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This guide is an essential resource for anyone facing the often daunting task of paying for a college education.
MAKE A REALITY CHECK
College Financing in the '00s
Not long ago, the two most expensive purchases in a person's life were a house and a car. Now, for most families, the cost of putting a child through college has become the single most expensive purchase they'll ever make. The total cost of attending many private, independent colleges has already exceeded $100,000 for four years (and many students go for five years). By the year 2007, the total cost probably will be more than $150,000. Even at lower-cost, state-supported colleges, the total can be staggering. Furthermore, the cost of college tuition and fees continues to rise at rates greater than inflation. Until recently, these costs were rising at two or three times the inflation rate. This rate of increase has begun to slow down, and some colleges are holding tuition rates steady.
We'll break down college costs in the next step, and you'll see how to determine your own expenses. For now, before you jump into action, let's get a handle on what you're up against.
WILL COST LIMIT YOUR CHILD'S COLLEGE CHOICES?
You want the best for your child, and this certainly includes the best in education. Therefore, you want your child to be able to choose the school that is most suited to him or her and that allows him or her to excel. For some, this most suitable place may be one of the top-rated, most competitive schools, where students can meet and work with many of the brightest young minds in the world. For others, it may be a small, liberal arts school, where students can experiment in a supportive environment. The right place for others may be a technical or art school that uses a conservatory approach to teach students who are committed to working professionally in a discipline. Or it might be a local school that allows students to remain near home and find their life direction before venturing out on their own, or a state-supported, low-cost school that lets students get their feet wet and demonstrate responsibility.
The point is, you want your child to choose the college that's best for all the right reasons, and in an ideal world, money would not be one of them. But let's be realistic. Money is almost always a significant factor.
It's easy to see why spiraling college costs can affect a student's college choice. This being acknowledged, your child's choices need not be limited by cost considerations. If you get nothing else out of this guide, we hope you gain the knowledge that you do have financing options, that there are steps you can take to keep any college within your ability to pay.
Remember, while cost is a very real concern for most families, an investment in higher education is an investment for a lifetime. A wise choice will return far more than just the dollar value of the initial investment.
The Financial Safety School
College costs and financial assistance are now two of the most important factors students and families consider when choosing colleges. When students apply to a number of colleges, they generally include one "safety" school, one they're pretty sure will accept them. Now, many students regularly include a financial "safety" school, one they know they can afford — often a state school or one they know will give them very close to a full tuition scholarship, or one within commuting distance where they can save on housing costs.
ARE YOU RELYING ON FINANCIAL AID?
Data show that before World War II almost two-thirds of the cost of sending children to college were borne by the family. By 1989, this figure had dropped to below 40 percent. The balance of the costs was paid by federal and state governments and colleges themselves.
Higher education professionals worry that parents are increasingly adopting the following philosophy: "Hey, no average person can pay this much money for a kid's education. I'll kick in what I can, but it's up to the government and the schools themselves to make up the difference."
The truth is, parents and students are considered to have the primary responsibility for funding the cost of a college education to the extent they're able. This is the basic principle of the financial aid system. If you have a child going to college, at least a portion of your family's current income is expected to go toward his or her educational expenses. This portion is referred to as your family contribution.
The problem is, even parents who do want to accept primary responsibility for college expenses find themselves incapable of rising to the task. Too many of them are caught trying to do three things at once. They're trying to save for their own retirement, pay for their children's education, and help their elderly parents with nursing home or medical expenses. As many parents have discovered, meeting all of these costs can be the biggest financial challenge of their lives.
CAN YOU RELY ON FINANCIAL AID?
The existing system of financial aid is based on the fundamental concepts of access and choice. All students, regardless of ethnic origin, gender, or financial status, can choose to pursue a college education knowing that financial assistance is available to those who qualify based on need.
This is the way the system should work. Unfortunately, the foundation of student financial assistance is showing signs of serious deterioration. The reality is that federal and state financial aid programs have not kept pace with today's increasing costs. The HOPE Scholarship and Lifelong Learning Tax Credit are examples of the federal government's attempts to help families with the rising cost of college attendance. Still, it will take a major influx of federal dollars to make a dent in the rising cost of higher education.
THE BOTTOM LINE
As a result of federal aid's inability to keep up with the rise in college costs, many colleges and universities have been making up the difference by tapping into their own financial resources. In an attempt to continue helping students who demonstrate financial need, many colleges have raised tuition, only to channel a significant portion of the tuition increase back into their student financial aid budgets. Because this practice stretches resources, many colleges are forced to defer maintenance needed on existing campus facilities, to postpone new research initiatives and building projects, and sometimes to reduce or eliminate existing academic programs, faculty, staff, and services. While this has worked in the past, this strategy can't continue much longer.
Colleges and universities are struggling to find the middle ground between maintaining or improving the quality of the collegiate experience while enrolling the most qualified freshman class. And while they agree in principle with the concepts of access and choice, some colleges have been forced by limited financial resources to depart from the standard practice of meeting every student's financial need.
To enroll the most qualified freshman class using limited institutional funds, an increasing number of colleges have increased the number of scholarships they award based on merit, rather than on need. Other institutions now meet only a portion of each student's financial need. And a small but growing number of colleges consider a family's financial ability to afford the college's costs before they make their admission decision.
How You're Affected
It's no wonder that financing a college education has become so complex. What was once a fairly straightforward, standardized process has now become a rather tedious one, often full of inconsistencies. Students who apply for aid at a number of comparably priced institutions often receive a vastly different financial aid award from each.
The students are often the losers. Paying for college is like buying an airplane ticket: everyone seems to be paying a different price. Like the airplane passenger, students and their families have no idea whether the price they paid to go to that school was more or less than that paid by any other family, or whether they could have received a better "deal" at another school or even by negotiating with the financial aid administrator or admissions director.
The good news is that by using this guide you'll make an informed decision.
Copyright © 2000 by Kaplan, Inc.
|Introduction: How This Book Will Help You Pay for College||1|
|Part 1||The Financial Aid Process|
|Step 1||Make a Reality Check: College Financing in the '00s||9|
|Step 2||Figure Out the Real Cost: Beyond the College's Sticker Price||13|
|Step 3||Learn Where the Money Will Come From: Your Financial Resources||21|
|Step 4||Get Your Share of Student Aid: Financial Aid Programs||25|
|Step 5||Navigate the Process: Your Financial Aid Applications||39|
|Step 6||Get an Inside Look at How You're Evaluated: Your Calculated Financial Need||79|
|Step 7||Compare and Negotiate Aid Packages: Aid Awards for Sample Dependent Students||121|
|Step 8||Meet Your Share of Expenses: Borrowing and Money Management||139|
|Step 9||Solidify Your Plan: Personalized Financing Strategies||153|
|Step 10||Review Important Last-Minute Advice: Quick and Easy Tips||163|
|Steps for Independent Students: Financing College on Your Own||167|
|Part 2||Financial Aid Resources|
|Grant and Loan Tables||199|
|Part 3||School-By-School Information|
|How Much Will It Cost?: Basic Data for Over 1,000 Schools||221|