College Costs Shape Family Life

While Debbie and Dan Hacker's two sons are only now in college, the San Diego couple have been preparing for the event their entire married life. "College has been a frame of mind for us," says Mr. Hacker. "The kids always knew they were going to college, so we were getting ready from the start."

David is now a senior at California Polytechnic State University in San Luis Obispo, with a yearly tab of $9,000 to $10,000. Their eldest, Josh, is working on his doctorate at the University of British Columbia in Vancouver, now sponsored by grants. But his previous four years at UCLA cost "around $50,000," Hacker says. "Which we paid for the old-fashioned way: cash out-of-pocket."

Whether it's a lifelong savings plan or a staggering student debt that puts a high school graduate through college, higher education can shape a family's life, before, during and after college. And by all accounts, the financial burden is only getting worse.

The yearly cost of college now drains nearly 25 percent of the median family income, compared with 17 percent in 1980. College Board figures show that college tuitions are rising faster than the nation's inflation rate. The cost of a public college education has gone up by 6 percent, while the tab at a private institution rose by 4 percent, making the average cost (including tuition and fees) of a four-year private college $12,823; public college, $2,966.

In an effort to keep up with the escalating costs, students are borrowing more money. In the 1995-96 school year, college students borrowed $50.3 billion in total aid (federal, state, and institutional sources), up $3.3 billion from the previous year.

"There is some $50 billion available in financial aid from state, federal and institutional sources," says Jack Joyce of the College Board. "The majority of that is in student loans."

But, according to the College Board, even more significant than the figures is the shifting financial burden. Whereas three decades ago, colleges picked up nearly 85 percent of the cost, today it is closer to a third. "The pressure on state budgets across the country is leading to higher costs for students," Mr. Joyce explains.

A factor in every decision

As a result, says Hacker, who recently retired as a $95,000-a-year naval aviator, college expenses were factored into every decision throughout his married life. Even then, "we only made it work because we had no car payments and we lived in the same house for a long time, and had a low mortgage."

Hacker explains that the family didn't forgo vacations in order to save for college. What made higher education possible for his kids was a habitually conservative lifestyle. "The savings habit was strong in our family," Hacker points out. "I just believe you should always be saving some part of your income, no matter what it's for."

Over the years, he says, he had money deducted from his paycheck to invest in a variety of financial tools, "but mainly mutual funds, although I played the market a little bit myself."

Hacker points out that if he had not had kids, he might have spent the money differently, but he would have saved it just the same.

"With kids, college was just the most logical place to spend the money we were saving," he says. "Otherwise, I probably would have been saving it for my retirement."

Not all families can share the burden as the Hackers did. A few hundred miles away, but a world apart, Korean immigrant Alexander Hull went to Harvard University in Cambridge, Mass., with no help from his father, who owned a small store in South Central Los Angeles.

"I had to sell my car, cash in all savings, get financial aid, student loans and work study," Mr. Hull says.

The cost of his master's degree in education was $30,000, which he now is paying off. "Both my brothers are still at Harvard and are running up total tabs of $60,000 to $80,000," Hull adds, "and they're doing it without any help from the family."

Starting early

"Parents should be thinking ahead as early as possible," Joyce says, "people are used to paying for big-ticket items like cars with a combination of savings and income. They should think about education that way."

Amen to that, says one family with three college-age offspring.

Until this year, the two sons and daughter of Susan and John, who requested that their last name not be used, were all in college - strictly on John's law-school dean's salary, which Susan calls "comfortable."

The eldest daughter is now on her own in graduate school, but still, says Susan, between buying cars for all three children and paying college and living expenses for the younger two boys, "we're not struggling, but it's a lot off the top every month."

And, Susan adds, even though now they're not paying for their eldest, Laura, who goes to George Washington Law School on government-sponsored-student loans, it's difficult to watch those loans add up. Her yearly debt? $30,000. "By the end, she'll owe $90,000," says her mother.

Now that the Hacker family can see light at the end of the education tunnel, Hacker says he won't stop saving. He'll just put it all towards retirement.

"I guess now that I'm almost done, the lesson is to start saving right away," he adds. "You never know what you might need it for, but when you do, at least it's there."