Student loan debt continues to be high, and now, with the pandemic, students are even more concerned about paying for college. We all know college is expensive. Did you know that it is the biggest investment most people make beyond buying a house? Most people do not start looking for a house without considering their budget, how much they can afford to pay on their monthly income, and the down payment.
However, many families plan for their children to go to college, but they do not plan on how they are going to pay for it. Or they plan on their children to get merit aid or financial aid to pay for college. Families are expected to contribute to the cost of a college education. Many families end up borrowing too much money for college because they did not make affordability part of the college planning process.
Here are five ways you or your student can make affordability part of the college planning process from the beginning.
1. Family Meeting- Have a family meeting at the start of the process. Decide who will pay. The parents? The student? A combination? Or do you have some other relative that will contribute? How will you pay? Do you have savings for college? Will it be part of yourmonthly expenses? Or are you going to take out loans?
Determine the max amount you are willing to contribute to a college education.
2. Predict Cost-The price listed on college websites is the sticker price. Colleges can discount the sticker price for a variety of reasons. Not all students pay the same price at the same college. It is like being on an airplane. Not everyone pays the same amount of money for the seats on the same airplane. There are calculators designed to help you predict the cost. EFC (Expected Family Contribution) calculators show you how much you may be expected to contribute to college. There are Net Price Calculators (NPC) that help you predict the price at a specific college. You can go to college websites and look on the financial aid page. Colleges are required to have a Net Price Calculator. This calculator will help you estimate what you may be expected to pay at that particular college.
3. Compare Salary to Debt-If you or your student is going to borrow money for college, consider what your salary will be compared to the loan debt you will have. Use a loan repayment calculator to determine how much you will be expected to pay every month compared to your monthly income. Think about the expenses you will have for a car, gas, housing, and food, and make a budget.
4. Merit Aid-Look for colleges where you or your student will receive merit aid.
Look at scholarship pages on college websites to see if you can find a chart that outlines how much merit aid the college will give for defined test scores and GPAs. Look at colleges where you will be near the top academically, the ones where you are in the top 25% for GPA, test scores, and rigor. Those colleges are potential places where you or your student could receive near the max of the merit aid if you are looking for merit money.
5. Stick with the Plan- Once you have set a budget, decided if you are comfortable borrowing money for college, and how much you are comfortable borrowing, do not waiver once acceptances are received.
Stick with the plan that you have already decided.