Prioritizing Finances for College Opportunities
In fact, it can be argued that in purely financial terms, families can make a wiser college decision by zeroing in on topics such as net price after aid, graduation rate, and job placement rates and by calculating just how much you might have to borrow.
Calculating net cost is not a simple task. The U.S. Department of Education has made an effort to streamline the process by asking colleges to adopt uniform language when presenting their financial aid packages. The “Financial Aid Shopping Sheet” is a simple, one page, standard format worksheet for evaluating costs and performance. Unfortunately only about 11 percent of the nations’ colleges have adopted the sheet.
Just because colleges have not completely jumped on board yet doesn’t mean you cannot use the sheet to create your own calculations. As college acceptance letters and financial aid offers roll in, fill in the cost categories in the shopping sheet. Don’t overlook books, transportation, lab fees, parking or health insurance. In fact, specifically look into health insurance because some schools will let you opt out of their coverage if your child is still covered under your insurance plan as is possible until they are 26.
Then, subtract all the possible grants and scholarships being offered. Pay close attention to those that only apply to first or second year tuition verse the full four (or five!) years. Front loading grants more heavily towards freshmen and less towards seniors is a way to attract your student to the school, but could negatively impact your ability to pay through to graduation.
What you have left is the net cost which will have to be covered either by cash payments or by student loans. So, how do you choose? Be as conservative as possible. Choose a thresh hold of net cost difference in the range of $1,000-$5,000. For instance, a prestigious school that is more than $5,000 higher in net cost than a cheaper school is probably not worth it.
Your primary goal is to minimize the loan burden since students who borrow heavily are less likely to attend graduate school and might choose a less than fulfilling job after graduation simply to begin paying off their debt. Choosing a college that prepares a student for their chosen career and doesn’t immediately saddle them with a heavy debt load is the goal of every parent.
Visit UniversityParent’s list of University Cost Calculators: CLICK HERE.