So, you think you've done everything right: accepted at universities whose strengths match your strengths and interests, visited campuses, filed a FAFSA, received scholarship and financial aid awards. And now you're looking at the numbers and seeing NO WAY. Or, perhaps this is about what you expected, but it still looks like a real stretch for your family financially.
How do you sort through this? Will you benefit from federal education tax credits for the middle class? How do you compare financial aid offers? How do you put the resources together to manage your college investment? What are the next steps?
First, we've written this as a guide to a conversation that most students should have with their parent(s). So, read through it, print it out, leave it lying on the kitchen table (or just forward the link) and get the conversation going.
Second, in the final analysis, paying for college is a stretch for nearly all families. At QU we recognize that and we appreciate the sacrifice the families of our students make so that their sons and daughters can receive a high quality education. And, we do our best to ensure everyone has a personalized college experience...in four years.
How will you sort out the financial side of your college decision? Although the details will differ for every family, the two worksheets that follow provide a helpful outline for these conversations. It starts with a worksheet that's simple, very important, and too often overlooked. Simply put, it's not about who offers you the biggest scholarship. The real cost (YOUR COST) to you and your family is the difference between the cost of the college and the scholarship and grant assistance you receive.
That's pretty easy math, but there are a few things to watch out for as you complete this worksheet:
- Be certain you have costs for the 2014-2015 academic year. Brochures and websites may have been published with 2013-2014 costs. If you don't have those costs for next year, call the Business Office.
- Make sure you're considering all the fees you would pay as a first-year student. They do add up, and you may need to check websites to figure this out.
- YOUR COST doesn't include other forms of financial aid, for example campus jobs and college loans. We'll consider them on the next worksheet.
YOUR COST will be different for every college and university you consider. That's no surprise, right? There is tremendous variety among universities in everything from size, location and programs to the emphasis they place on good teaching and student-faculty interaction. And, as you would expect, different college experiences will produce different results in your career, community involvement and values. In fact - and you should stop to think about this - you chose to apply to institutions because they were different, not because they were the same as all the other college choices available.
Whatever those differences are, they're important to you. They represent the university's match with your individual needs, strengths and interests. Your college decision hinges on whether you believe those differences are worth the investment. That's not an easy decision. However, be confident that your decision is financially possible!
This is what the second worksheet is all about. When you choose a university, you and your family have choices about how you manage your investment. What we offer here are the thoughts and solutions that other QU families are using. More than 95 percent of our students — from all financial backgrounds — receive some combination of scholarships, grants, loans and campus work. Without that, and the supportive choices their families make, their QU degrees wouldn't be possible. We hope some of their solutions will work for you too.
Once you've established YOUR COST, the next step is to determine what you and your parents can contribute from your existing resources. Nearly all families should file the Free Application for Federal Student Aid (FAFSA). Here are some things you should know about the FAFSA:
- The formulas are created by the federal government which means the data and analysis will be the same at all institutions.
- The FAFSA treats families fairly, at least in the sense that the rules are the same for all.
- It's required for all state and federal programs as a means of distributing grants to those who need them.
- It's also required for some lower interest federal loan programs that are available to all students.
- Filing the FAFSA is free on-line at www.fafsa.ed.gov. We will have the results within 3-4 business days. Feel free to call us at 800-688-4295 with any questions.
- If you're in doubt about whether to file the FAFSA, we're available to help you through that decision.
- Just file it... it's free... what is there to lose?
The key figure that comes from the FAFSA is called the Expected Family Contribution (EFC). It consists of two parts: Parent Contribution and Student Contribution. Some things to consider:
- The EFC is based on the idea that the first responsibility for paying for education rests with you and your family.
- That said, the EFC is, at best, a rough guideline rather than a hard and fast rule. Keep the figure in mind as you discuss Parent Resources and Student Resources.
- Families often make the mistake of thinking about their current budget when deciding how much they can afford the following year. That potentially ignores how expensive it is to have a high school senior in the house. Considering everything from food to car insurance to water bills, economists suggest a cost savings of at least $3,000 per year.
- Have you been planning for college costs? The FAFSA calculations are based primarily on income, do not tap retirement programs, and expect a contribution from savings only at relatively high asset levels.
- The American Opportunity Tax Credit provides up to $2,500 per year and is available to most lower and middle income families. This is direct reduction of your federal taxes.
- Approximately one-quarter of all college students receive some financial help from other sources, often a grandparent or employer.
- Unlike savings in your parent's name, the FAFSA does expect students to contribute their savings toward their college expenses.
- If you haven't already done so, check with your high school counselor about scholarships that may be available to students in your community.
- Yes, you need a summer job and, depending on other choices you make on this worksheet, you need to be serious about saving what you earn.
- Students working 8 hours a week during the academic year can expect to earn about $2,000. Like all jobs, campus employment is paid as you earn it, so don't plan on having this available at the start of the year. However, as the year progresses, this will be your source for books, toothpaste, pizza and travel home (to ask for more money, of course!).
- Loans are at the bottom of this worksheet for a reason. They've been a fact of life for nearly all college students for the past 20 years. Average loans at the time of graduation are nearly identical between public and private college graduates, with public college students sometimes borrowing less per year, but accumulating the same overall indebtedness because their degrees take significantly longer to complete. Loans are at the bottom of the worksheet because they fill in the gaps after you've considered the other choices.
- There are good loans and bad loans. Few of us can pay cash for our home so we spread those payments over a 30 year period. And, in the long run (put down today's newspaper), our homes increase in value, making them not only a place to live, but a reasonable investment as well. Or, think about car loans. Whether new or used, it's not uncommon to finance your car over a five year period. But, at the end of five years, the car is certainly worth far less than it was originally and eventually people buy another car and start that borrowing cycle all over again. Then there's credit card debt. Some of the purchases may be for what you need... and some may be for what you want. That can dig a deep hole. Where do college loans fit? Probably more like the mortgage on the house: Payments are generally deferred while you're in college with repayment starting after you leave school.
- College is a one-time purchase (not like your car).
- Interest on home loans is tax deductible. Even better, the federal government pays the interest on most student loans during your years in college.
- Your degree continues to grow in value. On average, college graduates earn $1 million more than high school graduates. Not a bad investment!
- Some parents use a home equity loan to pay tuition because the interest is deductible.
- Will you regret borrowing for an education that really meets your needs? In a recent survey of private college graduates, more than 98 percent said borrowing for college was a worthwhile investment. No regrets.
We hope this has been helpful, especially in facilitating a conversation with your parent(s). If at any point you would like our input in this conversation, call us - that's what our counselors are for.
As a final thought, at this time of year it often seems like cost and financial aid issues dominate the discussion. It's good to remember that your college search started with a focus on the best match between your interests and the strengths of the college. Ultimately, that's where you should end your search as well. It's not all about dollars; it's about the investment in your future.