Business Breakfast: US News and World Report

[0:00]" At today's WBZ business breakfast on getting into college I spoke with Kim Clarke the senior editor for education at US news and world report. About college affordability and financial --"

[0:11]" They said today that college becoming more affordable is that a misnomer yes college is not more affordable today. Tell me why I'm. Financially has not been keeping up with the cost of college the price of college. If you look at for example the pell grant that's gone from about 4000 dollars five years ago about 4700 dollars that's the maximum pell grant. Meanwhile the average cost of college has gone up by several thousand dollars. So the cost of college tuition inflation -- rice get about 566% a year tuition. Any financial -- is only rising at about 34% a year you can see what began -- can be created and the gap continues to watch. But does it that said there are still ways to go to great schools one way for example is to start as a community college a low cost public institution. Yeah pell grant -- Stafford loan next cover your total total tuition costs. And if you stay home young people don't want to stay in only if they. If they do stay home they can easily get picked first two years in and then transfer out to a public university if you use that as calculated that you total cost -- the degree. Could be something like 40000 dollars even if you live on campus -- last two years. It's really very affordable when he considers that a college degree. On average -- means you're gonna learn about 800000 dollars more over your lifetime we'll if he didn't go to college. To 40000 dollar investment for an 800000 dollar returned. -- to get to go to college to figure out if that's agreed investment that's pretty easy math. Now you've begun a website that sort of demystify his the the financial aid letter. Tell me about that in what do you try to show through that website. Okay it's actually just about financially lenders -- to find -- it financial aid letter dot com or eight US needs dot com. We're the only places that it posted true financial -- letters financially letters that actual students received what we show is that there's so much jargon. And prickly sometimes misleading information. The makes it look like the school is much more affordable than it is too many schools are packaging very expensive loans into what they call their aid package so it looks like. She got a free ride to this university but if you look at the fine print. Even after about 1020000 dollars a year they add that up but her for five years. Talking 8090000 dollars in debt and then you start compounding interest and kids are graduating with very high -- payments. Now that's scary he's people should be aware of it if you don't mind doing it that's finally got to know ahead of time that's what -- doing. That's going to do want to point out that the average student is currently only graduating with about 20000 dollars in debt. Very affordable that's not even the price of the new -- these days in many kids bother have a current cars a depreciating asset in education would be a they -- have more credit card debt right right so at 20000 dollars no problem if you stick with the federal student loans such as the Stafford. -- it's a great deal. And they have a maximum analogy can -- every year we'll get out with the very reasonable amount of debt. Now is Thomas about some of those those terms those terms on the financial -- letter what are some that really stick on your mind is. Totally going to use the word bogus. Okay well the one example we have on financially letter dot com is a school that -- packages something it calls alternative financing. In its. In its financial aid package well. I call the director of financial I said what's this and she's and I would soon could be alone I don't know. -- a private loan is simply alone that Citibank -- your local credit union would make you want your signature and that's eight that's a business transaction. So I'm concerned that they are using very vague terminology to describe really. What is just a business loan and frankly usually has very high interest rates"