Paying for College,Then and Now

Excerpt from my book, coming soon.

© 2009 C. Gary Hoffman, MBA, CFP^® , CCPS

The Real Cost of College: How to Finance Your Kids’ College Education Without Bankrupting Your Retirement®

  When I was nearing graduation of high school in 1970, I told my parents of my desire to go to college and asked for their help. I'll never forget the look on their face and our conversation.  I was the youngest of four boys and neither of my parents had gone to college nor any of my older brothers.
My dad worked as a debit insurance salesman for the Life Insurance Company of Virginia and my mom having been a stay-at-home housewife, had gone to work as a secretary. We lived in a very modest small home outside of Richmond across the street from my grandparents’ mini farm where my mother had grown up with her four siblings. My parents had met at the VA hospital during World War II just up the road, at a time when college degrees were not nearly as prevalent and as critical as they are today in the workforce.  So when I asked for help, not only did it seem to be a burden beyond their means but perhaps a luxury that neither of us could afford.
So they said they wouldn't be able to help me and if I wanted to go to college, I would have to be “on my own”. Well my mom lied a little because when I was in college she sent me a check every other week, for $5, $10 or sometimes $20, whatever she could afford out of her hard earned paycheck. Thanks Mom!
I was determined to go to college in spite of the costs and our lack of family funding. I applied to three colleges Virginia Tech, the University of Richmond and the University of Virginia. I was fortunate enough to be accepted into all three.
I had followed my brothers’ lead into the construction field and had been working as a carpenter's helper during the summers in high school. After deciding to attend the University of Virginia I squirreled away my summer savings, added it to what I had already saved (which wasn't much) and headed off to college. During the holiday and winter breaks I would work construction with my brother’s company to help make ends meet.
In round figures the total cost of attendance at the University of Virginia in the early 1970s was approximately $3,000 per year. During the summer break I was able to pick up a full- time job as a carpenter (I promoted myself!) earning six dollars per hour. With 10 weeks of work over summer break, 40 hours per week at six dollars per hour I was able to earn about $2,400. That left me about $600 short per year which I covered with student loans and work during winter and holiday breaks.
Come to find out I wasn't the only one at that time "paying my own way" through college.  Over recent years I conducted numerous at my college planning seminars. Often as many as one half of the parents attending these sessions had “paid their way through college”. 
If an ambitious student 25 to 30 years ago worked full time in the summers and during college breaks, they could pay for almost all of the entire cost of education without running up debt.
Today the story is quite different.  I currently have two of my kids in college full- time with Virginia in-state tuition rates and fees.  The total cost of attendance (COA) each college is approximately $20,000 per year. My son and daughter both have been working during summer college breaks. One worked at a local summer camp as a counselor and the other has worked at a local bagel shop.  The going rate for college kids is about (if you are lucky) $10 per hour.  40 hours per week for 10 weeks earns approximately $4000 per full-time summer employment. 
If today's student was trying to "pay their way through college" just using summer earnings, they would have a $16,000 shortfall each year!
In comparing these two time periods, there are obviously factors of inflation to consider. In the 70s I was $600 short after applying my summer earnings, which was 20% of my total cost. I did use student loans and when I left college I had $1,500 of total student debt. I remember what a huge amount of money that seemed to be and wondering if I could ever pay it off!  
Inflation actually helped to reduce the college debt as over time, the value of the loan dollars declined, while my ability to earn money increased.
In today's world taking on $16,000 worth of debt each year is not a reasonable or realistic approach.  The $16,000 earnings deficit is 80% of the total cost of attendance compared to an earnings deficit of 20% in the 70s.  
What this illustrates is the disparity between the inflation of college costs over 30 years and the meager growth rate of unskilled labor earnings over that same time period.
So what we could do then, our kids can't do now! For our students to earn 80% of the cost of attendance like I did, they have to be earning $16,000 over 10 weeks. 
Nevertheless, if you do the comparative mathematics, today’s student would need to earn $1,600 per week, (a rate of $83,200 per year), for summer wages to be able to match today’s inflated cost of college. And if students can earn that much over 10 weeks you and they might wonder why even to go to college!