On May 4th, The Wall Street Journal Reports TV Show discussed the increasing cost of college and ways to save for education. Here are some of the highlights from the show.

COLLEGE FEES ARE INCREASING

We all know that prices across the board tend to go up over time, but did you know that the cost of education is averaging an increase of 6% a year? This is clearly above the standard (prior to 2007) 3% inflation rate and most likely above your annual pay increase. This fact clearly supports the trend that students will graduate with plenty of debt - over 20,000 on the average.

WHAT ARE SOME SAMPLE ANNUAL COLLEGE COSTS?

In this episode the President of University of Pennsylvania, Amy Gutmann, discussed their fairly new initiative to give full scholarships to those who have a combined family income of less than $100,000. This is a great program partially funded by their extremely large endowment. Considering the cost to attend UPENN, it almost seems like this program is a necessity for the success of the university, going forward. The UPENN full scholarship reduces your monetary expense to attend however it does not reduce the time you will need to invest to complete your undergraduate degree. Below are some sample costs to attend Pennsylvania higher education institutions. Figure 1 shows the information graphically and the potential cost saving from taking advantage of the CLEP examination program.

Example: UPENN 08-09
Tuition 37,526
Books 1,200
Room & Board 10,622
Total 48,148
Source: WWW.UPENN.EDU

Example: PENN STATE 08-09
Tuition 11,476
Books 1,200
Room & Board 7,700
Total 20,376
Source: WWW.PSU.EDU

Example: Community College of Philadelphia 08-09
Tuition 3,21
Books 1,200
Room & Board -
Total 4,410
Source: WWW.CCP.EDU

NOTE: Only one school at UPENN accepts CLEP credit. As with all things college related, check with your university counselor to make sure you can take advantage of earning college credit this way.

SAVE TIME AND MONEY ON COLLEGE WITH CLEP TESTS

The College Board (the folks who put together that great SAT exam we all love) put together a program back in the 80s to allow students to get credit for the knowledge they already have. Why would you want to take a class that you are already educated on? The benefit of this program lies in the fact that you are saving money (tuition, books, Room and Board), saving time (9 week average class time) and fast-tracking yourself to that graduate degree each time you pass a CLEP exam. Personally, I found the most value in the notion of fast-tracking to graduate school, which is why I chose to CLEP out.

GETTING IN TO A TOP UNIVERSITY

The importance of the college degree is steadily increasing in our service oriented economy. The number of students enrolled in our top universities is also increasing. Add to both of these the competition of ever improving GPA, SAT and GMAT requirements among top universities and you have quite a challenge. For high school students applying to a university, having a couple of CLEP exams completed can give them an edge with college entrance and move them toward upper division classes more quickly.

GRADUATE DEGREE IS MORE THE NORM

We seem to be getting to the point where a graduate degree is the bare minimum for a good position. Take a look at Google's open jobs and you will often see PhD as the desired education level - for a mid-level position. What this says is saving time on your undergraduate education and moving on to your graduate degree will clearly give you a competitive edge in the job market and help fast track your career. Taking a few CLEP exams can truly payoff big with the saving of time and money.

In Part II of this WSJ Reports episode review, I will touch on potential tax savings that were mentioned.

-Jason
CLEP Test Review

References:
Saving for College Wall Street Journal Reports, May 4 2008
Amy Gutmann, President, University of Pennsylvania
Penn's president on the new ways an Ivy League education can be more affordable for the best and the brightest.
http://www.cnbc.com/id/15840232?video=729542669&play=1
Joe Hurley, CEO, Savingforcollege.com
Hurley explains how saving for college costs over time is less daunting when you choose a 529 investment plan, run by your local state government.
http://www.cnbc.com/id/15840232?video=729544343&play=1
Univerisity of Pennsylvania Website
http://www.upenn.edu
Pennsylvania State University Website
http://www.psu.edu
Community College of Philadelphia Website
http://www.ccp.edu/site/prospective/financial_aid/tuition.php