Take the Wheel of Your Own Destiny 

“You have to marvel at America’s economy,” reads The Economist magazine’s March 16 cover story, touting how well the United States has bounced back from the 2020 pandemic recession and subsequent bouts with high inflation and rising interest rates. 

But still roughly half of all Americans, according to many polls, say the economy is poor or not so good. 

Why the disconnect? It might have something to do with the erosion of two of the fundamental building blocks of financial security—a college education and home ownership. The cost for both has skyrocketed over the past two decades, making the American Dream seem like a pipe dream for many folks, especially considering the average U.S. household income has not increased nearly as fast. Here are the facts: 

• College costs – Attending a four-year public or private college on average costs nearly 114% more than it did 20 years ago, according to the National Center for Education Statistics. These institutions saw their prices skyrocket from about $14,439 a year in 2002 for tuition, fees, room and board to $30,884 in 2022. At the University of Colorado, that price hike is even higher. In state residents paid $9,786 a year in 2002 compared to $31,744 in 2022—a nearly 224% increase. 
• Home costs – The median U.S. house price, according to the St. Louis Federal Reserve (Fed), was $150,760 in 2002 and $476,500 in 2022—a 216% jump. 
• Household income – Between 2002 and 2022, according to the St. Louis Fed, the real U.S. median household income grew only 13%, from $65,820 to $74,580. 

Sure, the U.S. economy was solid last year compared to the rest of the world, excluding China. U.S. GDP increased an estimated 2.5%, unemployment remains below 4% and wages have been climbing. But that doesn’t help average Americans much when it comes to paying for their children’s college education or affording the down payment on a home. 

Both are traditional keys to achieving financial security in America. 

The Social Security Administration calculates that a man with a college degree will earn about $900,000 more in their lifetime than a man with only a high school diploma. For women, it is a $630,000 advantage. Homeownership allows families to build wealth in the form of home equity, control monthly housing expenses and enhance credit ratings. The website Today’s Homeowner estimates that owning a home for 30 years on average will save $176,000 compared to renting in more than 50 U.S. cities. 

Americans clearly understand the economic advantages of college education and owning a home. However, fewer and fewer can afford it these days. 

So what’s the answer? Folks who can afford it can help their children buy houses. They can also help their kids, grandkids and even great grandkids pay for college (and apprenticeship programs) by establishing and funding 529 education plans. These tax-advantaged plans can be used to pay for most educational purposes from kindergarten through graduate school, and leftover money can be rolled into a Roth IRA, subject to certain dollar amount caps. 

For those without 529 plans, controlling costs and reducing debt is essential. Think outside the box. For instance, many students can take college-accredited classes in high school or community college before enrolling in a four-year institution. It’s not uncommon for students to enter college with one, two or more semesters of college credit, substantially reducing the overall cost of a degree. 

For others, apprenticeships in high-paying trades like plumbing or welding, or community college certificates in computer programming might be a better path than college. Enlisting in the military can bring education benefits for veterans after their service.  

All this discussion of controlling higher-education costs circles back to owning a house. The less a graduate has in college debt the sooner he or she can save up to buy a home, which starts the building of net worth. 

Each of us needs to take the wheel of our own destiny and steer a course to our goals. Each of us, alone or with our families, can chart the way to financial success and security.