College financing has changed since you went to school. Many college graduates now get more than a sheepskin when they walk up to the lectern; they walk back to their seats tucking more than $27,000 in student loan debt (including parental PLUS loans), under their arm.
In light of the dismal job prospects that await many debt-laden grads it’s clear that today’s students and their parents must think strategically about ways to pay for college.
Here are some do’s and don’ts that may help you.
consider borrowing conservatively. Set a limit on the amount of money you’ll borrow. Research schools whose graduates incur low debt and those that have eliminated loans from their financial aid packages.
DO speak candidly to your college-bound youngsters about the importance of repaying their loans, how borrowing will affect their disposable income, and how long it will take to pay back those loans. Sheila Hicks, the director of financial aid at Riverdale Country School, says every $10,000 of borrowing equals roughly a $100 a month repayment. Paying back $100 to $200 a month is manageable, says Hicks, but $300 to $400 a month would affect lifestyle choices.
DO explore alternatives to borrowing. Experts recommend starting the college search process in your child’s junior year of high school. That’s when you or your child should register with reputable online scholarship databases such as Fastweb (www.fastweb.com) or Scholarship Search on the College Board’s website under “for students.” Pay attention to deadlines. Also, ask about scholarships or grants at the school your child hopes to attend. If you’re awarded a private scholarship, Hicks advises that you ask schools you’re interested in how they allocate such awards; you may need to ask them to use the scholarship to reduce or replace loans, not college grants. Look into state aid as well on your state’s website. Consider lower cost state schools, community college for the first two years, or attending college in Canada (where average tuition is about half as much as at a private liberal arts school in the U.S.).
DO avoid for-profit or proprietary colleges. Reports show that students who attend for-profit colleges end up saddled with more debt than most students who attend private nonprofit schools or public colleges, regardless of family income. According to a report by the Education Trust, these institutions provide their students “little more than crippling debt,” yet they aggressively recruit low-income minority students. These schools have come under increased scrutiny lately.
appeal a school’s financial aid award politely. State why this is your child’s school of first choice and why your situation warrants additional consideration.
borrow without looking at the big picture. Potential students should be educated about every aspect of their loan and consider it part of their higher education: Is the loan subsidized (which means the government pays part of the interest) or unsubsidized? When will they need to start repayment? What interest rate is being charged? What happens if they miss a payment or several payments? What will they do if they don’t get a job right away after graduation?
DON’T fill out the FAFSA, or Free Application for Federal Student Aid, without consulting “Common Errors on Financial Aid Applications” at FinAid.org. Submit it even if you think you’re ineligible for aid, because the FAFSA is also sometimes used for scholarship consideration. Important: The “you” on the FAFSA is always the student.
DON’T neglect helpful resources, which are too numerous to list here. Get started with these: FinAid.org, Fastweb.com, CollegeBoard.com, the Federal Student Aid (www.studentaid.ed.gov), UNCF.org, and the Hispanic Scholarship Fund (www.hsf.net). Be sure to attend local financial aid workshops offered through churches, community centers, schools, or other outlets. Your local library is another great resource.
DON’T forget about cooperative education, which isn’t written about much but because of persistent unemployment may see a comeback. Students in college co-op programs work in the field of their major while they’re in school, either concurrently or by alternating semesters of work and study. They earn money and develop relationships with employers, many of whom hire them after they graduate. Many graduate with less debt as well. Consult the Directory of College Cooperative Education Programs at your local library, or ask your student’s guidance counselor if he or she has a copy.
DON’T forget to file the CSS profile financial aid form, which is found at CollegeBoard.com. Certain private schools require this form (check the website to see if your school does). The form is long and asks more detailed questions than the FAFSA. It also needs to be submitted in the fall. You’ll need a credit card to submit the profile, and you’ll be charged a fee for each school or scholarship program selected.