Why aren't many students completing their college education? It's not simply about getting passing grades. A survey conducted in September 2017 by the 1,000 Dreams Fund, a national scholarship fund for American girls in high school and college, reveals half of those who didn't graduate dropped out of school because of financial reasons.
This phenomenon particularly affects women and minorities, with 52% of women and 58% of first-generation students saying they dropped out of school because of money.
Extra Costs Add More Hardship
The hardship many experience when going to college goes beyond being able to pay for tuition. The top five non-tuition expenses students said were "much more than expected" are:
Unfortunately, the high cost of education has also hindered students' abilities to get prepared for their careers. While a majority of students surveyed said extra activities like study abroad programs and unpaid internships are important to reaching professional goals, the same percentage (74%) had to turn down such activities due to a lack of financing.
"In conducting this survey, our intention is to shed light on the lesser-known financial obstacles that students, especially young women, face in pursuing higher education and how those challenges affect their careers and finances after graduation," said Christie Garton, founder of 1,000 Dreams Fund, in the survey report.
It's no surprise young adults are struggling with the increasing cost of a college education. According to The College Board, a non-profit organization that expands access to higher education, a "moderate" college budget (tuition and fees) for an in-state public college for the 2016—2017 academic year averaged $24,610. A moderate budget at a private college averaged $49,320. These prices have increased at a faster rate than the financial aid and family income needed to cover costs, and 2.5 times the U.S. inflation rate since 1986, according to Gordon Wadsworth, author of The College Trap.
Young Adults Need Education on Personal Finance Too
A lack of personal finance knowledge often contributes to the challenges students face. Among survey respondents, 47% didn't feel prepared to manage their finances while in college and 50% thought a high school course on personal finance would have helped. Among women, 51% felt financially unprepared for college.
Another 2017 report showed less than 10% of millennials had a "high level" of knowledge about personal finance and only about one-quarter demonstrated a basic understanding. This is detrimental to long-term financial success because students often need to juggle many expenses and debt, which can have an impact on their credit scores. A poor credit score can hurt the ability to obtain financing in the future for a car loan or a mortgage.
What Students Can Do to Afford College
There is no specific formula for how to finance a college education. However, there are many options available that students can pursue to cover costs. These include:
- Scholarships: A couple websites to review for scholarship listings are Fastweb.com and Collegeboard.com. There are also many private scholarships from corporations and nonprofit organizations, so search online and ask around.
- Grants: Colleges, states, and the federal government give out grants, which don't need to be repaid. Most are awarded based on your financial need, and determined by the income you reported on the Free Application for Federal Student Aid (FAFSA).
- Student Loans: This is another reason to apply for FAFSA. The school will use the information from this form to determine how much aid you are eligible to receive. This is essentially a line of credit so you will accrue interest but the benefit is that the interest is usually lower than a typical personal loan and you can wait until you've completed college to start paying it back.
There are also additional options to help pay for college such as working part-time, considering living at home to save on daily expenses, and starting out at a community college, which have much lower tuition rates.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on October 17, 2017, and has been updated.