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A University Primer: Tips for Saving Money on College
By Alan Haskvitz
“Does college pay? They do if you are a good open-field runner.”
University expenses are rising about six percent each year and it now costs from $50,000 to $200,000 to earn a Bachelor's degree in four years. That is the good news. The bad news is that only 47 percent of students finish at the same college that they started at, and only 54 percent finish in six years. Add to that the fact that half of all graduates owe $20,000 in loans after the sheepskin arrives and there clearly is a need to for some money saving tips.
First, start planning early, take tough classes, and do your homework. Only 30 percent of families start savings for college before high school graduation. There is also a need to make it a family affair. The selection of middle and high school classes may impact on college admission privileges and merit based financial aid. The most overlooked tip is making sure a student is taking the most challenging courses in middle school. Admissions officers don't care if a child had straight A grades in the eighth grade, what counts are high school accomplishments. Taking the classes and teachers who are most likely to help prepare a child for high school is essential, so carefully select the middle school teachers and classes with the future in mind. Computer technology, typing, language arts and social studies courses that stress research, writing, and using a variety of resources are important considerations as they set the tone for the challenge of high school.
Take the most demanding curriculum in high school. Social life aside, working hard during these four years can make a substantial difference in future earnings with the average college graduate earning 100 percent more than those that didn't go on to university.
This is also a good time to start exploring colleges and even planning family trips to view the institutions. If a state university is selected there could be a considerable savings in tuition thanks to the citizens who support these institutions with their taxes. Attending a public college in a different state could triple the tuition fee, not to mention added travel costs. If an out-of-state institution is of interest check for reciprocity agreements that can reduce the cost such as the one at the University of Minnesota. For those in a good financial position buying a condo for a student to live at rather then paying rent is a consideration and the mortgage payment is tax deductible.
That simple flip of a high schooler's graduation tassel represents both the rite of passage, and the potential for savings of thousands of dollars if the student takes Advanced Placement or Intern-ational Baccalaureate courses. These classes can count for university credit and save considerably on tuition. They may also prepare the student for the PSAT examination. Students who do well on the PSAT test are called National Merit Award Winners and pretty much get into their school of choice, as it gives a university creditability to have the very best test takers in attendance. A small scholarship also goes with it. Taking a rigorous course load also helps in preparation for the college entrance tests.
Thirdly, take both the ACT and the SAT tests if you can afford it. But, first check with your universities of choice. Many colleges will accept the test with the highest score. There is a tendency for families to get caught up in the belief that the SAT is the only test that counts. That is not true. Both examinations are given even weight even though they are different in construction. The SAT is more problem solving, and essay writing oriented, and the ACT is more curriculum based. If you can afford just one, it is important to check with the student’s high school counselor to see which test might yield the best scores. If you cannot afford the cost there is a fee waiver. When the decision is made as to which test to take, the student should spend a great deal of time taking practice tests online and reviewing books that have sample questions. It may be a good investment to consider tutoring services as well. Being familiar with the test reduces the pressure. The results of either of these tests are one of the major elements in admissions and can yield scholarships when combined with good grades and community involvement. Of course, if the prospective student is a good open field runner the scores may not be as relevant.
www.collegeboard.com/parents
Fourth, figure out what your Expected Family Contribution (EFC) is. Essentially, this is what the university uses to decide the amount the parent is capable of paying for a student's education. There are forms on line to do this, but the most important tip is having all the financial information at hand. These forms are frequently audited. Hint.
http://www.finaid.org/calculators/finaidestimate.phtml
Next, become very familiar with the government's Free Application for Federal Student Aid site (FAFSA). Financial aid awards are based on income reported the previous year. It is a good idea to postpone capital gains and save money for college in your name to obtain a better percentage. Be aware that saving for money in your child's name brings a new set of percentages into the financial aid calculations. The universities expect the student to pay a higher proportion of their savings to attend than the parent. Pay down the student's assets first and it is a good idea to ask grandparents and others not to give a student money for college as it is considered income.
Each school has different requirements and some, such as Pomona College; want additional forms to determine the amount of aid an incoming candidate will qualify for. Thus it is vital for a family to consider and document all expenses. For example, parents might consider going back to school themselves to finish a degree, as having more than one member of a family in a university increases the possibility of more aid. Always look to reduce the available cash by paying off debts or buying that new home entertainment center. Adding funds to a retirement account is also a good way to enhance the aid application.
Consider prepaying your mortgage. Make sure you don't take money from your retirement to pay for college...borrow from it instead. And consider reducing large amounts of money in a bank account or mutual fund as they also will count against you in determining financial aid.
Since 14 percent of the readership's population is in the pre-college age group there should be significant interest in starting a Roth IRA, a 529 plan or a Coverdell education savings account. A quick check with a financial advisor is recommended. The sooner these are started, the more the fiscal advantages. Some parents start these when their children are infants as the savings are impressive.
http://www.nasfaa.org/redesign/parentsstudents.html
It is highly advisable to contact the university's financial aid administrator before filing the EFC or your FAFSA. They are there to help and can provide invaluable assistance on matters that you may have missed. There is a Professional Judgment option open to them, too, should you have a special circumstance, such as selling that movie script for a couple of million dollars. This is why it is so important to carefully select the date the FAFSA is submitted as the figures provided must be accurate as of that date. http://www.fafsa.ed.gov/
If a loan is needed, the most cost effective way is the Federal Stafford Loans, Perkins Loan, and Federal Parent PLUS Loans. The rates for the student are usually much lower than a parent could get - a cut back on school costs considerably. Currently, these rates are in the six percent range. These all must be declared.
Sixth, consider enrolling in a community college and then transferring to a four-year university. It may not be as prestigious, but the savings are impressive. The average costs, according to Trends in College Pricing, are $13,126 for students attending two-year public colleges, $17,336 for students attending four-year public colleges and universities, and $35,374 for students at four-year private colleges and universities. Out of state students attending public colleges and universities pay an average total cost of $27,791 per year. Furthermore, research shows that students who transfer from a community college earn grades equal to, if not better than, students who begin their college careers at a four-year college or university. If you do take this tip make sure that you check that the courses taken are transferable to the desired university before hand.
Seventh, don't rule out expensive universities even though state colleges are much less costly. The richer the institution the more need-based aid is available. It is possible to pay less to attend an Ivy League school than a state university
As an example is if Harvard accepts a student for admission, and his or her family's income is below $180,000, the annual cost at that school might be capped at 10 percent of the family's income. Stanford and others have similar plans.
If you want to know a real secret about expensive private schools, the College Board found that the "net price" at the average private college in 2006-07 was about $9,000 less than the published price due to tax benefits, and institutional and federal grants. Some college's even list the discount just by entering the SAT or ACT score, grade-point average and class rank on their website.
There is more than $130 billion in financial aid available with about 66 percent of all students receiving grant aid with an average of about $2,040 per student at public two-year colleges, about $3,600 at public four-year colleges, and about $9,300 per student at private four-year colleges. Call 1-800-4FED-AID for a student guide to Federal financial aid.
The majority of scholarships and financial aid comes from the government and the FAFSA figure is the guide for these. Next there are a great many local resources. These are usually for smaller amounts, but they are worth pursuing. Local civic organizations, women's clubs, minority groups, memorial scholarships, all start with the high school guidance officer. There are categorically listing that include religious and ethnic groups, unions and professional organizations. Corporations also provide help such as Coca-Cola and Target.
There are an abundance of scholarships available including some truly strange ones like the Kor Memorial from the Klingon Language Institute, the Patrick Kerr Skateboard Scholarship, the Who Wants Chocolate $5000 offering, and The Scholar Athlete Milk Mustache of the Year Award. There is also a $1000 scholarship for left handed students, a Duck Brand Duct Tape Stuck at Prom Contest with $6000 for the couple with the best attire made of the product, and funds from groups that support Little People, Tall People, Fat People, Skateboarders, Tupperware sellers, Duck Callers, Mule Deer supporters, vegetarians, Pagan and Wicca students, golfers, and bowlers. For a larger list of grants, scholarships and aid go to http://www.reacheverychild.com/feature/grants.html
A word to the wise. There are a variety of sites that promise to provide you with scholarships without delivering. Look for the following before deciding if it is worthwhile. If there is a processing fee beware. There are plenty of free scholarship services. Others promise an award even before an application is submitted or a scholarship just by attending a seminar.
Eighth, don't overlook the AmeriCorps or the ROTC. By serving your country at home, as AmeriCorps does, or in the armed forces, by joining ROTC, you can reduce the cost of a college education. AmeriCorps is a domestic service organization where young men and women work on community service projects in exchange for a living allowance averaging $7,500 per year; health care; and an education award of $4,725 per year for paying back a student loan or for financing postsecondary education. Under some circumstances a person can serve part time and receive an education award of $2,362 per year. The ROTC offers scholarships for those who meet the criteria and agree to accept a commission and serve in the Army on Active Duty or in a Reserve AmeriCorps 1-800-942-2677.
Ninth, student aid comes in a variety of forms including some very interesting scholarships. There are many free sites that offer help in locating these, but start with the government ones first. Don't be dismayed because this is one search that isn't limited. A couple of reminders is to apply early, read the requirements, if an essay is required make it unique to you and not the store bought variety, stay positive, be aware that most scholarship deadlines are in between January and May. Before you apply it is important to see how the funds are going to be distributed. Sometimes they just reduce the amount of
student aid when an outside scholarship is earned.
https://studentaid2.ed.gov/getmoney/scholarship/scholarship_search_select.asp?13817/
Many colleges also offer work-study program that can be part of a student's financial aid package. The student works on campus doing a variety of tasks. Merit-based grants and scholarships are not related to need, but achievement. This can be for academics or athletics or artistic talents or whatever the university feels deserving.
Need based family financial aid is the most complicated owning to the many variables from family income to savings to assets to number of children in the family and more. To qualify for federal aid or state aid requires some homework and can come in a variety of forms, as tax credits, tax deductions, or tax breaks on savings plans. These are not the same as student aid but can make college more affordable by reducing taxes. The Hope Scholarship can provide up to $1,500 for a child's first and second years of college and the Lifetime Learning tax credit can provide as much as $1,000 a year after the first two years of college.
Reducing college costs is best done with professional help from a financial advisor, school counselor, or federal government help sites. Failure to do your homework could cost thousands of dollars in aid and make that college of choice too expensive. Of course, having a student who can throw a 100 mph fastball or have an overpowering serve could make everything a bit easier.
A final free tip is to not to miss deadlines. You are going to need letters of recommendation, completed applications, transcripts, and essays that must honor due dates. Failure to meet this timetable may mean not being admitted to the school of choice, not to mention the joy of living at home another year.
Alan Haskvitz is a National Hall of Fame teacher and author. His website, reacheverychild.com has thousands of free resources for parents and students.