College has gotten expensive. We are going to launch a multi-part blog series helping you understand what you can afford as well as how to navigate the financial process and all the terms and acronyms. The first thing to know is very few people pay the actual sticker price published on the college’s website under tuition and fees. Most colleges give some form of aid, especially private schools (state schools often do not give a lot of aid outside some special honors programs). But understanding what aid and what will be your out-of-pocket costs can help you pick a better list of schools (more on what is merit and what is need-based aid in a future post).
Brand name colleges don’t have to give a lot of merit aid. They don’t need to. They get far more applications (usually from people who can and will pay) than they need to fill their class. They use their big endowments to help increase enrollment from lower income and marginalized communities through need-based aid. Every other college is fighting for a smaller pool of high school graduates. They use merit aid to attract and enroll students. Its become more of a coupon or discount than actual scholarship.
During the Obama administration, colleges were required to add a Net Price Calculator (NPC) to their website. Some are better than others. You can put in your family’s financial info and student’s grades and get back some information on the merit and/or need based aid you might receive (schools change their budgets and aid can change year to year so know its an estimate). Print the NPC results for your records (this could help with negotiating later-another blog post to come).
Most colleges will allow you to pay tuition over a payment plan (for a fee). Most payment plans are 10 or 11 payments. Take the estimated aid you might receive, and subtract that from the tuition, room (if your child will live on campus) and board (even commuters should get some meal plan since they are on campus a lot and they will want to eat with friends). What remains is your out-of-pocket direct costs. Divide that by 10 months. Can you cover that with cash flow, savings or will you need loans (we will talk more about loans in this series)? Can you sustain this for the next four years or will the savings only cover one year? Are you willing to take on these loans times four years? If the answer is years–than its a good fit. If the answer is no, you might need to remove it from your list.
Some schools give free books, some have a small fee for a digital textbook subscription but some places books cost as much as $1500 or more a year. So add that cost. Also, how far away is the school. Estimate cost for plan tickets and gas. Many colleges do this for you and publish a Cost of Attendance (tuition, fees, room, board and all estimated expenses). Can you afford these costs for four years? Again, yes means its a good fit. No, means its not.
Some schools make the scholarship process very transparent (University of Alabama publishes a chart–Roll Tide). Others, its a super secret who knows why I got the amount I did process. Never rule out a school based solely on sticker price but do some research to understand if they are stingy or generous with aid–what type (merit or need) and if you will be able to afford the outcome. If after the research, you think its manageable then keep it on the application list. Don’t assume you can just negotiate the aid package. Some schools will allow you to file an appeal, some will only do so if you have new information (change in job circumstance, medical bills, death, divorce), others may negotiate if they aren’t meeting their enrollment goals. Many don’t negotiate at all.
Aid is often tied to specific deadlines. Make sure you are meeting those and submitting all required materials. Paying for college is often seen by the college as a partnership between the family, the student and the school–savings, loans and aid. Going into massive debt for a college, borrowing from a parent’s retirement or home is not a great solution. There are a lot of amazing colleges in this country that admit a high percentage of their applicants and give generous aid.
Regardless, have a conversation about what you can afford so students focus on schools that are realistic. Nothing is worse than falling in love and being admitted to a school you then can’t afford.
If you need help exploring colleges and creating a college list, Coffman Consulting is happy to help.