This article is primarily for people who have high school seniors headed to college next year.
I wish I’d known all this when my first child was applying. Hopefully, I can pay it forward and save others money (and a little aggravation too).
If affording your child’s college education is going to be an issue for you, there are some strategies to consider before taking out any loans, other than maybe the $5,500 federal one offered to first-year students after filling out the Free Application for Federal Student Aid (FAFSA).
If you are almost positive you’re going to need extra loans to afford your child’s college education, believe it or not, now is not the time to begin stressing about finding the best interest rates and loan terms.
That’s putting the cart before the horse. There are things you should be doing first. Because even if you find great loan terms, they won’t be able to save you a fraction of what being discerning about which college your child chooses in the first place can.
Steps to Reduce College Costs
As a top applicant, your student will likely be eligible for whatever the top institutional merit scholarships are at those colleges.
Then, if there’s still a gap between the remaining costs and what you can afford, there are some things you can do to reduce the costs (other than researching loans).
Net Price Calculator and Fee Waivers
Now is the time to be running the net price calculators (NPC) on prospective colleges.
Have your child create their list of possible colleges but be sure to include a few schools where your student’s stats (Grade Point Average (GPA) and SAT/ACT scores) place them well above the average for the college.
Those used to be called “safety schools,” but for financial purposes, consider them potential economic safety schools.
Run the NPC on websites of dozens of colleges. Make the selection of which colleges should be on your child’s list of schools to apply to based partially on their affordability.
Call or email the colleges asking for a fee waiver before they apply. Some colleges will just give you one, simply for asking!
Selective College Visits and Applications
Only apply to or visit the colleges that will meet your child’s academic and social needs —- and are at least somewhere within the realm of affordability for you.
Your child’s top choices should be the closest schools to what you can afford.
Even if you can’t outright afford any of them, closer to affordable is going to be exponentially better than farther from what you know you can afford.
Ask for More Merit Scholarship Money
After your child is accepted, always appeal to the admissions department asking for a higher merit scholarship, long before you send in the enrollment deposit.
Even if it’s your child’s top choice!
Even if it’s already the best deal!
Even if they say you already have their top aid package!
Even if they say they don’t do that, and even if your student’s stats don’t necessarily meet the cutoff for higher merit, appeal for higher aid anyway!
The Squeaky Wheel Gets the Grease
As long as housing is guaranteed for freshmen at all of your child’s top choices, keep on appealing to admissions and financial aid for more money until May 1st (Decision Day).
Email them. Call on the phone. Visit admissions in person when you go for accepted students day.
Don’t make a pest of yourself, but following up two to three times over the course of several months should be fine.
This helps you because if any of the colleges that have accepted your child happen to be falling short of their enrollment quota they tend to become desperate enough to make deals with their uncommitted students, just to reach their class size quota.
Patience and flexibility about which college your child chooses can be worth significant money in this system.
The day before Decision Day, contact all of your child’s top choice colleges one last time to find out if they can make your out-of-pocket net price lower than the best offer you have so far.
Hot tip: it doesn’t matter if one school offered your child a $50,000 scholarship while another offered only half that.
What matters is how much is left for you to pay after all scholarships and aid are factored in. Care mostly about your net price. That’s your bottom line.
Enroll your child in whichever school comes through with a reasonable net price weighing everything else they like about that college: program for their major, geographic location, class size, retention rate, four-year graduation rate, post-graduate employment percentages, etc.
If there is still a gap between what you have to pay and can afford, see if the college’s monthly payment plan will fit into your budget.
And take a serious inventory of what expenses you can cut in your monthly budget. But don’t expect a miracle here, most of us have already done this just to afford a normal life.
Nevertheless, do a double-check of your expenses anyway to see if there’s anything you can free up. You just might find something you missed before.
Loans and Private Scholarships
If there’s still going to be a gap, have your child apply for every local private scholarship they can. (In fact, they could really start doing this right now.)
But since local scholarships aren’t a guarantee, and they may not totally bridge the gap, it makes sense to start considering private student loans or accepting the Parent PLUS loans when you know there will be a gap to fill.
Look at loans after your child has committed to the best of their most affordable options. Only then does it make the most sense to begin looking for the lowest interest and best terms for loans that you can find.
Keep in mind, this year, the origination fee charged for a Federal Parent Plus Loan (PPL) right off the bat is 4.228 percent.
(So for example, if you need $10,000 your loan balance starts out at $10,422.80.) Federal PPL interest rates are 6.28percent this year, but if you have good credit, you may be able to find a private student loan without an origination fee and a lower interest rate.
By shopping around (using my example of a $10,000 private student loan) you could save the $422.80 in origination fees.
And any loan with an interest rate lower than the current federal rate (7.08 percent) is something to consider.
Loan shopping should come after you’ve done everything else because the other steps can easily save you thousands of dollars per year while better loan terms will only save you hundreds.
Disclaimer: I’m not an accountant; I’m not a financial planner, nor a mathematician.
But I am a mom of six with my four oldest kids in four different colleges this year.
By implementing these very tactics, we managed to just barely avoid loans for the kids and for ourselves this year.
In full disclosure, however, after we finish paying for their textbooks, we will be lucky if we have $100 left in our checking account to last until our next payday.
I hope this helps.
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