Before College: Shop Comparatively When Selecting Postsecondary Institutions

Would you make purchases costing you tens of thousands of dollars without doing comparison shopping? Surely not! Well, make sure your Pre-College Finance Plan includes a healthy dose of such shopping as you and children start deciding which colleges they’ll attend.

This year alone, what students pay to attend postsecondary institutions averages $18,550 at community colleges and $26,820 at in-state public colleges and universities. That’s a lot — so most families can’t send children to postsecondary schools without financial aid and student loans.

Here are some pointers on how you comparatively shop to discover a postsecondary school’s affordability:

Avoid For-Profit Schools — At Least For Now: Donald Trump once paid $25 million to close a lawsuit brought by 6,000 students who sued him for defrauding them through his for-profit school. Not surprisingly, his administration protected similar schools. Although Joe Biden plans to crack down on them, that’ll take some time. So for now, send your children to a community college or state technical institute for technical or vocational education.

Be Careful About High-Priced Private Institutions: This year’s posted Cost of Attendance (COA) averages $43,280 at out-of-state public colleges and universities and $54,880 at private colleges and universities. The Federal Pell Grant maximum is $6,345 and freshmen may borrow up to $5,500 in federal student loans. In most states, non-residents aren’t eligible for state grants and loans so, absent lot’s of institutional and private scholarships, understand you as parents may need to borrow heavily.

Determine True COA: Colleges play games with the COAs they publish. So double check:

  • Room and Board: Usually this is an average of what students living on-campus pay. Groceries, rent, and utilities may cost more or less in off-campus apartments.

  • Books and Class Supplies: This is typically an average of what all students spend. In certain majors (architecture, art, literature, etc.) it could be more.

  • Transportation: Most likely this is for getting to and from an in-state home a few times a year. It doesn’t include costs associated with having a car at school or flying between home and out-of-state schools.

Carefully Consider Each School’s Aid Offer: Have your children been offered “renewable” grants and/or scholarships. If so, study their renewal criteria carefully. Some are a form of “bait and switch;” requiring exceptionally high GPAs and credit hour completion for renewal. Also, understand that most Federal TEACH Grants ultimately turn into costly loans.

Compare Net Prices: Net price represents what you and your children will have to pay by borrowing, liquidating assets or working.

Shop comparatively now to avoid massive debt or other problems later!

Next Wednesday we’ll be posting an article right here about another seldom-considered but absolutely essential issue in shopping comparatively when selecting and affordable college or university. So become a follower of this website to get this and other college affordability strategies.

Before College: Make Money Management Education Part of Your High School Senior’s Pre-College Finance Plan!

By Linda Matthew, AFC

Parents, you have 9 months until your children leave for college! (let’s assume for now that by next September they will indeed be leaving . . . ) During the next several months, do take some time to help them get ready to manage their money in the real world.

This may not be the most comfortable topic — therapists say that talking about money can be more difficult than talking about sex — but do it anyway. Most students today graduate with large loans: the average loan balance was $29,200 (Note 1). This means an average payment of $393 per month in every month after they graduate. In addition, over a third of students in college say that they already have credit card debt of over $1,000 (Note 2).

So take time to prepare them, and see if you can minimize their debt.

  • Help them put together a draft budget. Tuition, room, board and book costs are often well understood. But what will they need for living expenses? Together, write a list of your best guess at the items and their costs each month, and total it up. Decide how much you can give them and help them figure out how to earn the rest. Or help them figure out what they can live without.
  • Consider the car. With the cost of insurance, gas, maintenance, and parking (and tickets!), this can add up. If they can manage without one, skip the cost.
  • Teach them how to cook and how to do their laundry so they don’t have to nervous about these tasks. Send them grocery shopping (on their own, with your card) to help gets the kinks out of that process. Even in a dorm room, you can fix a surprising amount with a mini-fridge and microwave.
  • Teach them to review their bank statement at the end the each month to see where their money went. They can even download their transactions and total them up by category — it can be surprising to see the numbers. (Those little rental scooters. They add up.)
  • Teach them how to save. This is a journey all its own. Have them work at least next summer, and have them save at least half of what they earn.

Children get most their information on managing money from their parents. But most parents, when asked if they talk to their students about managing money, say no. Take this time to give this gift to your children. Whether we know it or not, our children are learning from us.

Feel free to contact me if you have questions or need help. Start with the “College” chapter of my book, Teach Your Children About Money. I wrote it just for this purpose.

1. https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=5447586e281f

2. https://www.cnbc.com/2019/05/31/over-a-third-of-college-students-have-credit-card-debt.html

About Linda Matthew . . .

Linda Matthew is today’s guest author. She is an Accredited Financial Counselor® and owner of MoneyMindful Personal Financial Coaching through which she has clients throughout North America. Linda is also the parent of both a college graduate and current college student.

Linda’s new book, Teach Your Children About Money, offers a variety of age-appropriate ways help your children learn about themselves how to manage their money. Go to the MoneyMindful website to learn more about Linda and arrange a free consultation.

Special Bulletin: Contact Your Federal Representative and Senators Right Away on This Important Matter!

If you’ve been following our blogs, you know we recommend your College Finance Plan include exercising your right to be politically active. And if you owe money on postsecondary loans you borrowed from the Federal Direct Loan Program (FDLP), it’s particularly important to be politically active right now by contacting your U.S. Representative and U.S. Senators!

A recent COVID-19 related presidential executive order extended the following postponements on FDLP debts through December 31, 2020:

  • Interest Postponement: The government is charging no interest on FDLP loans through December 31;
  • Payment Obligation Postponement: Payments on FDLP loans aren’t required through December 31; and
  • Default Collection Postponement: All activities normally conducted to collect defaulted FDLP loans (bad credit reports, hiring collection agencies, garnishment (i.e. confiscation) of tax returns and wages) are suspended through December 31.

Mr. Trump said he’d extend these postponements beyond December 31 if necessary. And extensions are certainly necessary since our country’s new explosion of COVID-19 infections and deaths is causing many of the 44 million Americans owing the FDLP to become ill, loose jobs, etc.

But after losing the election Mr. Trump seems less and less interested in running federal programs such as the FDLP. So there are serious questions about whether he’ll make good on his promise to suspend these postponements. While President-Elect Biden seems more likely to extend them, if he does it will be a full three weeks between December 31 and when he takes office and can do so.

This means Congress needs to extend these postponements as part of some “must pass” bill such such as the one that’ll fund the government after December 11 or a COVID-19 relief bill that may be negotiated. But congressional Republicans must drop their opposition to extending the postponements past December 31 for this to happen.

Result? You need to call or email the House member and Senators who represent you in Washington. Find their contact information on the House website and Senate website.

Contact them in support of extending the FDLP postponements because it’s in your best financial interest! Contact them in support of extending the FDLP postponements because it’s in the best financial interests of 44 million fellow Americans! But contact them, and do so as soon as possible!

College Affordability Solutions has 40 years experience in help borrowers with federal parent and student loans. Contact us to book a no-charge advising session if you need help managing the debt you owe from such loans!

Before College: Here’s a Great College Affordability Strategy for Your High School Students

Would you and your children be interested in a Pre-College Finance Plan strategy that generates funds for college and has almost a dozen other advantages? If so, here it is — have your children to work part-time while in high school.

Understand that we’re not advocating sending your children out to work in the midst of the current COVID pandemic. Some of the jobs most available to high schoolers, such as cashiers and fast food workers, appear to have the highest COVID infection rates.

But if the vaccine breakthrough recently announced becomes widely available over the next five or six months, it could become much safer to hold such jobs sometime during the second half of 2021.

Before the pandemic, 25% of high schoolers and 40% of college students worked. Those who did achieved higher levels of independence, became better time managers, built resumes and professional networks, enjoyed increased confidence, earned money that, if saved, helped reduce their reliance on college loans, and gained skills transferable to future jobs.

It’s unfortunate that fast food workers are currently at such risk of contracting COVID, because part-time positions in fast food restaurants are particularly well-suited for high school students. For one thing, there are many such jobs and fast food establishments are constantly hiring.

These jobs also require little or no experience and often offer flexible work schedules. Plus, fast food’s average hourly wage of $11 can generate a little more than $8,000 per year for employees working less than 15 hours per week. This can significantly enlarge your high schoolers’ college savings and pocket money.

Best of all, many — not all, but many — fast food companies try to recruit and retain good employees by offering to help them pay for college. A great example of this is the Chipotle restaurant chain. It’s “Cultivate Me” benefits for crew members offers $5,250 per year for college, supports debt-free education for crew members who seek certain business and technology degrees, and pays quarterly bonuses to crews whose restaurants meet certain performance measures.

Chipotle’s not alone. Several other employers both inside and outside the fast food industry offer benefit programs that help pay for college. And even in the midst of the COVID recession, they’re generally maintaining these programs.

True, delivering packages, flipping burgers, and serving tacos isn’t glamorous work. But the money your high school students can earn, and especially the postsecondary benefit programs some employers offer, can really help make their postsecondary education more affordable. So when it’s safe for them to seek employment, recommend they consider fast food jobs and always ask potential employers about their employee education benefits programs.

Need help designing your Pre-College Finance Plan? Let College Affordability Solutions help. We bring over 40 years experience to this topic. And we serve as consultants for parents and students at no charge. Set up a consultation with us by calling (512) 366-5354 or by emailing collegeafford@gmail.com.

Before College: Extracurricular and Community Activities in High School Create Stronger Scholarship Candidates . . . And More!

Here’s a dirty little secret about scholarships for prospective college students — many of them are awarded for reasons other than athletics, class rank, GPA, and college entrance exam scores! Instead, a record of involvement in community and high school extracurricular activities is one of, if not the deciding factor.

This is especially true for the almost $17.5 billion in scholarships awarded by employers, foundations, and other community organizations. It often sets their scholarship selection processes apart from those of college and university scholarship committees. The latter are often under pressure to help recruit freshman classes that will help their institutions get high rankings in publications such as the U.S. News & World Report Best Colleges Guidebook. These publications do use factors such as class rank and ACT or SAT scores.

But many scholarship providers reject the selection of scholarship winners based on easy-to-calculate but overly simplistic numerical data. Their biggest such concern is that doing so ignores factors that are so important to success in and after college, things like:

Young people who engage in school-based extracurricular activities and charitable and other community activities tend to refine such characteristics and bring them to college with them. They also strengthen the resumes many scholarship selection committees evaluate when selecting recipients. And they often have more interesting experiences to cite when responding to the essay questions such committees evaluate.

However, it’s not necessarily the number of activities in which your high schoolers engage, but the persistence and quality of their engagement. Some high school students pad their resumes by joining numerous extracurricular and community organizations and teams, but they often fail to be really active members of those organizations and teams. This makes scholarship evaluators are cynical about resumes listing many short-term, low-level memberships.

So work with your high school students early on to identify activities about which they are enthusiastic and interested. Guide them toward joining in those activities early on, really investing their energy and time in those activities and, as their peers and teammates get to know them, volunteering or even running for leadership positions within those activities.

Taking part in extracurricular and community makes your children stronger scholarship candidates. It also makes high school more interesting and helps your children mature. So urge them to participate!

College Affordability Solutions is posting a new article right here every Wednesday about strategies for parents and students to include in their Pre-College Finance Plans, so follow this website to make sure you get these articles!