The rapid inflation of college costs has lead to a trillion dollars in debt for American students and a decrease in percentage of students attending four year schools.
Its important for parents to be aware of the changing college funding landscape. Here are the new rules for getting the best deal on college during these depressing times:
- Have your child apply to more schools. We recommend that students try to apply to 6-8 schools, focusing on institutions which place them in the top 25% of applicants.
- Eliminate the words “reach” and “safety” from your vocabulary. Today’s job market expects, nay, demands an undergraduate degree. We advise that parents consider colleges as either “funded” or “unfunded”. From there you can determine which schools are even worth applying to.
- Understand the effects of “price discrimination”. Different students pay different prices for the same education. It’s an undisputable fact of life. Although seemingly unfair, it also means that competent players can work the rules of the game. Just because a school seems expensive doesn’t necessarily mean you can’t afford it. Fancy private schools often have enormous endowments and can afford to offer good students more financial aid. They also usually have higher graduation rates.
- Don’t count on the scholarships. Firstly, some scholarships will increase your EFC thus reducing your eligibility for aid. Secondly, private scholarships only make up a very minute percentage of all financial aid awarded.
- Do count on the government. The FAFSA is a major step in every well-crafted college plan. Almost everybody, even very high net worth families, are eligible for some sort of federal aid. Also, most state aid requires the FAFSA be filled out. Finally, if you must consider loans, the government offers the most agreeable terms.
- Not all private education loans are scams. But the interest rates can be devastating to a student’s credit. In fact, we advise against them in almost all instances.
- On second thought, don’t always count on the government. The golden rule of finance is “Where there is gold, there will be robbers.” And the government is the biggest robber of all. Be wary of 529 plans and do your research. State-run plans might not be right for your situation and actually be damaging to your aid eligibility.
- Don’t be afraid to ask for help. Talk to Financial Aid Officers, they can give you insight into the practices of a specific school. Talk to Admissions Counselors, they’ll help your student understand what colleges are looking for. Talk to College Funding Specialists who can understand your particular situation and help you make the right choices for the future of your family.
- Do your research. Read everything you can on the subject and understand your finances to a tee.