During College: Strategies for Your College Finance Plan

Your College Finance Plan (CFP) needs strategies for you and you student toIMG_9592 implement before, during, and after college. Let’s look at the “During College” phase.

Research at a major university indicates that, looking back, almost 4 out of every 10 seniors conclude part or all of their student loans weren’t essential for their educations. Therefore, some of these strategies focus on personal money management so students can spend and borrow less of the interest-bearing educational debt that, over time, increases college costs. These include:

IMG_9555Also, the faster your student gets her degree, the less cost and debt she’ll incur. Still, the latest national data show that only 39.8% of undergraduates earn their bachelor’s degrees within 4 years. Here are some strategies that’ll help your student graduate on-time, if not before:


Look here for why you need a CFP. You can find summaries of strategies for your plan’s “Before College” phase here. And next Wednesday there’ll be samples of “After College” strategies for your CFP here.
Beginning October 16, check this website every Wednesday for a more detailed account of a strategy you may want to use in your CFP’s before, during, or after college phase.


Before College: College “Sticker Prices” Aren’t Necessarily Their Final Prices

This summer is the time for rising high school seniors to begin researching colleges they may want to attend. There’s much check out, including each school’s costs.

To get an idea of what it’ll cost to attend different colleges and universities, go to their websites and search for “Cost of Attendance 2018-19.” You might also want to use College Navigator from the National Center for Education Statistics, opening its IMG_6849“Tuition, Fees, and Estimated Student Expenses” page to track cost increases over the last four years.

Here’s an important point — 2018-19 college prices you see on websites and College Navigator are “sticker prices” and not necessarily final. Schools generally engage in “discounting” their tuition and fees and, sometimes, other student expenses.

Colleges offer discounts differently than auto dealers, although the end result is the same. Rather than reducing a student’s tuition and fees, they give him grants and especially scholarships to pay these charges. For recruiting purposes, prestigious institutional scholarship offers often impress families and help bring in students.

Public and private colleges both discount. A new study by the National Association of College and University Business Officers found that private non-profit colleges and universities provided institutional grants and scholarships to 87.9% of new freshmen and 78.5% of all undergraduates in 2016-17. Collectively, these awards discounted tuition and fees by 49.1% for freshmen and 44.2% for all undergraduates.

Why discount? One reason is increased price sensitivity by families still recovering from the recession. It’s also related to decreased numbers of traditional college-age students and increased competition from other institutions for, like all businesses, colleges must bring in customers to survive.

IMG_6850Not every student should expect grants and scholarships equal to the discounting percentages noted above. Financial need plays a role. So do the characteristics of students an institution seeks to enroll; some want higher SAT scores, or certain types of musicians, or students likely to succeed in various academic programs. Your student won’t know his actual discount rates until winter or early spring, when he receives official financial aid offers from the colleges to which he’s applied.

The important thing is this — don’t let a institution’s “sticker price” discourage your student from putting it on the list of colleges to which he’ll apply. If that price gets discounted, it may be much more affordable than he thinks.

Before College: May 1 is Right Around the Corner!

May 1 is just 34 days away. That’s the deadline for paying a nonrefundable enrollment deposit to hold a spot at the 4-year college your student decides to attend this fall. When it comes to affordability, there’s much to do.

(1) Award Letter: Be sure your student has his financial aid offer from each school he’s considering. If a school’s award letter hasn’t arrived yet, make sure you’ve completed verification (if the school required it), then contact the financial aid office to request one IMG_5726ASAP.

(2) Outside Aid: If you know about scholarships your student’s getting from parties outside the school, report them to the aid office right away. Not doing so will freeze financial aid once the school learns of these awards, because it’s required to determine that the aid it awarded isn’t affected by outside scholarships. Should reductions be required, schools usually cut loans, then work-study and, last, grants or scholarships.

(3) Appeal: File a financial aid appeal ASAP if it might lower your student’s Expected Family Contribution and qualify her for more need-based aid. The aid office can tell you how.

(4) Affordability Analysis: Evaluate the affordability of each school under consideration.

First, use the “Tuition, Fees, and Estimated Student Expenses” on the National Center for Education Statistics College Navigator website to calculate annual growth in the average cost of attending a school over the last four year. Multiply the school’s 2017-18 costs by this average for each of the next four years to project your student’s 4-year cost.

Now project the financial aid to be received over four years. Some institutional grants and scholarships are for one year only, so be sure to differentiate between them and 4-year IMG_5659awards. And watch out for schools that practice bait and switch. Assume federal and state grant amounts will remain constant each year. Keep your borrowing assumptions within annual federal loan limits.

Subtract your 4-year financial aid projection from your 4-year cost projection. Now the big question — can you and your student cover the remaining gap? If so, keep that school on the list for consideration. If not, it may have to be dropped.

(5) Fit: Fit is absolutely critical. If a college or major doesn’t work for your student, chances are he’ll transfer, which’ll increase the cost of his degree. So consider fit carefully.

Need help analyzing the affordability of the colleges your student is considering? Contact College Affordability Solutions by email at collegeafford@gmail.com or by phone at (512) 366-5354.


Before College: Problems With Beginning at Community Colleges

The financial reasons for beginning at a community college are compelling. But this isn’t necessarily what’s best for every student. Problems along the way undermine some students’ ability to complete an affordable higher education.

If your student seeks an occupation requiring a bachelor’s degree, he’ll eventually need to transfer to a 4-year college or university, so carefully consider whether he has the academic dedication, drive, and perseverance to get there.IMG_5562

Only 16% of students who begin at community colleges transfer and get bachelor’s degrees. Of course, not all these students want such degrees but, at an age when peer pressure is a big influence on your student, these will be his classmates and friends. They could distract him from his ultimate educational goal.

Course transferability is another problem. Your student will actually lose money whenever she must retake a community college course at a more expensive 4-year school.

She’ll probably be able to transfer some, but not all, community college courses to substitute for “core” courses at your state’s 4-year colleges and universities. Chances IMG_5628are that some of her less community college coursework won’t be accepted by those schools for classes she must complete to earn a specific degree. So before she registers for community college classes, urge her to check this out with that college’s academic advisor or the admissions offices at 4-year institutions to which she may transfer.

If your student has been accepted to another college, consider his scholarship offers that are limited to attending that institution. Most scholarship providers won’t hold their awards until he transfers from a community college. If those offers are large enough, he could actually lose money by not beginning at the school to which they’re tied.

Finally, to really save at a community college, your student will have to exercise spending and borrowing discipline while there. Attending a community college but borrowing to live an expensive lifestyle is a losing proposition. Your student may actually end up taking on more debt than classmates who began and ended at her 4-year college or university.

An affordable college experience isn’t worthwhile unless your student graduates with the degree she wants. Beginning at a community college can work If her eventual goal is a bachelor’s degree, but only if she avoids or overcomes the problems described above.


College Affordability Solutions can help you conduct an affordability analysis on various paths your student may take to earn a bachelor’s degree. Contact us at (512) 366-5354 or collegeafford@gmail.com if you need such assistance.


Before College: Is Your High School Junior Already Looking for Scholarships?

Emily and Jacob. Both college-bound high school seniors. Both with 3.5 GPAs, 1350 SAT scores, and busy schedules. Emily’s won 5 scholarships worth $6,000. Unfortunately, Jacob hasn’t won any scholarships.

The difference? Not academic performance. Not financial need. The difference is time. Emily began searching for scholarships last winter. She put in nearly 100 hours finding and applying for 30 different scholarships. Harry started his search this past fall and spent about 10 hours applying for a half-dozen scholarships. What led to Emily’s success? Let’s break it down:

1. Searching for Scholarships: Emily first spent many hours looking for scholarships img_5587with eligibility requirements she met. She visited her high school counselor’s office and looked through fat scholarship binders. She still goes back there weekly to look for new scholarship notices.

She did the same thing online, using reputable websites such as Big Future by College Board, FastWeb, and Scholarships.com — search engines that don’t charge fees or sell students’ personal information to marketers if students “opt out” of that practice.

Emily also made inquiries around town — with businesses, churches, civic groups, community foundations, and similar organizations — to see if they offered scholarships to local students.

2. Scholarship Resume: Emily developed a “resume” to help remember all the activities in img_5588which she’d been involved during high school. It was a strong resume that showed her staying active in the extracurricular and community volunteer activities she joined, and even rising to leadership roles in several of them.

3. Applying: Emily applied for every scholarship for which she was well-suited as soon as it’s application period opened. She worked hard on her application forms and essays — carefully transferring resume information to the application forms, writing essays with conviction and passion, and proofing both for completeness, spelling, and grammar until they were perfect.

4. Interviews: Emily was invited to interview for a few scholarships. Each time, she dressed well, took a copy of her application and essay(s), gave thoughtful answers, was upbeat and optimistic, and made sure the interviewers knew how important their award was to her college and lifelong plans.

So Emily began early, kept at it, and worked hard during her 100 hours of pursuing scholarships. In a way, those $6,000 in “free” money she got for college amount to “earnings” of $60 an hour. Not a bad return on her investment!

Got questions about scholarships? Contact College Affordabiliy Solutions at (512) 417-7660 or collegeafford@gmail.com for a free consultation.


Before College: Beware of “Bait and Switch”

Bait and switch is a sleazy practice in which some, though not all, supposedly reputable colleges and universities engage. These institutions include some but, again, not all, schools requiring mid-February enrollment deposits from students offered “early admission.”

Here’s how bait and switch works: (1) Unsuspecting freshmen are lured to a school with generous grant and scholarship (gift aid) offers that seem to significantly discount their 4-year cost of attendance. (2) The school manipulates its awards so all thor most of their recipients lose them after a year or two. The cancelled funds are then switched to bait future recruits. (3) Families suffering gift aid reductions must then borrow more or use more of their financial resources to keep their students at the school.

Not surprisingly, colleges don’t publicize bait and switch. You have to look for it before paying your student’s enrollment deposit. Here are some common practices and ways to spot them.

Renewable Non-Renewable Gift Aid

A big grant or scholarship is renewable for 4 years. But its renewal criteria — e.g. GPA, credit hours completed — are so grueling that few students meet them.

The National Association of Student Financial Aid Administrators’ Code of Conduct img_5441requires institutions to disclose grant and scholarship renewal criteria, but the criteria may be obscurely placed or written in a complicated way.

So carefully read the “fine print” on your student’s financial aid award letter or the school’s website, and honestly assess your student’s ability to meet gift aid renewal standards.

The Incredible Shrinking Gift Aid

The overall amount of gift aid awarded drops each year, even if the student’s ability to pay college costs holds steady or decreases.

img_5440To identify this practice, you generally have to pose direct questions to the financial aid staff about whether the school engages in it. Make sure you get clear, comprehensive answers.

Gift Aid Displacement

Gift aid originally awarded decreases as the student brings in other scholarships. They may be outside scholarships, but the financial aid office may also reduce gift aid it awarded due to scholarships from the school’s academic departments. The student typically looses a dollar for every other dollar received.

Federal and state rules sometimes force displacement because they prohibit the receipt of financial aid in excess of cost of attendance. But sometimes displacement is an institutional choice.

Ask the financial aid staff for the order in which it makes reductions if additional scholarships come in. Hopefully it’s unmet financial need first, loans second, and gift aid third. If it’s gift aid first, the school clearly employs displacement.

Need help scrutinizing the financial aid offers you’ve received from colleges and universities? Reach out to College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com. 


During College: Keep Seeking Scholarships

A top university once examined which of its students were outside scholarship recipients. Two facts emerged — freshmen, just 18% of its student body, brought in 44% of of its outside scholarships; upperclassmen, 72% of its enrollees, accounted for just 56% of such awards.

Sure, some providers limit their scholarships to freshman. But others, both on and off-campus, prefer students after their first year. Unfortunately, most students stop looking for scholarships once they go to college.

That’s dumb! Why ignore free money? Here are some scholarship tips for you if you’re already in school:

1. Start looking early and keep looking. Scholarship opportunities get announced year-round, so your search shouldn’t be a one-time thing. Set aside some time to look every week or two.

2. Seek on-campus scholarships. Institutions generally have scholarships for upperclassmen only. Often their colleges, departments, and schools target awards at students who’ve demonstrated persistence and performed well in their majors. Get to know faculty in your major — their recommendations can help. Student organizationsimg_5355 typically reserve their scholarships for currently enrolled students, too.

3. Don’t ignore off-campus providers. These organizations don’t always limit their awards to freshmen, either. And if someone gave you money only for your freshman year, see if they also make awards to continuing students.

4. Use the internet and scholarship search engines. Be specific in internet searches — e.g. “accounting scholarships” or “future accountant scholarships” instead of “college scholarships.” Same for your institution’s scholarship web page, if it has one. On search engines, answer every question, even if it’s optional, to improve your chances of finding matches.

5. Contact providers back home. One study indicated that 20% or fewer students get promising “hits” on search engines. So look in your home town, county, and region for scholarships offered there

6. Don’t dismiss “small” scholarships. A few $100 or $250 scholarships add up.

7. Make your applications stand out. Type anything you don’t just check on an application furnished by the provider. No bizarre or suggestive email address. img_5354

8. Write killer essays. They can be as important as any term paper! So outline, write boldly, and rewrite! Be personally revealing, show your passion, and tell how you “fit” the scholarship you’re after. Proof your content, grammar, and spelling; don’t just rely on spellcheck.

9. Beware of scholarship scams. Never pay a fee for help in your search — it’s generally a rip-off. Review search engine privacy policies and avoid those that disclose (sell) your personal information to marketers and other merchants.

College Affordability Solutions has extensive experience in managing financial aid and scholarship programs. Call (512) 366-5354 or email collegeafford@gmail.com to consult it at no charge on any questions you may have about this article.