A Mother’s Advice For Helping Her Children Avoid Student Loans
Many of us see no choice other than to take the Parent Plus loans, cash-out or borrow from 401Ks, remortgage our homes, pull from IRA’s, decimate savings, squeeze our monthly budget, or take a second job to pay for college.
But parent-to-parent, I’d like to tell you, there ARE some other options, tactics, and best practices that help.
The college admissions and paying for college system is broken! (Understatement of the year.)
And what’s worse, not enough of us are aware of the things that can help minimize the financial impact of paying for college.
This is why I love the Paying For College 101 Facebook group. I have learned so much here that SAVED MY FAMILY REAL, ACTUAL MONEY. Significant money, if I’m being frank.
For example, early on, I learned the importance of and difference between choosing schools that meet a high portion of demonstrated need vs. schools that my kids’ stats make them eligible for merit scholarships. (This can dramatically change how much any school will actually cost.)
I learned to enter our information in the net price calculator (NPC) of any college my child is even considering – long before visiting or applying.
I learned to what extent our parental savings, assets and income will actually impact the kids’ financial aid offers. (Hot tip, put as much as you can into 401k or retirement savings because whatever you already have saved up there won’t count against your ability to pay like money sitting in a savings account would.)
[Read more in How FAFSA Calculates Your EFC]
I learned to create a list of schools (I shared it with the group) which at-a-glance revealed key facts and NPC estimated costs for colleges my kids are considering.
Most of us realize that affordability is NOT based on a college’s sticker price, but it’s really based on how much we have left to pay after all institutional financial aid is offered.
The key to actually leveraging this information is what is too often overlooked.
Figuring out how to pay for college has as much to do with how strategically you approach the college admissions process as it does with how much money you have to pay for college.
Don’t Fall In Love With A College
Don’t risk falling in love with any college in the first place if it will require overly drastic measures for you to afford it!
This might be the biggest takeaway that too many parents and kids struggle with. And wind up making crippling, expensive, hamstringing financial decisions as a result.
For example, in my case, there was a really great, prestigious college that my daughter (a rising college freshman) and I really liked. It had all the “things” we were looking for.
They have a fantastic program for her major. The school is set on a beautiful campus. It has a high 4-year graduation rate. It is geographically within a few hours of home and it has a great job placement track record. Plus, she was eligible for one of their top merit scholarships.
They offered her a fee waiver to apply and a free weekend to visit their campus and stay in a dorm. Sounds great, right?
Who wouldn’t jump at this free opportunity?
Thankfully, we didn’t. And it was because of a strategy I learned from members of the Paying For College 101 group.
I ran their NPC first and discovered that even with their biggest scholarships, this particular school would still wind up costing us more than double our EFC every year.
So she didn’t take the free visit, didn’t apply, and didn’t risk falling in love with that school.
Instead, she focused on other great schools that had a net price estimate that would be at (preferably far below) our EFC.
My Top College Advice
I thought sharing what I’ve learned might help some parents and students who are entering the process right now. As a parent who went through this in 2016 with my oldest son, in 2018 with my DD, and is currently going through it again for 2019 with two more kids, this is my advice:
Be selective about which schools you’ll even consider. And remember, it’s the net price (and whether or not it includes loans) that should be the determining factor as to how affordable any school will wind up being.
You can choose which schools your student will love but it’s a whole lot easier to choose which not-to-love from the beginning of your selection process vs. the end.
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