine your goals. Can you find the educational resources you need at a less-expensive public school? The answer, often, is yes. However, if only private schools have what you're looking for, don't rule them out because of cost. Although private schools are generally more costly than public schools, private schools often can be more generous in providing financial aid.
• How much does location matter to you? According to the College Board, tuition costs vary considerably from region to region. Schools in the Southwest are generally less expensive than those in the East.
• How much debt do you want to incur? If you expect to be a freelance artist after you graduate, you might want to take on less debt than if you're planning a career as a doctor.

The costs of attending college have been rising faster than the rate of inflation. This chart, adjusted for inflation to 2004 dollars, shows how the average annual costs of attending four-year private and public colleges and universities have risen since 1985.

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