College Game Plan

College 'victory laps' can cost an extra $300K

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Not graduating college on time might cost parents and students more than you'd think.

Students in a four-year program who take six years to graduate can expect to lose as much as $300,000, according to a new study from using National Association of Colleges and Employers data. That's not just extra tuition and mounting student loan interest, it's also the lost value of retirement savings and wages from two extra years out of the workforce.

Most students, who refer to those additional years as "victory laps," typically aren't thinking of the long-term impact of their decision, said Nonso Maduka of NerdWallet.

"We have a tendency to think of the near term," he said. "Education is good. ... One or two more years doesn't seem like much in terms of time, but the cost is real."

Unfortunately, it's a cost plenty of families face.

"For a four-year institution, most of the students are not graduating in four years," Jeffrey Selingo, author of "There Is Life After College," told earlier this year.

Among students who started at a four-year private nonprofit college in 2007 (the latest data available), just 52.8 percent graduated within four years, according to the National Center for Education Statistics. At public four-year colleges, 33.5 percent got their four-year degree on time, and at for-profit four-year colleges, 22.5 percent did.

By the six-year mark, 59.4 percent of students had graduated, including 65.3 percent of those attending a private nonprofit college, 57.7 percent of those at a public college and 31.9 percent of those at a for-profit college.

Even with just four years in college, costs can easily tally into six figures. For the 2015-16 academic year. The College Board estimated the cost to attend (tuition, fees, and room and board) at almost $44,000 for a private nonprofit institution and $19,500 for a public one.

In NerdWallet's analysis, two extra years at a private college would add another $38,115 in out-of-pocket tuition costs, and at a public college, an extra $25,375. Student loans with interest over the life of the typical 10-year loan would cost $15,645 and $12,080, respectively.

Plus, grads are then two years behind their peers. "You're taking longer to get into the workforce and start earning money, so there's lost opportunity there," Maduka said.

Lost wages for graduates could amount to $94,353 over two years, based on average starting salaries, NerdWallet estimated. Those first two years of retirement contributions, they calculated, could have added up to $150,882 in value over a 45-year work career.

It's worth pointing out that grads aren't the only ones facing a financial domino effect from an extended college career. Parent income and savings are the No. 1 source of college funding, according to a 2015 Sallie Mae report.

"It does delay the opportunity for parents to start really investing in their retirement," said Lazetta Rainey Braxton, a certified financial planner in Baltimore. Depending on other aspects of your finances, she said, extra years of tuition payments could also mean delaying retirement.

In an HSBC survey released earlier in June, 58 percent of parents said paying for their child's education makes it more difficult to keep up with other financial commitments. Yet 60 percent said they were willing to go into debt to fund a child's education, while 37 percent prioritize college over retirement savings. Another 37 percent put it ahead of paying credit card debt.

A family's best defense is to talk about college affordability and funding early, said Braxton — including who will foot the bill for any extra years. Revisit the topic regularly, especially if your student hopes to transfer schools, switch majors or make other moves that would delay graduation.

"Certainly plant the seed of the importance of graduating on time," she said. "The clearer you are in the planning aspect, the better."

Early assessment can also help families spot opportunities to cut costs by having their student graduate faster. Take as many credits as you can handle, said Maduka, and focus on finding classes that help you complete graduation requirements.

"Treat college like a full-time job," he said.