The surest way to incur crushing college debt is to overbuy, and it’s the number one error students and parents make when purchasing a college education. Any car salesman will tell you that the biggest pitfall people face when buying a car is buying too much car. Too many people buy or lease the $55,000 car when their financial statement says the $30,000 vehicle is all they can afford.

The same tendency exists for many students and their parents when buying a college education. Too often, they overbuy and they do so partly because they believe that, like automobiles, higher prices mean higher quality.

That’s a mistaken assumption on two counts. First, college-bound students and their parents aren’t always sure what they are getting when they purchase a college education, and second they often don’t know what they’ll end up paying... in some cases the real price may not be revealed for years until they see what their student loans will cost them.

Not so for cars. You generally know the kind of car you are buying and what it will cost, financing included. That’s true whether it’s a Chevy, Camry, Mercury, Mercedes, Porsche, or Rolls Royce. And, the occasional lemon aside, what you pay for a car bears some relation to the quality you receive.

That’s not the case for academia. Quality learning experiences are hard to predict. Sometimes you pay for a Porsche and you get a Camry. Sometimes a Kia morphs into a Mercedes. What you get versus what you pay can also be upside down. For instance, Harvard and a bevy of wealthy elite schools now enable students from low-income families to graduate debt-free. For these students, from a financial perspective, Harvard is a Chevy.

Unfortunately, only a small number of low-income students can gain admission to these elite and wealthy schools and qualify for a high value/low cost education. For most students, regardless of income, too many colleges are now high value and high cost institutions. And even worse, too many offer only low value for high cost. That can be true even at two year public colleges, as well as four year public universities where prices have skyrocketed over the last four decades. Some community colleges are great. Others, not so much. The same is true for four year public universities where out-of-state prices rival pricy private colleges and prices for state residents aren’t far behind at some institutions where state legislatures have dumped the cost of paying for college on the backs of students and their parents.

The situation is bleak, in some states more than others. Fortunately you can still find superior value at a low or moderate cost if you look hard enough. But you’ll never realize these “bargains” if you simply “buy too much car.” So the first rule of smart college shopping is DON’T OVERBUY!

Sounds simple. But obviously it isn’t. Let me put it this way: I encourage people to save for college, but I hate it when they exercise great financial discipline for years and then fritter away their money on an expensive school, particularly one that is more than they can afford. It wouldn’t be so bad if their savings covered all four years of college. But at today’s prices, too often their savings don’t last more than a year or two.

Why does overbuying occur so frequently? There are several reasons, including conspicuous educational consumption, student peer pressure, impulse buying, the price/ value misconception, and insufficient search. These and others are the subject of future rules... so stay tuned.


Robert Ronstadt, PhD, is a former vice president of Boston University. He advises parents and students about finding, selecting, and paying for college. Contact him at 603-998-4364 or to learn more about how he can help you save money, limit college loans, and reduce stress.

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