|Posted on February 26, 2020 at 1:40 PM|
It appears planning to save and pay for college is always something that is on the horizon. Families never seem to get that “chore” off their to-do list.
Public universities this year approach $30,000 a year, and very few private universities cost less than $60,000 a year. And that’s for one child. How can you ever afford to pay those costs? You could empty your retirement account. You could sell your house and live in a two-bedroom apartment.
While there isn’t any easy solution, there are some basic things parents must understand about planning for college that can go a long way to help survive the coming storm.
1. Ignore College Rankings
The hype around college rankings can be hard to ignore, and many students load high-ranked schools on their wish list. It's easy to assume that a highly ranked college is a good choice, but rankings should support, not replace your diligent research. The "best" college is the right college for the student's personality and the most affordable for the family.
2. Estimate Your EFC
Financial aid is awarded based on your Expected Financial Contribution (EFC). The sooner families know their EFC, the sooner they can make realistic plans on how to pay for college.
3. Use the College’s Net Price Calculators
The net price is the amount that a student pays to attend an institution in a single academic year AFTER subtracting any scholarships and grants. Colleges are required to post “Net Price Calculators” on their websites. While there are various net price calculators on the Internet, each college has a Net Price Calculator that you should use, as it will have the college’s exact cost of attendance and their financial aid parameters.
4. The Most Competitive Colleges Offer the Least Amount of Money
Ivy League schools like Princeton and Harvard turn away 90% of their applicants. They don’t need to provide price incentives for students. Instead, apply to a school that the family can afford, or a college that gives outstanding financial aid packages that will keep your net price at the same level as a state (public) university.
5. Apply to the Schools That Want You
Most private colleges give more desirable financial aid packages to the students they want. Students in the top 25% of the college’s admit list will get larger packages with fewer loans. Students whose qualifications would place them in the bottom 25% of admitted freshman will find themselves with smaller awards and more debt.
If your children weren’t involved, paying for college would be easy. Similar to retirement, you’d merely save X dollars for X years and go from there. But when heartstrings are pulled - the logic goes out the window, and that type of college planning is the reason for today’s college debt catastrophe.
If you need assistance in developing a financial game plan for college, contact Jeffrey Taylor at Calendly.com/yourmoneycoach and select the 15-minute phone chat option. We may be able to save you considerable money and help you avoid strategic mistakes when you file for financial aid.