Mike Earl, CFP®, CPWA®
When Mitch Daniels (former Indiana Governor) took over as President of Purdue University in 2013, the school had increased tuition 36 years in a row. Since then, Purdue has not raised tuition once. By graduation day in 2020, Purdue will be able to boast the total cost of “going to Purdue will be less in 2020 than it was in 2012.”
He has achieved this feat through a number of innovations, including an invite to Amazon to build brick-and-mortar stores on campus – a first for Amazon. The school has slashed the cost of textbooks by 30% since Daniels took over. And that’s just one of the many cost-cutting measures embarked upon under Daniels’ leadership.
Purdue has become known as a school that keeps cost in check, which has led to it attracting “record applications, from higher- and higher-quality students.”
As a result of these prudent cost-cutting measures, total undergraduate loan debt for students at Purdue University has fallen dramatically:
Purdue University’s enrolled freshman boast an average ACT score of 29 and an average SAT score of 1282. The school is ranked #56 (of 312) in US News rankings of the Best Colleges in America.
We at The Wealth Group have long felt that college costs should not be a reason for parents to sacrifice their own retirement savings. We advise clients to take a multi-pronged approach to college planning for their children and grandchildren, including:
Investing consistently and over the long-term in a 529 account.
Encouraging high school students to pursue programs such as Post-Secondary Enrollment Options (PSEO), the College-Level Examination Program (CLEP), and Advanced Placement (AP) Exams. These programs can lead motivated students to realistically complete 1-2 years’ worth of college credits before finishing high school. Further, these programs are not solely for the highly-gifted students – students don’t need to be brilliant to obtain a lot of credits while still in high school.
Involving your student in the cost/benefit analysis of various school choices. Students should understand the costs of various schools while still in high school. This leads to a more informed college decision, and perhaps more importantly, leads to a young person that grows his/her financial decision-making skills by understanding the value of a dollar long before entering “the real world.”
Our hope is that other schools follow the example set by Purdue University. But we won’t hold our breath. Nonetheless, the higher education space is ripe for entrepreneurs and innovators to profit (and thus, for American families to benefit) from the rapid inflation of costs that has been endemic to higher education. Cost-cutting by schools like Purdue should put pressure on other universities to follow suit.
For many American families, spending on college is the second-largest purchase of their lives (behind housing). The college decision deserves a great deal of attention and discussion. We at The Wealth Group can help lead you to success in this crucial area of financial planning.
Because The Wealth Group, Austin B. Colby & Associates is independent of Raymond James, the expressed written opinions above are our own and not necessarily reflective of Raymond James’ opinions.
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Investors should consider, before investing, whether the investor's or the designated beneficiary's home state offers any tax or other benefits that are only available for investment in such state's 529 college savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors.
Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.