The Costs Of Taking A Victory Lap

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The fifth Year. The Victory Lap. The one, legendary year where you get to take only blow-off classes, free to party every day and do all the fun stuff in college without any of the stress or exams. Currently, the average percentage of college students that complete a bachelor’s degree in four years (“on time”) is around 40 percent, which is down from 44 percent in 1996 and 58 percent in 1976. So if you want to take it easy, you’re not alone.

But before you decide on a light couple of terms to focus on your drinking, make sure you consider the costs:

According to Nerd Wallet, who ran a study measuring the opportunity costs of a five or six year degree over a traditional four year, you could be losing out on a ridiculous amount of money. Nerd Wallet’s numbers were assuming an $18,600 per year cost (in terms of tuition and loan interest) increase at a public college and $37,500 per year at a private school for a longer degree. I think some of you out there at private colleges are probably shaking your heads in disbelief right now because you know it really costs you almost twice that. Then add in the cost of lost wages at an average graduate salary of $46,000 per year, and double that if you’re taking six years.

Altogether, the difference could total up to at least $82,000 of missed retirement savings for year five and up to $151,000 for year six. A private school student could be looking at something more in the $300-500,000 range. That’s huge incentive for taking a few extra classes and cracking the books every so often.

Of course, college students don’t think that way, and even if they did, there are some factors at play that are actively working against earlier graduation. Let’s go back to that statistic in the beginning. Why has the percentage of people graduating on time dropped 18% in 40 years? Note also that this is the average graduation rate, which is skewed upwards by elite institutions, which graduate very high percentages of their students on time. The percentage for students at most public schools has dropped from 48 percent to almost below 30 percent, much faster than the higher level schools.

What’s happening?

There are a number of reasons it can take longer to finish college these days, and the evidence says it’s not because students are less prepared than they were decades ago or as a result of “party school culture.”

Like everything else, it’s a money thing.

As tuition prices soar, a higher percentage of students have to work to put themselves through school, delaying their studies. At the same time, a widespread “go to college” culture driven by several tough recessions and carefully fostered in favor of universities over low-cost/higher reward technical schools has attracted many hapless students that don’t have a good idea of what they want to do and probably shouldn’t be in college at all. These students take dozens of credits that don’t build to anything and waste a lot of time before finally picking a major or simply leaving school.

Others transfer to several schools, racking up useless credits they must repeat due to a ‘boutique’ model of curriculum and required ‘degree core’ classes unique to each college. Universities do this on purpose because they can use it to artificially lengthen their programs and net more tuition money from you. Anyone who’s had to suffer through a bullshit Art History class taught by grad students knows how pointless these hours are.

This can be terrible news for people who think going to community college for two years will save them money, as these students often find they still end up having to go to a university for four years, taking only one or two classes during the final terms but still paying the base tuition fee.

Maybe the worst of it is that colleges across the board are dropping instruction hours in favor of more lucrative research positions, reducing teachers and limiting availability for often vital classes that can push students waitlisted out of them back a term. In other words, universities are padding their graduation requirements and reducing resources for students in order to keep them in school longer to maximize tuition dollars, all while raising prices at an order of magnitude greater than inflation since the 1970s.

Basically, the odds are against you, and that may be one of the reasons that Millennials are far less likely than their parents to be prepared for retirement.

So what can you do to beat the system and graduate on time?

Know why you want to go to college, pick a major early, and try to avoid the liberal arts (which have more fluid graduation requirements and pre-requisites). Once you have one, take at least 30 credits a year and at least one class over the summer if you can.

If you have to work, consider delaying college and living at home for a year. Get a 401K and an IRA, max them both out, and pad your savings as much as possible. That reduces your tax burden and guarantees you’re not taking as much of a retirement hit. With your savings backing you up, if you get a decent major with decent job prospects, you can pay off any loans you have to get to finish quicker more cheaply than being forced to take an extra year in school and not saving anything. Plus you’ll have a nice nest egg with four years of beneficial interest waiting for you on the other side.

If you’re in high school reading this, and you plan on going to a state school so you can party just like the guys on TFM, take as many AP or IB credits as you think you can pass. They can virtually eliminate your freshman year and save you tens of thousands of dollars.

And if you’ve got a trust fund, disregard everything I just said. Crack open an extra beer and stay in college as long as you can. The outside world is a terrible place, and working sucks.

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