Carla Fried: The best way to make college affordable

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Unemployment claims| Initial unemployment claims seasonally adjusted (week ending May 23, 2020): 2,123,000 | More than 2.1 million people filed a new unemployment claim for the week ending May 23. It indicates that companies that retained their staff through March and April may have needed to close in mid-May, or may have faced a slowdown that affected their ability to keep people employed.
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To put into perspective how the coronavirus has affected America's economy, Stacker compiled a list of 50 different economic indicators and where they stood in June 2020.
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Consumer sentiment | -Index of consumer sentiment (May 2020): 72.3 | - Year-over-year change in sentiment: -27.7% | Consumer sentiment aims to quantify the outlook that consumers have on their own financial situation, as well as how they expect the economy to perform over the near and long term. With many consumers having been hit with layoffs or reduced hours during the pandemic, as well as inflation causing prices to rise, consumer sentiment has fallen by 27.7% year over year.
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Corporate-treasury yield spread | -Moody's seasoned Baa corporate bond yield relative to yield on 10-Year Treasury constant maturity (as of June 1, 2020): 3.11% | February 2020 average spread: 2.11% This economic indicator explains the difference between Baa corporate bond yields and 10-year Treasury Notes. While it saw a spike in early march, the figure is nowhere near where it was during the Great Recession. It does, however, reflect the effect that COVID-19 has had on customer behavior and supply chains, and ultimately the debt risk of large corporations, according to Essex Financial Group.
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Unemployment rate | -Unemployment rate (April 2020): 14.7% | | Change since February 2020: +11.2% | Many businesses across the country were forced to close during coronavirus-related shutdowns in March and April. As a result, nearly 40 million laid-off workers applied for unemployment benefits during the pandemic.
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Bank prime lending rate | -Prime lending rate (April 2020): 3.25% | - Change since February 2020: -3.5% | The prime lending rate measures the average interest commercial banks charge companies on short-term loans. With a 3.5% rate reduction from February 2020, creditworthy businesses may be able to borrow money at a lower cost.
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Bankruptcies - business | -Business bankruptcy cases commenced(March 2020): 1,859 | Change from February 2020: -136 | The coronavirus has put companies under a lot of financial pressure, with many facing shutdowns and lower consumer spending. But despite these circumstances, the number of business bankruptcy cases filed in March and April were relatively low, potentially indicating that the government's assistance to companies during the pandemic is paying off. [pictured: JCPenney store in Music City Mall in Lewisville, Texas. JCPenney filed for bankruptcy protection in May due to COVID-19.]
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Building permits | - New privately-owned housing units authorized by building permits seasonally adjusted (April 2020): 1.1 million units | - Change since February 2020: -372,000 units | Building permits have been on the decline during the pandemic, falling 372,000 units between February and April. The figures may indicate that a deep economic contraction is coming later this year, according to Lucia Mutikani of Reuters.
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Restaurant bookings | -Year-over-year restaurant bookings (as of May 31, 2020): -83.0% | With dining rooms at many restaurants across the country closed, it's no surprise that reservations have taken a nosedive. They were down 83% at the end of May. The loss in business has cost the restaurant industry 59 million jobs.
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CPI excluding food and energy prices | -CPI all items except food and energy(April 2020): +1.4% | The consumer price index for all items except food and energy rose 1.4% in April, signaling a period of inflation. This measurement can help economists analyze "core inflation" that's not influenced by erratic spikes in products like food and energy, which tend to have more volatile pricing than other goods and services.
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Wages | -Change in total private average hourly earnings for all employees (April 2020): +$1.34 | Average hourly earnings for workers in the private sector jumped $1.34 in April. The jump could be reflective of the loss of low-wage jobs in the economy during the pandemic, an increase in states' minimum wages over the last few years, and/or the extra hazard pay some workers received from their companies.

PUBLISHED: July 6, 2020 at 5:26 p.m. | UPDATED: July 6, 2020 at 9:26 p.m.

Families committed to college, but with the good sense to also know that cost matters, have long had motivation to consider community college. The case for community college is even stronger today, with the economic impact of the coronavirus crisis upending household finances.

And this is so not about settling. There are plenty of great careers that require only a two-year associate’s degree. Or, if the end goal is a bachelor’s degree, spending two years at a community college and then transferring to finish up a bachelor’s at a four-year public university can be a financially wily move, especially if your kid lives at home for the first two years.

Here is a cheat sheet for this decision:

—Yep, college pays off, but that doesn’t mean it must be from a four-year school. The median entry-level salary for someone with a high school degree last year was $38,000 according to official government data. The median entry level salary for someone with a two-year associate’s degree was $55,000.

Sure, a four-year bachelor’s degree will typically lead to an even higher salary: $75,000 median starting salary. But here’s where parents need to push themselves rather than their kid: If you’re insisting on a four-year school, and your kid is resistant, are you really sure you are doing right by them? A two-year associate’s degree might be the goldilocks. Or it might be the right choice now if your household is juggling new financial challenges in this new recession.

—You might be surprised what careers don’t require a bachelor’s degree. Nurses, radiation therapists, software engineers, IT specialists, project managers, diagnostic med techs, to name a few.

If a goal is future earnings potential, it should not be a surprise that certain majors are the better route (yes, this would be true for bachelor’s degrees as well). A study released this year by the Georgetown Center on Education and the Workforce found that engineering and architecture, law enforcement, firefighting and healthcare-related associate degrees earn the highest median salaries.

—Your family might be able to emerge without any debt. Net price is the key variable to focus on; it’s the actual average cost families pay after factoring in grants and financial aid (but not loans).

According to the Department of Education, the average net price for students at a four-year private nonprofit college in the 2017/18 academic year was $27,000. For four-year public schools the typical net price was $13,700. And for a two-year public community college the average cost was $7,200 a year.

That works out to less than $150 a week, spread out over an entire year. Might your family be able to absorb that cost with some budget trimming, and expecting your kid to work part time?

If that’s not possible, a federal undergraduate student loan should be able to carry the bulk of the load. The maximum loan amount for the first year of school is $5,500 and rises to $6,500 in the second year. For the upcoming academic year, the fixed interest rate is $2.75%.

—Hatch a transfer strategy now. Spending the first two years at a community college can be an economical way to earn a bachelor’s degree. Best case scenario is that you can transfer all your community college credits and enter as a junior pursuing a bachelor’s degree.

Pulling that off will take serious planning from the earliest days of starting at a community college. A 2017 General Accountability Office report estimated that among community college students who transferred to an in-state public four-year school, about 26% of credits were lost/denied. That said, even when accounting for the extra cost of having to make up for those credits, families still saved money compared to having spent the entire four years at the in-state public school.

To reduce the risk of losing credits, as soon as possible identify the four-year public school your kid would like to end up at. Then dig into the website of that school to get the official details on credit transfers. Search for the “articulation agreement” list. These are the community colleges that the school has a formal transfer policy with. If the info isn’t on the website, start calling and bugging. Once you confirm a community college is on the list, also directly check with that school as well.

Then comes the harder part: What credits are transferable is going to be in part determined by the bachelor’s degree the student will be pursuing. At the point your kid has an inkling what the major might be, you want to connect with the four-year college that is the transfer target and get a rundown of specific credits/classes needed to transfer in as a junior. Or as close to a junior as possible.

Many community colleges have advisers ready to help with this, as will the in-state public school you want to transfer to. But given crunched public-school budgets — at both two-year and four-year schools — your family will likely need to put in some time nailing things down.

Another project: Search for scholarships specifically designed for community colleges, as well as scholarships for students who will transfer to a four-year school. Yep, they exist. But you need to go after ’em. Given the payoff, it seems a worthwhile effort.

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