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Financial Comparison: Junior College vs. Four-Year Institution

Learn about the financial implications of attending a junior college then transferring versus immediately enrolling in a four-year institution. The analysis compares costs, loans, living expenses, savings, and earning potential, focusing on a case study using specific institutions. Explore the data presented by Paul DiMola, Eckart Lyew, Shawn Ricordati, and Mike Santa Ana to make an informed decision for your educational journey.

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Financial Comparison: Junior College vs. Four-Year Institution

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  1. After High School Graduation: Attend a Junior College and Then Transfer? Immediately Attend a Four-Year Institution? Which Is More Financially Advantageous? Personal Investment option: CPPvs. RCC Presented by: Paul DiMola Eckart Lyew Shawn Ricordati Mike Santa Ana

  2. Assumptions • California Polytechnic University, Pomona • Five years to graduate as an engineer • Loan to pay off all expenses @ $15,000 • 6.62% interest rate on a federal unsubsidized college loan, with a 10 year payback period • No commuting involved. • Riverside Community College • Full-time student with 12 units/semester, year-round • Part-time job – 20 hrs/wk @ $8/hr • Commuting distances are equal (Home is equidistant between work, RCC, and CPP) • Goal is to obtain a General Education Certificate.

  3. CPP Specifics • Total Expenses per year = $74,245.40 (PWC) • Includes: • Annual school fees ($5,559.08) • Annual living & nutrition ($9,290) • Loan will cover all expenses with a leftover total annual savings of $754.60 • Loan payback required within 10 years of graduation • Loan payable for $15,000/yr

  4. RCC Specifics • 3 years of GE fulfillment to transfer • Living costs are negligible • Costs: • Fees ($821) • Commuting ($1040) [$20/wk] • Total expenses/yr = $1,861 • Income/yr = $8,320 • Total savings before transfer = $19,377 ; will be use to cover ~2 years of loan payback • CPP loan to begin upon first year of transfer ($10,000) • Total expenses per year including transfer = $19,797.24 (PWC)

  5. Initial Conditions • For all sensitivity analysis… • Portion of income will be set aside for savings @ 20% per pay period, before any loan payback/yr or expense payments • Both scenarios require loan payback within 10 years • Annual pay raise of 4% • Starting salary of $50,000 • Inflation Rate set at 3%

  6. Cash Flows • Loans cover all school and living expenses while at CPP • Working while at RCC helps to cover school expenses • Loan continues to cover school expenses once at CPP

  7. Sensitivity Analysis: • Used for analysis

  8. Sensitivity Analysis Continue: • RCC was favored in all sensitivity analysis: • Inflation Rate • Starting Salary • Repayment Period • Pay Raise Percent Breakeven Analysis using Pay Raise Percent Variation

  9. CPP vs RCC: Savings Comparison The Best Savings

  10. Final Thoughts:CPP vs RCC: Savings Comparison • 25 Year Projection

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