What Is the "Real" Cost of College? The Answer Will Shock You!

We all know that sending your kid's to college although necessary, is very expensive. Unfortunately, many parents are shocked when they discover the real costs they never considered and it's often too late to do anything about.

So what are these costs? First, let's start with the Colleges themselves.

Estimated Cost of Attendance

Every college by law has to post their estimated annual Cost of Attendance on their school's website. The cost of attendance is much more that tuition and room & board. There are books, lab fees, travel expenses and other miscellaneous fees(this is where they throw everything else, even fees not yet know). This seems pretty straight forward right?...Wrong!

If you ask any parent who has sent their kid's to college if the quoted cost was higher or lower that what they really paid, the answer is always "We paid much more then we expected!' -100% of the time.

The single biggest cost factor though is how long it takes a college to graduate your child.

Parents are still under the false assumption that college is a 4-year financial commitment. The reality is that 53% of colleges cannot graduate their students in less than 6-years! Do you know for sure the schools you're planning on sending your kids to will hit the 4-year target? If not, your costs are already 50% higher that you may have thought! What is really shocking is that the colleges do NOT post these statistics on their websites so most parents are blind to this massive price variable.

Cost of Financing the College Costs

Statistically, less that 10% of families have saved enough money to send ONE of their children to college for ONE Year. This means that 90% of families have to finance the entire college bill (each year for each child) and 10% have to finance almost all of the college bill for one of their kid's and all of the bill for the rest!

Furthermore, most parents are unaware of how costly college loans are. The traditional Student Loans are 6.5% but are capped at $31,000 TOTAL for the entire time in college. The rest has to be financed by the parents at a rate of 7.9% plus 4% in fees! Each loan has a scheduled 10 year repayment period after graduation.

Let's do the math...Assuming 4-years in college @ $25,000 per year=$100,000 But, if loans are needed to pay the bill, your costs will look like this: $31,000(Student Loans) @ 6.5% repaid in 10 years=$42,240 Plus $69,000 (Parent Loans) @ 7.9% repaid in 10 years=$100,022 Total Cost=$142,262 Cost to Finance an already expensive college education= $42,262!

Wouldn't you rather spend that money elsewhere?

Opportunity Costs of Choosing the Wrong College

Many families, especially the middle and upper middle class families make all the wrong moves when choosing the college to spend their hard-earned money at. Unfortunately, the consequences are crippling for student and parent alike.

Opportunity cost of choosing the wrong college can be defined as the loss of potential gain elsewhere by NOT making better strategic choices. Examples of this opportunity cost would be:

How long it will take a college graduate before they land a job. This is caused by a college having a poor career placement history and limited opportunities for career advancing internships. If you child chooses the wrong college and it takes 2 years to get the job they always wanted, the opportunity cost would be Salary NOT earned over that 2 year period. If their staring salary is $35,000 then the opportunity cost would be $70,000 ($35,000 x 2 years waiting for a job)Poor college financing choices and the negative impact on your other life goals. Using the financing example above, the opportunity cost would be $42,262. This is YOUR money that you no longer have available to pay other household expenses, pay for other kid's activities or fund your retirement goals.Comparing colleges without considering their discount probabilities for your family. Let's assume you are considering two colleges with very similar sticker prices ($25k per year). With strategic student positioning & leveraging, College A will discount their price by $5,000 per year. This is a $20k savings over a four-year period. The opportunity cost of choosing to send your child to College B is what that $5,000 could have done for you elsewhere. In this example, let's use retirement. If you are 50 years of age and you plan to retire at 65, your opportunity cost on your future retirement would be $42,013 ($5,000 saved at 6% for 4 years and compounded until retirement @ age 65).

It is absolutely essential that you consider each and every one of these costs BEFORE you settle on a college.

Ignoring any of these cost factors is simply too expensive.

Ken Schreiber is the Host of 'College Bound' on AM560 WIND in Chicago.

If you would like additional information about Paying for College Without Draining Your Retirement, visit http://www.collegefundingexperts.com/ to access additional information and special consumer reports.