What Can We Afford for College?

What Can We Afford for College?

By Dr. Mark Fisher | drmarkfisher@yahoo.com

For many high school seniors, March was a key month for their college decisions.

For those who applied early decision, early action or at an earlier priority date, the decision may have already been taken care of. For other students, including those whose applications were deferred from early admissions programs, March brought word of acceptance, denial or wait list.

Parents have an additional concern: Can we afford the total cost of the college?

The Higher Education Opportunity Act of 2008 required all postsecondary institutions that participate in the Title IV federal student aid program to become more transparent about the cost of college.

While the student has counted on that dream college for a long time, the parents are giving more and more thought to the tremendous cost of college. Surely, it would have been preferable if the parents had let the student know about any monetary problems long before the student’s dream was shattered. In other words, parents need to be upfront with their children from the beginning.

We know that in many cases the student will receive need-based financial aid and perhaps a merit scholarship or a HOPE grant in the state of Georgia.

To the rescue, possibly, comes the federal mandate that forced colleges and universities to make their pricing transparent. Since Nov. 1, 2011, the Net Price Calculator has been required on every college website.

Colleges had three years to get ready. Vendors came on the scene, including the famous College Board, and the colleges listened to the various pitches.

The first problem is that the NPC may be a little different, depending on the design of the website. So beware in comparing the NPC of each college.

Colleges wondered whether some families would immediately bypass them because the potential financial aid didn’t compare to that of other colleges. The admissibility of a student and the fit of a particular college for a student could unfortunately become lesser issues.

My advice is to use the NPC. The whole idea was to make college costs transparent. The government let it be known that only the first name and ZIP code of a student could be required, but the college could ask whether you wanted to be called.

Some NPCs are easy to find on college websites. You have to go fishing for others. But the NPC must be there.

By using the NPC, you can determine what the college might cost you. A scary sticker price isn’t always a reason to reject a college. I have been researching colleges for a client whose family financial situation might enable spending no more than $20,000 per year. But some colleges’ average financial aid packages are around $30,000.

Average means just that — some packages are more, some less. Does that include loans? It could; all packages are different. A few schools eliminate loans if your family contribution is below a particular figure.

The NPC should take between 15 and 20 minutes to complete on a college website. Afterward, parents will realize that some colleges to which their students were accepted could be affordable.

The estimates are primarily for the first year of college. The College Board estimates that about one-third of students pay the sticker price. More than 80 percent of the students at private institutions receive financial aid.

If you choose to use the NPC for a given college, the college will look at its costs and your family financial information and some student data. Then the calculator estimates the student’s potential financial aid and subtracts the aid from the sticker price, and out comes your potential net price, the amount a student would pay and/or borrow to enroll.

The NPC probably won’t be perfect, but it is certainly better than not knowing anything. You may be pleasantly surprised.

Mark Fisher is a college and career consultant at Fisher Educational Consultants (www.fishereducationalconsultants.com) and a consultant for the College Planning Institute (www.GotoCPI.com).

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