News Column

Paying For College During an Economic Downturn

April 17, 2009


college costs, college scholarships, pell grant, pay tuition, find scholarships

Just like a car buyer does research, makes comparisons and gives the vehicles test drives, so too should parents and students be savvy shoppers when it comes to choosing a college that is the best value for the money.

According to October 2008 figures by the College Board, the average cost of college (tuition, fees, room and board) for in-state students at public four-year colleges for 2008-09 is $14,333, an increase of 5.7 percent from the previous year. At private, four-year colleges, it's $34,132, a 5.6 percent rise. At very pricey private schools, the cost can swell to $50,000.

Being able to afford college has always been a concern for families, but the bad economy -- in which employees are losing their jobs and college funds are being tapped for necessities -- has added to the challenges faced by those seeking a college education.

"Most parents and students don't realize that this is a consumer transaction," Kalman Chany, author of "Paying for College Without Going Broke" and founder of Campus Consultants Inc., which provides college financial aid advice to students and their families, told "The college wants you to buy their service."

Often campus information sessions and financial aid talks are designed for the purpose of getting the student to apply, Chany said, not necessarily to tell the parents how to get their child into that school and how to get the best, most affordable financial aid package. Recruiters may have quotas and/or receive bonuses and be under pressure to fill classrooms. "Realize that you have to take everything you hear from the colleges with a few bushels of salt," he said.

"What most families don't realize is that the most aid -- whether it be in grants, scholarships or loans -- goes to those who are savviest about applying for it, not necessarily those who are neediest," Chany said. He recommends specific strategies such as making adjustments to your assets, debts and expenses to help boost your financial aid eligibility.

Students oftentimes have their heart set on a particular school, and it may be a pricey one that doesn't offer the best financial aid. Chany advises parents to tell their son or daughter to talk to peers in their mid-20s who took on large loans to attend a university. Seeing how peers are now buried in debt and trying to make ends meet may make them reconsider their plans to attend that costly college that offers little or no financial aid.

If the family is financially strapped, one option is for the student to defer admission for a year and get a job to earn more money. However, this strategy could work against the family, Chany warned, because under current law, student earnings above a certain dollar amount will reduce eligibility for aid.

Another option is to attend a less expensive community college for the first two years and transfer to a four-year institution after that. But as others seek to cut costs as well, it may become more difficult to get into community colleges.

If the family's financial condition worsens, such as from a job loss, parents should go back to financial aid directors and explain the situation. Also, seek out Pell grants and other grants that won't need to be repaid.

Some students believe the name of the university on the diploma is what will result in higher earnings after college, but that's not necessarily so, Chany said. While those with degrees from the top schools generally do receive a higher starting salary, Chany said students shouldn't be sold short. "It's what the student will do with their education that matters, not what bumper sticker they have on the back of their car."

Like that consumer who got a great deal on a car, a college shopper needs to "slam the doors, kick the tires and understand what you are really getting for your money," Chany said.

Source: (c) 2009. All rights reserved.

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