Overall, it was extremely helpful to have a knowledgeable person guide us through this potentially stressful time. Thank you Sue!
Lauren C. – Mother of University of California Berkeley StudentPaying for College
While it has long been a key source of opportunity, a higher education is a necessity in today’s world. And while high school students are thrilled when that “fat envelope” signaling a college acceptance arrives in the mail, parents are often shocked at the cost! Recent data shows that tuition and fees have increased 439 percent from 1982 to 2007, and given the current state of the economy along with shrinking state budgets allocated to education this appears to be a trend that will continue.
The good news is that there is a great deal of financial aid available to students and families who qualify – more than $130 billion in aid is awarded each year. Gift aid – money that does not need to be paid back – is available in two forms. 1) Merit aid which is awarded to students based on specific talents in academics, athletics, or the arts. 2) Need-based aid which is based on the student and/or family’s income. There is also self-help aid – either Federal Work Study or Student Loans. Federal Work Study provides federally subsidized part-time jobs to students. The Federal Student Loan program offers both Subsidized (the U.S. Department of Education pays the interest that accrues on these loans while the student is still in school) and Unsubsidized Loans. The government loan program is excellent – usually with much lower interest rates than regular loans, income –based repayment plans, and under certain circumstances loan deferment and forbearance that allows postponement of loan repayment.
Don’t get sidetracked by the myths surrounding financial aid: that you can’t get it if you own your home, or if you have savings in the bank, or if you make more than a certain amount of money, or even if you are not a U.S. citizen. Also, don’t rule out a school based on “sticker price”. Tuition discounting is pervasive – the national average is said to be as high as 40%. Not everyone pays the same price for a given college. Strong students need to think strategically – being at the top of the applicant pool at certain schools can translate to thousands of dollars in merit aid.
A final note – college is a business like any other. It provides a service and then must find customers who are willing to pay for this service. Of course we all know that college is a life changing experience that is way more than a business – but try to keep sight of the bottom line. Become an educated consumer by seeking out college consultants with thorough knowledge and understanding of the financial aid process.