With the fall semester underway, most college-bound seniors are enjoying their last year of free education. Parents know too well that big costs loom. In my experience, people in their 30s and 40s worry more about paying for kids college than retirement, not to mention they may be still paying off their own educational debt.
While considering colleges for your child, I beg you to make this pledge: do not allow your child to apply for college if you don’t have a rough idea of what it will cost. I’ve seen many students march down the path of decades of debt (often co-signed by the parents) because the thrill of college acceptance and pressure of deadlines supersede the harsh reality of high college costs.
After all, if you don’t want your child to fall in love with a college because of its cost, than why encourage them to go on a date? That’s what you’re doing if your student applies to schools above your price range.
Key to this mission is understanding a specific college’s cost within a reasonable range before your student applies. But you only truly know about the scholarship package, if any, once the student has been admitted. College admissions offices are quick to say that the official price of tuition, room, and board is just the sticker price and is often significantly discounted. But by how much?
College value surveys attempt to address the real costs. They don’t focus on an Ivy League college sticker tuition costs of $47,000 a year, but instead use the average cost after grants of close to $16,000. These value surveys usually incorporate in-state tuition from public schools. But are these assumptions even valid for your family’s situation? Ivy League schools do not offer merit aid of any kind, so in order to reap this vaunted value your family’s financial situation would need to demonstrate that $31,000 in aid is needed each year. If you’re applying to out of state public college, then value rankings may be ignoring the $20,000 to $30,000 more you would be expected to pay.
You need to construct a customized college value survey for your family’s own financial situation, state of residence, and your student’s academic performance. Reading this you may want to throw up your hands and hire a private college counselor (which may be the right thing to do).
The trick lies in finding a good net price calculator for colleges that are targets for your student. This can be as simple as searching for net price calculator and the name of the university. The forms can take a while to fill out as they inquire about household income, home equity, savings and other assets. You can keep your personal information anonymous at this stage. Unfortunately not all calculators are created equal. The ones that take just a minute or two to fill out and quote college costs from two years ago are largely worthless.
Once you see the results of a college cost calculator, you are able to see whether that college financial aid office uses a formula that results in a demonstrated need. Plus you can tell whether the college meets most of this need with a grant, or whether loans will be most likely be used. While there is uniformity among public schools with the FAFSA, schools that use the CSS Profile can have vastly different formulas on the use of home equity, for example, in determining how much they expect your family to pay.
If your family has a relatively high income or asset base, it’s important to find college net cost calculators that incorporate your student’s academic credentials. One good local example is the University of Denver’s calculator that includes academic performance and estimated merit aid.
When you know roughly what merit aid your child will receive, then you’re in a position to decide whether a school would end up being a reasonable value for your family. While it’s not as concrete as a legitimate scholarship offer, it gives you an idea of what you can expect. Another good resource is that some universities including the University of Colorado publish GPA and test score criteria for merit scholarships.
Finally, one my favorite sites for financial aid data is CollegeData with its sophisticated screens for colleges that give substantial grants to a high percentage of students who wouldn’t ordinarily qualify for need-based aid. It also has links to net college costs calculators. It details if your student does have financial need, the percent of need that’s met by grants. If you’re prepared to pay full price for college, that’s great. For the rest, I would start your college finance exploration on this site.