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.
