Make sure your degree pays off
A college degree is essential these days if you want a good job. Also essential: Making sure you're getting the best bang for your education buck.
This post comes from MSN Money's Liz Pulliam Weston.
A college degree is pretty important in our brave new economy, but some schools seem more intent on exploiting their students than educating them for available jobs.
The latest report on school scandals comes from The New York Times, which detailed how law schools fudge their employment numbers to make their students' job prospects seem much rosier than they actually are. Graduates often discover they've been had only after they've paid fortunes for their degrees, since "tuition at even mediocre law schools can cost up to $43,000 a year," as The Times explains. Many times, these educations are financed with crushing debt.
"There were fewer complaints about fudging and subsidizing when legal jobs were plentiful," The Times notes. "But student loans have always been the financial equivalent of chronic illnesses because there is no legal way to shake them. So the glut of diplomas, the dearth of jobs and those candy-coated employment statistics have now yielded a crop of furious young lawyers who say they mortgaged their future under false pretenses. You can sample their rage, and their admonitions, on what are known as law school scam blogs, with names like Shilling Me Softly, Subprime JD and Rose Colored Glasses."
The Times' exposé comes on top of a crescendo of complaints about deception and fraud at the other end of the higher education spectrum: for-profit colleges.
These schools, which sometimes tout their vocational and bachelor’s degree programs on late-night television, often target working adults, immigrants, minorities and low-income people eager to improve their economic prospects. For-profit schools educate only one out of eight college students in the U.S., but they account for almost half of federal loan defaults, according to the U.S. Department of Education.
Too often, critics say, students at for-profit colleges wind up with useless degrees, credits that can't be transferred to other schools and piles of debt they can't pay.
As Bloomberg Businessweek put it, "Students seeking to move up in life by getting a degree from a for-profit college are being trapped in a growing underclass of education debtors."
These students aren't just being dumb about debt; they’re often being duped. An investigation of 15 for-profit colleges by the U.S. Government Accountability Office found that every school misrepresented its programs, lying or making questionable statements about cost, duration and employment prospects for their degree holders. Several encouraged investigators posing as students to lie on their federal financial aid programs, which provide for-profit colleges most of their funding.
The answer to these scandals isn't to opt out, since higher education isn't really a luxury anymore. Without at least a two-year degree, the prospects of landing more than low-wage, low-skill work will grow increasingly dim as the U.S. continues to export lucrative manufacturing jobs. If you want to scrabble up to the middle class, or keep from falling out of it, a college degree is all but essential.
But the scandals wracking higher education show that people have to be cautious -- and smart -- about the education they get. If you're a prospective student, or the parent of one, here's what you need to keep in mind:
You should save for your kid's college education, if you can. Make sure you're saving enough for your own retirement first, but try to save for your child as well. Money put aside in 529 college savings plans gets favorable treatment in financial aid formulas, and can reduce the debt your kid may one day face. For more, read "How to save for your kid's college."
Do your research. Don't rely on the school’s assessment of your job prospects. Find out what the demand is for your degree from more objective sources, such as prospective employers. The U.S. Department of Labor tracks the fastest-growing occupations and gives an idea of expected wages. Look for jobs with median wages that are H (high) or VH (very high).
Limit student loans. With most degrees, you don't want to take on more debt in total than you expect to make in the first year of employment. Don't apply for private education loans until you've exhausted available federal student loans, and consider avoiding private loans altogether. Using non-federal student loans, which have variable rates and few consumer protections, is equivalent to using credit cards, except that you can't shake the debt in bankruptcy court.
Cast a wide net. Before you enroll in a for-profit college, investigate your alternatives, particularly local community colleges. Education there is far cheaper and many community collegeso ffer evening or weekend classes for working students.
Don't assume your credits will transfer. Some students start at for-profit or community colleges hoping to transfer to better-known institutions. Before you pay tuition, contact the college to which you want to transfer to make sure your credits will be honored.
Don't participate in fraud. If a school official encourages you to lie on a financial aid application, run the other way. A school that's eager to rip off the federal government will have no compunction about ripping you off, as well.
Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also helps middle-class families cope at Building a Brighter Future.
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