Is College Always a good Financial Investment?

Right after going through the painful experience of writing a tuition check for my daughter's next semester of college, I had to remind myself of exactly why we choose to dole out money for a post secondary education. Not that I've ever questioned any investment I've made in my kids (I am glad to get my daughter through school), but we have to make sure that the thousands we invest in sending our kids to college is the best use of our money. As a college professor and staunch advocate for education, I am typically inclined to always endorse college for any American who wishes to pursue a better life. In fact, going to college was the best decision I've ever made. My grades were very poor in high school and I only chose to continue my education because I didn't have anything else to do.

But after speaking with NPR's Michele Martin about the matter, I decided that the issue warranted a deeper discussion. After all, there are some kids who go to college and party the entire time. There are some who choose a major that doesn't pay the bills, and there are also students who simply don't believe they belong there. So, while the whole idea of a student being "college material" is debatable, there are certainly those who don't get the most out of their education and/or choose to exclude themselves from the group of students most likely to succeed academically.

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Six Ways to Get Free Cash for College

COLLEGES -- THE CATCHES

Plenty. Both the Independent 529 and Sage Scholars networks of colleges are limited to a few hundred comparatively expensive private colleges. There's no guarantee members' children will apply to or be admitted to the member schools. Both programs require parents to sign up several years before they tap their money. And both cover only tuition, not room, board, books, or any other college-related expenses. Sage members build up Tuition Rewards only by investing or shopping with Sage partners, some of whom charge more for their products and services than competitors not affiliated with the firm. In addition, parents of students who don't attend a member school don't get a penny of the promised scholarships back. Sage rules allow colleges to count "rewards," which average about $1,700 a year, against scholarships they were going to give the student anyway, so students may not really get any extra money. If a student doesn't end up attending a member of the Independent 529 network, parents who withdraw their money can receive no more than 2 percent more than they contributed. (But they are also limited to 2 percent less than they contributed, which makes the prepaid plan comparatively attractive right now, when the stock market is weak.)

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Six Ways to Get Free Cash for College

It's true: Some states, businesses, and colleges are really handing out free cash to help build up parents' college savings accounts. There are a few catches, of course. Nobody should sign up for anything that sounds suspiciously good without doing a little homework. And most of the grants and rebates are comparatively modest: The typical family might reap a few hundred dollars. Few parents will get enough free cash to make up for the average 20-plus percent decline in 529 college savings plans over the past year. Still, those who collect the grants when their children are young or who are diligent about maximizing rebates could generate several extra thousand dollars. Click through to see six sources of free cash, as well as some of the "catches."

Six Ways to Get Free Cash for College

GET FREE CASH -- STATES

In at least nine states, government agencies or charities offer grants for college savings to local residents. Maine, for example, in 2009 started handing out $500 to babies born in the state for whom an adult opens a Maine 529. In states such as Arkansas, Colorado, Michigan, Minnesota, Rhode Island, and Utah, the matching grants go only to low- and middle-income families. Louisiana, New Jersey, and a few other states offer different kinds of grants or scholarship programs to encourage savers.

Six Ways to Get Free Cash for College

STATES -- THE CATCHES

Each state has its own deadlines and red tape. Some require parents to fill out long forms early each year, for example. Utah's grants are so new and limited that only 19 families had qualified in the first three months of the program, which started January 1. And the Utah Educational Savings Plan, which awards the money, will stop accepting applications for the year on May 29.

Six Ways to Get Free Cash for College

GET FREE CASH -- EMPLOYERS

In 2008, Unum started giving new parents grants of $700.

The catches: Parents have to open a 529 savings account before the baby's first birthday, and the bonus is taxable.

Six Ways to Get Free Cash for College

GET FREE CASH -- CREDIT CARDS

Fidelity offers an American Express card that will rebate 2 percent of all purchases to a Fidelity 529. Upromise just launched a Mastercard that will send rebate checks or funnel rebates to a Upromise 529 account or to reduce Sallie Mae educational loans. The new card will rebate at least 1 percent on all purchases, 10 percent on groceries at selected stores, and-if consumers choose-additional rebates on certain gasoline or restaurant purchases. Babymint, Futuretrust, and FreshmanFund offer credit cards that rebate at least 1 percent to any 529 account. The catches: Spenders who carry balances or pay bills late will most likely pay more in interest and fees than they will save for college. Travis Plunkett, spokesman for the Consumer Federation of America, notes that credit card companies are not charities; accordingly, they are probably making more money from their borrowers than they are giving back.

Six Ways to Get Free Cash for College

GET FREE CASH -- WEB SITES

Babymint, Littlegrad, Futuretrust, Upromise, and other rebate Web sites will send cash back to shoppers who click through their sites to partner retailers.

The catches: Some of the Web sites make you jump through a few hoops to collect your cash.

Six Ways to Get Free Cash for College

GET FREE CASH -- COLLEGES

Several hundred colleges are offering matching grants for parents who sock away college savings. A marketing company, Sage Scholars Inc., has persuaded 230 private colleges to guarantee "Tuition Rewards" scholarships to students from families who invest or shop with Sage's business partners. And 274 private college members of the prepaid Independent 529 plan give parents at least a half-percentage-point discount if they buy tuition for a youngster at today's cost. Dickinson College upped the discount ante last year, adding an extra 4 percent to its inflation discount. That means a family with a 10-year-old who puts about $29,000 in the plan today will have paid a year's tuition in 2017, even though a year's tuition in 2009 is nearly $40,000 and, at the current rate of inflation, will probably reach $60,000 in eight years.

Six Ways to Get Free Cash for College

GET FREE CASH -- RELATIVES & FRIENDS

Freshmanfund.com and Ugift offer electronic tools to make it easier to ask relatives and friends to donate to your college savings account in lieu of, say, a birthday or graduation gift.

The catches: While Freshmanfund will funnel gifts to any 529, Ugift will work only with Upromise 529s. Some relatives and friends might find requests for donations to be, well, tacky. And, let's face it, you might not have many wealthy relatives. Ugift says that half of the birthday or other event donation requests result in total donations of no more than $100.

Six Ways to Get Free Cash for College

With that said, there are ways to ensure that: a) college is the right investment for you, and b) that you're getting the most out of that investment. Also, I should note that if you want to be college material, you can be. Even students with significant learning disabilities can be accomodated at most universities. Also, if your high school didn't adequately prepare you for college, there are remedial classes you can take, either at a four-year school or local community college. You must always remember that where you're going matters far more than where you are, so working consistently every single day always yields long-term benefits.

With regard to ensuring that your educational investment is the right one, there are a few things to remember. First, if you plan to use college as an avenue for economic fulfillment, you should ensure that your career is going to hook you up with a salary that will be high enough to pay off any debt. Fields like Business and Engineering are money-makers, along with Law and Medicine. Other fields, such as Sociology, English or Philosophy, are incredibly worthwhile endeavors, but aren't known for paying the big bucks. I am not saying that you should only go to college for the money, but if you are going after the dough, make sure you know what you're getting yourself into.

Secondly, college is NOT a good investment if the campus is used as party central or the place to spend all your time engaged in things that have nothing to do with education. While most of your learning does happen outside the classroom, the truth is that spending all your time wrapped up in greek life, gossip, hanging out, playing sports or partying does almost nothing to help you to achieve your long-term personal goals. So, if the student is using the university as an expensive social gathering, then college is not the right investment.

For those who are thinking about going back to school, I argue that it's never too late to learn. In fact, learning should be a lifelong choice and empowers you in unimaginable ways. In that regard, I recommend seeking out fields that are in alignment with your career goals, and weighing the amount of debt you must incur against the long-term benefits. For example, if you have to borrow $30,000 in a field where you expect to increase your income by $12,000 per year, that might be a good financial investment. This doesn't even count the added benefit of having more career flexibility, job security and personal satisfaction. Debt is not fun to carry, but it's not nearly as difficult as spending your life in a career that you find to be psychologically draining. You deserve to be happy, no matter what the cost. But I recommend that you be responsible in the process.