Talking about College Costs

It seems that work and other life commitments have completely overrun my schedule for the last little bit here, and it's been quite a while since my last post.  These days I'm spending a lot of time thinking about financial aid, however, and I felt I needed to share a few thoughts on thinking (and talking) about college costs.

If you are a senior (or the parent of a senior) reading this, I'm sorry, it might be too late.  But read on, maybe you can pass this advice on to your friends who are (or who have children who are) freshmen, juniors, sophomores, or even middle school students.  Seriously, it is never too early to start talking about college costs. There are several reasons for this:

First, it takes awhile to research grants and scholarships. If you start this process your senior year, you might only have a few months to complete your research before the scholarship deadlines have passed you by.  Some of the larger scholarships require a lot from you in terms of information on your community involvement, extra-curricular activities, academic achievements, and essays or personal statements.  If you are rushing the process of compiling this information and writing your essays, you may not be presenting your best work - and you are competing with many other students who want that money just as much as you do.  Start now collecting the information and thinking about how you want to present yourself in those personal statements.. and begin compiling a list of scholarships you might be eligible for so you can hit the ground running senior year.

Second, and perhaps more importantly, it takes awhile for the family as a whole to think about how college costs fit into the family budget.  Sticker shock is a pretty common response when students and parents first start to think about college costs.  If you've been following the news, you may have heard that college costs have been rising rapidly over the past decade or so.  Gift aid has not necessarily kept up with this trend.  That leaves more and more students and families borrowing to make up the difference, with the resulting student loan crisis that has also been frequently discussed in the news lately.  Thinking about and discussing college costs early and often can help your family create a plan to minimize the amount you will need to borrow to complete your education.  As with grants and scholarships, an earlier start on the research phase may also help you find better terms for any loans you do take out.

Finally, the paralysis caused by this sticker shock may cause you to waver in your quest for higher education, or miss the opportunity to apply to some of the schools that might be the best fit.  At the very least, it can cause excessive stress during an already stressful time.  If you've dealt with the cost issue early, and come up with a viable plan to address those costs, you can focus on the college and scholarship applications.

So what's a family to do?

• Starting as early as possible, look at the cost of attendance for a variety of schools you may be interested in.  This information can be easily found on the most college websites.  
• Next, estimate your expected family contribution (EFC) using the FAFSA forecaster.  This is the amount the federal government thinks you should be able to afford to contribute towards your child's education
• Does this amount seem reasonable?  Unfortunately, short of earning less money (which will not really help the problem) or having another child (not a decision you want to make based on how it affects your EFC) there is not much you can do to change your EFC, so begin thinking about how you might change your family's budget to make this amount reasonable.
• The EFC gives the total amount per year you are expected to contribute to your student's education.  It might help psychologically to break this down into a monthly amount.  Where a $6,000 EFC might seem overwhelming, the idea that's $600 per month over the course of the academic year might not seem quite so outrageous.  And if your student is living away from home, remember you'll have some savings for not having to feed him/her during those 10 months.
• Check out payment plans at the colleges you are interested in.  Sometimes breaking up the total cost into smaller payments can help it fit into your budget better, and help avoid taking out loans.
• Once you've got your EFC, you can begin to think about how much additional aid you will need.  For middle class families, aid given based on the FAFSA often comes in the forms of loans.  Doing some scouting for scholarship options now can help reduce the need for loans later.
• I wish I could tell you you're going to be able to finance your entire education with loans and grants, but I would probably be lying to you.  Student loans are a ubiquitous part of the package in paying for college.  By thinking ahead, however, you can reduce the amount you need to borrow, and look for the best possible terms on the money you do borrow.

Also, keep this in mind: According to the US Bureau of labor statistics (2012), a person with a bachelor's degree, on average, earns about $20,000 more per year than someone with only a high school diploma.  Furthermore, the person with the bachelor's degree is half as likely to be unemployed. So it's likely that taking out a few loans to make it through school could give you a very good return on your investment over the course of your career.  More on loans - what to look for, which have the best terms, etc. in my next post.

Rising College Costs and more on Financial Aid

For anyone who's been looking into colleges, it will come as no surprise that college costs are rising... and rising, and rising some more, to somewhat shocking levels.  In light of this fact, I'd like to take this opportunity to add to the information and suggestions from past posts regarding financial aid.

If you've read my previous posts, you might have noticed that I strongly advocate looking beyond California (or whatever your home state is), and beyond public institutions to expand your choices.  There are over 4,000 colleges and universities in the United States, and each one has a unique way of calculating costs and financial aid awards.  The most important consideration in choosing a college is not the location, the degree programs they offer, the cost.... all of those things are important, but the most important consideration is the fit - how well does the college fit the needs, interests, and unique talents of the student.  Cost is, of course, one factor in that fit, and in many cases a major factor.  You don't want to get through your dream education just to find yourself shackled to crippling debt for a major portion of the rest of your life.  In some cases, it might make financial sense to stay in your home state, in other cases, it might be more affordable to go out of state.  A lot of this depends on the aid offered by your state, and whether or not you qualify for that aid.

But first, a note on community colleges.  I work with high school students, and often hear "I have to go to a community college because I can't afford to go to a 4-year university."  I want to start by saying there is nothing wrong with beginning your education at a community college - it is a great choice for many students.  However, it breaks my heart when a student is choosing this option even though it is clearly not their preference, simply because they feel they have no choice.  Especially when the student is not planning to live at home, in which case (depending on the family's financial situation) it might not be any less expensive to attend a community college.

OK, enough intro - now let's get down to how to keep college costs under control. Most of the rest of this is focused on California residents - if you are not a resident of California, or choose to attend a school outside of California, skip to "Non-California Residents or attending school out of state" below.

California residents

If you are a California resident, and your family income falls in the low to moderate range, you may be eligible for a Cal Grant that will pay tuition and fees at any California public college or university, and some private schools as well (up to certain limits).  There are three types of Cal Grants:

• Cal Grant A: Covers tuition and fees at CSU (up to $5970) and UC (up to $12,192) schools.  This means you could go to Humboldt State or UC Santa Cruz, and not have to worry about tuition and fees.  You still will need to come up with money to cover living expenses, books, transportation, and personal expenses.  
• Cal Grant B: For very low-income students, will provide up to $1,473 for books and living expenses.  After Freshman year, it also covers tuition and fees at the same levels as Cal Grant A.
• Cal Grant C: Pays tuition and training costs at occupational and career-technical schools

More information on Cal Grants can be found on the Cal Grants website.  

What if you want to start at a community college?  How does that affect your Cal Grant?

• Cal Grant A: Your award will be held in reserve for up to two years until you transfer to a 4-year college.  As a Cal Grant recipient, community college fees will be waived.  Be warned, though, many students take more than 2 years to transfer from a community college - make sure to speak with a counselor early and often at your community college to make sure you are on track to transfer within two years.
• Cal Grant B: You can use the $1,473 living allowance to pay for books and other expenses at the community college, but you will use up some of your Cal Grant eligibility.  You are probably better off deferring your Cal Grant until you transfer to a 4-year university
• Cal Grant C: will pay for expenses for technical, career-training programs at some community colleges.
• If you do not initially receive a Cal Grant, or if it takes more than 2 years to transfer, you can also apply for the Cal Grant again when you transfer to a 4-year university.

To apply for the Cal Grant, complete the FAFSA (Free Application for Federal Student Aid) before the March 2 deadline.

In addition to the Cal Grant, some schools have developed their own ways to make college affordable for California residents.  For example, the Blue and Gold program at UC Davis guarantees gift aid to cover tuition and fees for all California residents with a family income under $80,000, assuming they have financial need (based on the FAFSA, which will generally be the case as long as the family does not have an exorbitant amount of assets). To qualify, you need to complete the FAFSA by the March 2 deadline.

Non-California residents or students attending schools out of state

This advice actually applies to all students, whether California residents or not:

• Complete the FAFSA early.  Some schools award available financial aid funds based on the date of application - first applied, first served.
• Apply for all scholarships and grants you are eligible for - some may be only for $500 or $1,000, but they can add up to a big chunk of aid, and help reduce the amount you need to borrow. Ask the guidance counselor at your school for suggestions on local scholarships.  The applicant pool is smaller and you may have a better chance at getting them.  If your counselor doesn't have a list, check out the websites of other high schools near you - many of the scholarships listed there are probably open to you as well.
• Look into inter-state agreements and tuition exchange programs (see my previous post on the Western Undergraduate Exchange).  If the cost of living is high where you live (e.g. California or New York), you may find it more affordable to attend an out-of-state school that participates in this sort of inter-state exchange program.
• Look at the financial aid/scholarship page for the schools you are applying to.  Many schools have their own in-house source of grants and scholarships.  Some require a separate application.  Check into school-based scholarships as soon as you decide you want to apply to the school - deadlines vary and some are fairly early.
• Don't discount private schools.  Many people panic when they see the advertised cost of some private schools.  In fact, you won't know what it will actually cost YOU until you complete the financial aid application process and see your award letter.  Because some private schools have more gift aid available, it may actually cost less out-of-pocket to go to that expensive private school than it would to go to the "cheaper" public university.
• If you are considering a career in the military, look into ROTC scholarships. The Army, Navy, and Air Force all offer ROTC scholarships in certain academic fields.  The scholarship requires participation in the school's ROTC program (so, of course, they are only available at schools with the appropriate ROTC program), and a commitment to active duty (usually 4 or 5 years) after graduation, followed by several years in the military reserve.  Only pursue this if you have a true interest in serving in the military - not just to get money for school.  By taking this scholarship, you are making a serious commitment to military service - make sure you are ready for that commitment before you apply.

If you do have to take out loans.....

Much of your financial aid offer will probably come in the form of loans.  If you are going to take out loans, be sure to take advantage of the subsidized loans first.  The main difference between subsidized and unsubsidized loans:

• Subsidized loans generally have a lower interest rate, and do not start accruing interest until after you graduate.  You do not need to start paying back the loan until you are out of school - even if you go on to graduate school after you graduate.
• Unsubsidized loans generally have a higher interest rate.  Although you don't have to pay back the loan until after you are out of school, the interest DOES accrue during this deferment period, so you will find yourself owing a lot more than you borrowed.

Once you've exhausted your options with subsidized loans, I strongly suggest you look into other financing options before taking on an unsubsidized loan.  Generally speaking, the terms on unsubsidized loans aren't too great, and if you do have to borrow further, you may be able to find a better deal with sources of credit you already have available.

In conclusion....

I wish I could tell you that you will probably be able to find financial aid to fully fund your college education, but I would probably be lying.  A lucky few do get a full ride scholarship, or combination of gift aid that pays all expenses for college.  A lucky few more have enough income and assets that they can pay their own way without any financial aid.  Most students fall somewhere in the middle - they qualify for some gift aid, dip into some savings, and take out some loans.  By being pro-active in your search for financial aid, applying early, applying for all scholarships you even remotely qualify for, and considering all sources of aid available in your state and at the schools you apply for, you can put yourself in a better position to make college affordable.

Online learning - the future of education?

With tuition costs skyrocketing at many colleges and universities, and admission becoming more difficult at selective schools, debate is raging about a new (or perhaps not so new - depending on who you ask) development in higher education - Massive Open Online Courses (MOOCs). This month, I'm going to take a break from my normal focus on college admissions and financial aid advice and explore a developing trend in higher education.

MOOCs share some features with the old-time correspondence courses - flexibility, independent learning, the ability to access the course from anywhere, on your own terms.  With advancing technology, however, MOOCS add a lot more - video lectures, links to nearly unlimited online resources, including interactive learning tools, and the ability to easily reach many thousands of students.

Arguments rage over the benefits and drawbacks of MOOCs.  For a good overview of the debate, see the following articles:

Napster, Udacity, and the Academy
Venture Capital's Massive, Terrible Idea for the Future of College
The Crisis in Higher Education

For a brief synopsis of the arguments, obvious advantages to MOOCs include:

• They're free
• Timing is usually flexible; you can access and work your way through the material in a way that fits your schedule
• They give access to some great courses developed by outstanding professors at prestigious universities
• They can reach many, many students - sometimes over 100,000 students in a single course
• They provide unprecedented access to higher education, regardless of geography, socio-economic status, ability to pay, or any other demographic feature

Some disadvantages to MOOCs include:

• High dropout rate - in many cases less than 20% of students who enroll complete even the first assignment
• There is little or no connection between the professor and the student
• There are some things a course with a dynamic professor can offer that can never be replicated in online education
• The course relies heavily on student self-motivation to complete (see first bullet point above)
• Quality control can be a problem - some courses have the backing of prestigious universities and are probably a good bet, but there's no guarantee
• They currently offer little or no support for struggling students; resources that might be found in a traditional college class.
• With so many students, there is no way for the professor to give direct feedback to all the students; grading relies on computer-graded quizzes and sometimes peer feedback.

The last point, about peer feedback, is not necessarily a bad thing; it's the way things work for research in many disciplines - the problem is that at the MOOC level, there is no shared level of expertise among the peer reviewers.

For more information on how this process works, see the following video from TED about Massive Open Online Courses:

Recently, the discussion has escalated with the announcement that some courses offered through the online provider Coursera may be eligible for credit.  These include courses from University of California at Irvine, Duke University, and University of Pennsylvania.  Issues of verification of student identity and work completed (proctoring) are yet to be worked out, but this is a large step forward in MOOCs becoming part of the mainstream of higher education.

So, will students be abandoning traditional universities and flocking to MOOCs?  Probably not. However, these massive online courses are sure to leave a mark on the world of university education.  Some developments that are already having an impact on campuses around the country:

• The rapid proliferation of MOOCS is causing advances in the development and dissemination of technology that can be useful in traditional classes as well - incorporating more multi-media and interactive content into university courses
• The large enrollment (hundreds of thousands of students) provides a gold mine of data for research into online education.  In fact, one of the websites offering courses (EdX) was perhaps designed in order to conduct research on student learning as much as to educate the students enrolled in the courses.
• MOOCs give prospective students the chance to try out a course - with little financial or academic risk - before they commit to the school.  They may also provide a good opportunity for pre-college students to experience college level coursework and get a feel for the level of reading and critical thinking they will experience in college.  A word of caution however - not all MOOCs are created equal, and quality control is still something that's being worked out.

One ideal use of MOOCs is for continuing education for mid-career professionals.  Much of the above information was brought to my attention in a MOOC I am currently taking on E-learning and Digital Cultures. 

So, freshmen, sophomores, and juniors, you are not off the hook for college and financial aid applications.  But, if you're interested, you might want to check out some of the course offerings at the following sites providing access to MOOCs (descriptions taken from the websites of the various organizations).  And share this information with your parents - there might be something there for them, too.

Non-profit organizations offering MOOCs:

EdX is a not-for-profit enterprise of its founding partners Harvard University and the Massachusetts Institute of Technology that features learning designed specifically for interactive study via the web.

The Open Learning Initiative (OLI) is a grant-funded group at Carnegie Mellon University, offering innovative online courses to anyone who wants to learn or teach.  Our aim is to create high-quality courses and contribute original research to improve learning and transform higher education.

For-profit companies offering MOOCs:

Coursera: We are a social entrepreneurship company that partners with the top universities in the world to offer courses online for anyone to take, for free. We envision a future where the top universities are educating not only thousands of students, but millions.

Udacity was born out of a Stanford University experiment in which Sebastian Thrun and Peter Norvig offered their "Introduction to Artificial Intelligence" course online to anyone, for free.  Over 160,000 students in more than 190 countries enrolled and not much later, Udacity was born. Now wer'e a growing team of educators and engineers on a mission to change the future of education.

What do you think?  Please feel free to comment on how online education in general, and MOOCs in particular, are likely to affect the future of higher education.