Here are five ways parents and the college-bound can give colleges an incentive to lower their costs and three reasons for the ghost of college present. With this knowledge, families will be able to use college prep to attend college without incurring insurmountable debt. This is the third and final installment of a three-part series to plug the college cost drain.
Part 1 of this article addressed President Obama's plan in his 2013 State of the Union Address on Feb. 12, the new College Scorecard, redistributing financial aid towards institutions that control college costs, and the importance of college prep in correctly calculating college costs by including hidden costs and subtracting financial aid to reduce the college bill with the federal FAFSA2caster tool.
Part 2 explained the college cost ghosts of the past and future and the ghastly reasons why college costs are rising.
The ghost of college present
1. Financial aid dilemma There are three types of federal financial aid: grants, loans and work/study. Out of these options, only grants are free money. Loans may help pay the college bill upfront but they must be paid back. Loans also have borrowing costs that add to the overall cost of a diploma. Students receive a paycheck for work earned under the Federal Work/Study program but how much they can make is limited by their college financial aid award and how well they can balance work with their studies.
Most middle class families may find, after using FAFSA4caster to estimate their potential need-based aid, that they make too much and are not eligible for federal free money grants. Many may be eligible for subsidized student loans where interest is paid by the federal government while students attend school. All students, regardless of their wealth, are eligible for unsubsidized student loans. Here, interest can be deferred while in school but it must eventually be paid along with the amount borrowed.
2. Cost calculators comparisons Colleges are required by law to post their own cost calculator but there is no one universal model that all colleges must use. Institutions may choose many of the factors they include so it is difficult for college to college cost comparisons.
In addition, schools don't usually disclose the factors they rely on to determine what they will give and to whom from their own funds. Both need and merit based scholarships from a college's own funds is another source of financial aid that does not have to be paid back but amounts are carefully calculated based on the size of the fund and the qualifications of applicants.
Each college has their own criteria but commonly, the most sought-after students often receive the most generous financial aid package. This makes estimating scholarship dollars for one student alone very hard.
3. Money factor Even if parents and students can closely estimate college costs, they may not be able to afford to pay for their top choice schools. Turning down an offer of admission because of money can be devastating and demoralizing. It can undermine student abilities to take full advantage of educational opportunities at other less than best fit schools, wasting time and money.
Incentives to lower costs
Higher education options are expanding into the new online frontier. Students can use a combo of old and traditional college prep ways to earn a diploma, cut their own college costs, and give colleges an incentive to lower their costs:
1. Maximize high school opportunities Increase chances for college admission and scholarships by taking advantage of special programs offered that show students are eager to learn, can handle college level material, are unique, special and ready to be an asset to the college community. For colleges that accept them, pre-earning college credits can reduce the future college bill. Investigate dual high school/college enrollment, online college courses known as MOOCs (massive open online courses), research contests and clubs where students can gain knowledge in fields of interest, leadership skills and make a difference in their communities.
2. Follow the college money The renowned professor of archaeology may have a national best seller, the Physics professor may have a Nobel prize, the new sports complex may be state of the art, but if your student has no interest in these subjects, he is not getting a direct benefit from how the school spends its dollars. Concentrate on institutions that reward areas and students most similar to yours.
3. Get help from the start Check the school's record for how long it takes most students to earn a diploma. If a college doesn't have good advisors to keep students on track to graduate within four years, students can rack up extra years of college bills. Picking a major, mapping out when to take prerequisites, required and elective courses, and monitoring progress can be tricky. Stick with schools that support their students via high retention and graduation rates.
4. Maximize the value of the diploma Colleges can offer a host of fringe benefits such as internships, study abroad and student exchange programs, lectures, campus clubs and events, and research opportunities. Apply to colleges that have the best instant resume builders for developing leadership skills, establishing networking references and making contacts in fields of most interest to the student .
5. Take the low key road Prepare now to treat the higher eduction opportunity as a job for the student. Sure there are plenty of chances for fun, but the goal is based on academics and living a future good life. Delay the gratification and stay focused, limit the parties and investigate less expensive living options both on and off campus.
By forming a razor sharp college list of 6-8 best fit colleges, families limit college application costs. They also send a message to colleges that don't cater to their student's best interests.
Parents, the college-bound, the federal government and colleges must each do their part to plug the drain of college costs.
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