LearnmoreMN Blog

Beginning the cost conscious college search: first steps for parents

By Carol Stack, November guest blogger

Co-author of The Financial Aid Handbook: Getting the Education You want for a Price you Can Afford

The long Thanksgiving weekend will soon be upon us, a great time to tackle that big box of college brochures sitting at your house, just quietly waiting for attention. Also sitting in the corner of the room is one of the biggest college consideration issues of all — how much is this going to cost and how are we going to pay for it? You may not know it, but in the U.S., college financial aid policy demands that the primary responsibility for paying for college rests with the student and her family. Yes, you read that correctly — the primary responsibility for paying for college rests not with the government, or the college, or the money tree you wish you had in your backyard — but with the student and her family. This alone is a huge reason for you to know, as early in the process as possible, how much colleges will expect you to pay. Keeping your sanity is another good reason. With a few minutes of your time, you can get a head start understanding what college costs will be for you. And the best part of all — this process isn’t only for parents of high school seniors — whether your student is a 6^th grader or a high schooler you can begin to understand and plan for college expenses.

My advice? Use this simple, 5 step process:

1. Take a few minutes to educate yourself about the process of paying for college. A great place to start is by viewing the Paying for College videos.
2. Before you talk with your student (I’ll call her Susie) about how much you can pay for college (unless that is an unlimited amount) — you need to know just what you can afford. Sit down with your spouse, partner or Quicken and take a good hard look at your budget. Determine how much you can contribute on a monthly basis (from your income) and on a semi-annual basis (from your assets) to help daughter Susie go to college. Multiply the monthly amount by 12, and the asset amount by 2. Add the two together and write this number down.
3. Go to www.fafsa4caster.ed.gov, and complete the sample FAFSA to see how much money the needs analysis (the data and formula that the feds, state governments and colleges use) will expect as a contribution from you for your child’s education. It’s called the Estimated Family Contribution. Write this number down.
4. Compare the two numbers. If they are dead on — great work. If not — review your budget to determine how you can meet your EFC. Club memberships to drop? A car payment to avoid by driving the old reliable for another year or two? Even giving up a daily $5 latte for a quick cup from the long ignored Mr. Coffee on your kitchen countertop can mean more than $1000 a year for college expenses.
5. Now, make an appointment with Susie to talk about college costs. Sit down at the kitchen table, turn off the cell phones (all of them — yours and hers) and explain what your EFC is, how you’ll be able to meet that, and how college costs beyond that will need to be met by scholarship, grants, work study and limited amounts of student loans. Express your willingness to help Susie find a college that will offer her merit scholarships and other aid to make the investment in her education. Earlier this month I wrote a post about Net Price Calculators — give some of them a go.

Congratulations — you’ve begun the cost conscious college search!

Net Price Calculators: The Good, the Bad, and the Ugly

By Carol Stack, November guest blogger

I have had a long career helping students and families with the college search process — including helping them figure out how to pay for college. Recently, I’ve had many questions from students and parents about a new wrinkle: the federally required “net price calculator” (aka NPC) on each college’s website.

The thought was a great one — help students and families know the “net” (cost after financial aid) price they are likely to pay for college — as distinguished from the sticker (full tuition and cost) price. The basic idea is that if a student and family have at hand their income and asset information, they can plug it into a calculator and see how much scholarship or grant (free money!) aid the student would receive from a specific college. This can happen before applying for admission, before completing financial aid forms, as early and as often as the family wants to use the calculator. Sounds great, doesn’t it? The reality is more complicated….

First, you have to find the net price calculator on the college’s website! On the surface, this seems as if it should be an easy proposition. Ha. I resorted to three approaches. On try number one, I went to a college’s website, used the navigation system to get to the financial aid page, and looked for “net price calculator” on the side rail, and voila, success. Or not. If “or not” was the result, on try two I used the search function on the college’s website to look for “net price calculator.” If that failed, my last ditch effort (try three) was to go to www.netpricecalculator.com to see if the college was listed there, and I could link in.

Second, all net price calculators are not created alike. It would be too much to hope for to find a handy tool that would insure students and parents can compare prices in an apples-to-apples way. But it just isn’t so. The feds simply require a college to show, by family income bands, the average amount of financial aid students in each group received at that school in the prior year. And that is exactly what calculators for some colleges do. No more and no less. Other colleges saw this as an opportunity to be more specific — and add into the mix merit scholarship and other awards. The result: wide variety in accuracy and specificity of estimated awards from one college to another. The more detailed the information the college asks from you, the more detailed and accurate the estimated award will be.

Third — an old adage but still true — garbage in, garbage out. The results of the calculator will only be as good as the information you put into it. If your guesstimated family income is off by a missing “0” at the end of the number, or you assume an extra family member or two in college — the estimate you receive will be off as well. Take time to carefully enter a response to each question — and write your answers down so that you use the same information for each calculator.

Finally — above all remember that this is an estimate — not a guaranteed price. The younger the student, the more likely the college’s aid policies will change dramatically by the time he or she enters college. If there is a big difference in your family income between what it is now and what it will be when your student enters college — the actual aid award could be very different. Don’t take this NPC estimate to the bank, or expect to hold the college to it. Do use it as a guideline — a picture of college costs painted with a very wide brush.

Families find ways to make college affordable

By Jesús Hernández Mejía, October guest blogger

In my first post I talked about saving for college. That’s a good place to start, but what else is out there?

Dual Credit options are another way to save some green. Students can earn college credits while still in high school. These programs include Postsecondary Enrollment Options (PSEO), International Baccalaureate (IB), Advanced Placement (AP), Career/Technical Education and Concurrent Enrollment (College in the Schools).

It’s possible in some cases for a full-time PSEO student who starts in their junior year to earn enough credit for an associate degree. That might save two years of college expenses. Some colleges have a limit how many credits can be transferred and ultimately have the last word on particular courses.  Even if this is the case, with PSEO your student is exposed to the rigorous work required in college and will be college-ready when it’s time to enroll.

For families looking ahead to college, realize that not all schools offer these options. But any research you do now is an investment in your child’s future.

Is there anything else?

At the start of every school year I have at least nine or 10 students who stop by my office because they are having a hard time paying for school. Looking through their awards I see a common theme: most of these students did not apply for any scholarships. Most don’t believe they would qualify but a lot say they were not aware of scholarships.

In simple terms, a scholarship is money that you don’t have to pay back. It is given to you for reasons such as merit, athletic ability, affiliations and the list goes on. Scholarships can be used to pay for tuition, fees, room and board, depending on the stipulations of the donor.

View a partial list of scholarships offered by Minnesota institutions. There are also scholarships offered through private entities. The best way to locate these is through Internet searches (try Fastweb or FinAid) or through personal connections with various companies.

Another good place to go for scholarship information is located right where your student attends school. Most high schools have a resource center or a counselor to whom donors send this information.

I have to say one more thing about scholarships.  If it sounds too good to be true, it probably is. It should not cost you any money to access information to scholarships.

Are there any other resources?

There are three additional resources that come to mind when trying to find ways to make college more affordable: AmeriCorps, Peace Corps and military service. If these sound like options for your student, consider checking them out.

What if my student is graduating next year?

The first thing is not to panic. Has your child settled on a college choice yet? If not, think about all the different options. Starting your student’s education at a community college would save you some money. Your child can complete the first two years there and then transfer to a four-year institution. Have your student contact that four-year institution to make sure that his/her credits will be transferred.

If you have already settled on an institution, meet with a financial aid advisor at the school. They will probably ask you to complete the FAFSA or a Financial Aid profile in order to give you a more accurate answer as to what your student might qualify for.

It helps if you plan ahead for college, but even if you haven’t, it is still feasible. There are many resources to help families pay, including the new video series, Paying for College.

College affordability is something to really think about

By Jesús Hernández Mejía, October guest blogger

How do I pay for college? This is the question that is most often asked when students apply to a postsecondary institution. The typical answer is, “you can get financial aid.” For some students that might well be the case but for others it is not. In some instances, even with financial aid, students are faced with stark decisions of giving up the college of their choice and enrolling in a more affordable institution, taking lots of student loans, or giving up on college altogether.

There are several steps that can be taken and many ways to accomplish the dream of a college education. One of the first steps is to start saving. View a short video about saving from the new Paying for College series. (There’s also a 16-minute video, Paying for College in Spanish.)

As an assistant dean of financial aid, I often meet with parents who did not plan for the reality of their student going to college. It’s as if it came to them as an afterthought when their student burst through the door one day and said, “Mom, Dad, I want to go to college!”

The panic on their faces and the awkward conversation that follows is understandable. College is something that we really need to start planning for as soon as we start thinking about having kids — and continues until the day they graduate. Yes, you read that correctly.

Planning for college is essential and there are a variety of tools (see the MassMutual Financial Group resources) that can be used to predict the future of college costs. For example, a child born in 2013 will expect to pay $30,627 in 2029 at a public institution and $67,767 at a private institution.

If you are betting on your future student using government financial aid to pay for college, keep in mind that it will still exist in some shape or form, but it might not resemble what it currently looks like.

So it’s important to start saving now. Here’s a hypothetical example from MassMutual: save $50 per month on a savings plan for 18 years and you would end up with $12,339. This assumes a 6% earning rate. Even if you don’t put that money on a savings plan, $50 per month for 18 years gives you $10,800 or about a third of the cost for the first year. Obviously, the more you save, the more money that your student will have to pay for school.

I know you have a life and saving a lot of money might not be convenient or possible. After all, you are also thinking about buying a house or paying for rent, purchasing a vehicle to get to work, vacations and many other things. But think of the advantages that your student will have: less debt in loans after graduation and more time to start thinking about college for their own children.

Watch for my next blog post to learn about other ways to truly make college an affordable option.