“What if I graduate from private school and have to live at home with my parents because I can’t find a job?”
“What if I graduate from private school and end up back at McDonald’s?”
“What if I graduate from private school and end up getting the same job with the same pay as my public school friends?”
“What if I bleed my parents dry to the point they have to work many more years to afford retirement?”
“What if I drop out of private school halfway through, thereby wasting all that time and money?”
I asked myself these questions over and over again when deciding between public university or private university. My parents weren’t rich nor was I smart enough to get large amounts of scholarship money from private schools, so I felt extra pressure to make the right choice.
My thesis is that the more fearful you are of failure and the more guilt you feel about spending money, the more you should consider going to public school. If you are unaware that 870 million people in the world suffer from malnourishment every day, then what do you really care about wasting food on your plate or gorging yourself to oblivion? If you know your wealthy parents will hook you up with a job at their company after graduation, does it really matter you spend $44,000 in tuition going to Boston University when U. Mass-Amherst costs $13,400 in tuition and provides just as good an education? Of course not.
In the end I decided there was no way in hell I was going to attend a private school that cost $25,000 a year in tuition back in the 1990’s if it wasn’t in the top 10. All subjects are taught off the same text books anyway. Some of the intro courses are even taught by teacher assistants. Why pay a premium?
I was even considering going to community college for two years and then transferring over to a four year institution to save my parents more money. But thankfully William & Mary accepted me despite my average SAT score. Virginia has some other great public schools including UVA, Virginia Tech, James Madison, and Mary Washington so it didn’t seem right to not take advantage of the public school system.
When I wrote “Average Inheritance By Country,” I was merely guessing at the $3,000 a year tuition my college charged back in 1995. After doing some digging online, it turns out my guesstimate was pretty spot on at $2,890 a year. The reason why I remember the cost 18 years later is because I was extremely sensitive to my family’s finances.
Public Or Private School?
I believe for the vast majority of middle class citizens, going to a public university is the optimal choice for the following reasons:
Benefits Of Going To A Public School
* High Rankings: Schools such as UC Berkeley, UCLA, UCSD, Wisconsin, Michigan, UVA, William & Mary, and UNC Chapel Hill are regularly ranked amongst the top universities in the nation. There is no dearth of high ranking public schools who produce Nobel laureates and Rhodes Scholars. If you don’t go to a highly ranked public school, rest assured that your public state school provides a similar quality level of education.
* More Economical: If we simply compare tuition costs, private school tuition is regularly 4X more than public school tuition ($40,000 vs. $10,000). After factoring in need based scholarships, the difference is still at least 2X. But if your family falls in the amorphous middle class income level of $60,000 – $120,000 a year, it’s unlikely your family will get need based help. The average student loan debt is roughly $29,400 according to the annual Project on Student Debt / TICAS report study.
* Larger Alumni Base: Public schools are generally much larger than private schools. As a result, you’ve got a much larger alumni base to work with who might help get you employed.
* More Grounded. No matter how hard a private school tries to diversify its students’ economic backgrounds, they will never succeed in reflecting the economic reality of the country’s population. I attended private schools for over a decade when I was overseas, and public schools for 11 years in the US and there is a big difference.
* Less Stress. If your parents pay $170,000 in tuition alone for your private education you’re going to be mighty stressed to be somebody successful by the time you graduate. You’ll feel similar amounts of stress if you have to take out student loans. If you go to public school that costs $40,000 in tuition over four years, you can afford to breathe easier if you don’t find that money job after graduation.
Benefits Of Going To Private School
* Prestige. If prestige is your thing, private schools in America carry more prestige. The reverse is true overseas at the university level curiously enough. Just remember that prestige must be followed by a prestigious occupation, otherwise, what’s the point other than to waste money?
* Facilities. Oh, how I envied some private school athletic and academic facilities! Some schools feel like you’re walking around a private country club with a world class golf course, a indoor Olympic pool, magnificent library, and the best computers and electronic equipment money can buy. Public school bathrooms and dorms can be less than Ritz Carlton like.
* Connections. The rich have gotten much richer than the rest of us over the past several decades. Attending private school puts you in contact with a much wealthier pool of students who likely have better connections to get you what you want. Your academics can only get you so far in this incestuous world. (Read: How The Rich And Powerful Become More Rich And Powerful)
* Target Schools. Many of the top employers in the world will specifically target a handful of schools for recruiting purposes. Many of these schools are private schools. Therefore it is even that much more important that if you do spend the big bucks attending a private school, that your school be on the recruiting list of employers you’d like to join.
Obviously if you are smart enough to get a scholarship from a private school that equals the cost of a state university, then attending a private school is also a great choice. Just know that not all private and public universities are created equal. And of course if your family is rich, then feel free to do whatever you want!
YOU CAN ALWAYS GO TO PRIVATE SCHOOL LATER
Hopefully nobody is foolish enough to want to go to private school just because it’s a private school. It’s important to do a cost benefit analysis on the university based on reputation, lifestyle, academics, sports, learning, alumni network, arts, music, and the ability to get a job upon graduation.
I seriously cannot believe that after 18 years, William & Mary still only charges $7,700 a year for tuition and fees. As an alumni, investor, and personal finance buff, there’s no way I would spend $45,000 a year for ANY private university over William & Mary. My kid would have to get at least a $25,000 a year scholarship from a top 10 school for me to even consider.
For folks considering blitzing their parent’s retirement savings or going into major debt by going to a private university, know that you might feel like a total failure if you graduate with a job that doesn’t match the cost and reputation of your university. You might even join protestors who rail against the government and your private university for not doing enough even though you consciously decided to attend!
Education is becoming commoditized with free online courses from MIT and other leading universities for example. You can even read blogs like this one to learn about personal finance for free and still throw peanuts at me in the comments section.
If you have your heart set on private university, I suggest going to public university first to see how things go. If you’re financially responsible and still have an itch to go to private school, then go ahead and spend a ton of your own money on graduate school.
Refinance Your Student Loan With SoFi
SoFi is a fantastic social lending company that provides rates as low as 1.9% variable with auto pay and 3.5% fixed with auto pay. The reason why they can offer lower rates than the rest is because they analyze you based on merit, quality of employment, and education besides just your credit score and financials. When you just graduate or are early in your employment career, your credit score won’t be as high, thereby penalizing you from getting the best rate possible. There is zero origination and prepayment fees. Offer terms are from 5, 10, 15, 20 years in both fixed and variable. Both private and public student loans can be refinanced.
Besides low rates, one of their best features is their unemployment benefits. If you lose your job while repaying your loans, you don’t have to pay your loan for up to 12 months while you look for a new job! Interest will still accrue, but having this cash flow break is a huge benefit. They also provide job assistance guidance as well. You can apply to refinance or apply for a new student loan here.
Updated for 2017 and beyond