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Case Study

How Being Smart about Degree Planning Can Save You Money: A Case Study

Alicia, Brad, Mike, and Lindsey go to Longwood University. Each student lives in Virginia, has the same degree requirements (120 credit hours), the same job and the same salary after college.

One student ends up over $53,000 ahead of the others… How?

 

Here’s the Story:

Alicia takes the ‘standard’ 15 credits a semester and graduates in 4 years.

Brad takes a 12 credit full-time course load each fall semester and 15 credits each spring. He will graduate one semester late, since he still needs 12 credit hours to reach the 120 credit hour requirement.  In other words, Brad will graduate in 4.5 academic years.

Lindsey takes a 12 credit full-time course load per semester in fall and spring, and graduates in 5 years.

Mike also takes a 12 credit full-time course load per semester in fall and spring.  Then he takes a year off in the middle of school to work 30 hours per week at the deli.  Mike also changes his major, which requires him to take 3 additional credits per semester in his last two years. He graduates in 6 years.

The cost for one credit hour at the in-state rate, taken on campus, is $378, and the scenario estimates an annual tuition increase of 4.5%. The entry level salary for their first job is $30,000 (with an annual increase of 3%).

 

Scenarios Showing Tuition and Fees (Excluding Room and Board) Plus Loss of Employment
 

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Total After 6 Years

Alicia

Tuition
-$11,340

Tuition
-$11,850

Tuition
-$12,384

Tuition
-$12,941

Earnings
$30,000

Earnings
$30,900

$12,385

Brad

Tuition
-$10,206

Tuition
-$10,665

Tuition
-$11,145

Tuition
-$11,647

Tuition:
-$5,409

Earnings:
$15,000

Earnings
$30,450

-$3,622

Lindsey

Tuition
-$9,072

Tuition
-$9,480

Tuition
-$9,907

Tuition
-$10,353

Tuition
-$10,819

Earnings
$30,000

-$19,630

Mike

Tuition
-$9,072

Tuition
-$9,480

Earnings
$15,600

Tuition
-$10,353

Tuition
-$13,523

Tuition
-$14,132

-$40,960

 

Alicia is over $53,000 "ahead" of Mike, in terms of finances,
and has a 2 year head start in her professional experience!

 

What is the cost difference between graduating in 4, 4 ½, 5, and 6 years? It’s not about the tuition!

The above scenario focuses on the lost revenue from lack of employment. Let’s think about this scenario a little differently and only focus on the cost of attendance.  The difference in cost for completing a degree in 4 years versus  4 ½, 5 or even 6 years isn’t much when you only consider the anticipated increase in tuition each year since you are still taking a total of 120 credit hours, unless you change majors like Mike did. The big difference is the added housing and meal plan expense. 

Let’s use Alicia as the "standard", since she completed her degree in 4 years.  How much more does Brad, Mike and Lindsey pay for their additional time compared to Alicia?

Scenarios Showing Cost Differences for Housing/Meals
 

Number of Years

Estimated Additional Cost

Alicia

4 Years

Baseline

Brad

4.5 Years

-$6,897

Lindsey

5 Years

-$13,184

Mike

6 Years (with major change)

-$21,855