When my son was small and I would tell him to do something, he would ask why and I would tell him because “it’s in the parent’s manual.” He got really curious about that manual. Where was it? (I wasn’t allowed to tell him.) When did we get it? (At the hospital, of course, you don’t think they would let us leave without it?) Was there a kids manual? (You mean you lost yours?)
As all parents know, the truth is that as much as we would have liked to have such a manual, it doesn’t exist. I think after we survive the terrible twos, we tend to forget about how nice it would have been if such an item actually existed.
That is until they become teenagers. After thinking we’ve got it all figured out, someone comes along and pulls the rug out from underneath us. And this time not having the manual can have some significant financial consequences because of one word: College.
Paying for college is always something that is on the horizon, like an approaching thunderstorm that we hope will miss us. And then we get the flyer to attend the college planning session from the high school or maybe it’s a first shiny brochure that shows up in the mail listing the “affordable” tuition. Then we know the storm has arrived and we don’t have an umbrella, much less non-existent parent manual.
While there isn’t any manual, there some basic things parents need to know about paying for college that can go a long way to survive the storm without getting soaking wet.
1. Start early.
I’m not talking about setting up and funding a 529 plan for your two-year old. I’m talking about parents of high school juniors, sophomores, and yes, even freshman. The fact is that financial aid consideration now starts January 1 of the sophomore year in high school. After January 1, families will find that they have fewer options in terms of arranging their finances to maximize their chances for financial aid.
2. Estimate you EFC.
Financial aid is awarded base on your Expected Financial Contribution (EFC). The sooner families know their EFC, the sooner they can make realistic plans on how to pay for college.
3. Don’t count athletic scholarships.
Most parents don’t realize that over a third of colleges aren’t even allowed to offer athletic scholarships. Furthermore, most scholarships are “equivalency” sports where scholarships are split up between several athletes. If you think you’re going to pay for college with an athletic scholarship, you need to learn the reality of the numbers now.
4. Use Net Price Calculators.
Colleges are required to post Net Price Calculators (NPC) on their websites. While imperfect, they will give you a better idea of what you might be expected to pay than any vague proclamations by the schools that they will make it affordable.
5. Ignore college rankings.
College rankings fall under the category “you get what you measure.” And the most well-known of the rankings, US News Best College Rankings, actually measures academic reputation which they explicitly defined as “intangibles,” something that can’t be measured. We’re not talking about Consumer Reports style ratings here. In a lot of ways, it’s just a popularity indicator that allows colleges to charge more.
6. Test optional is nice but…
There may be dramatic changes in college admissions sometime in the near future but probably not soon enough to affect students currently in high school. And while it’s nice to know that students can get admitted into quality colleges without test scores, it’s important to remember that test scores still have value. Why? Because they’re part of the college rankings. So some colleges will “pay” students who have higher test scores to attend their college with increased merit awards.
7. The most competitive colleges offer few, if any, academic scholarships.
This is basic supply and demand. Everyone admitted to the Harvard and Yale have fantastic academic qualifications. They don’t need to provide incentives for students with such qualifications to attend. And ultimately, how would they decide what deserves a scholarship, the student with the most patents or million dollar charities?
8. Apply to the schools that want you.
Most private colleges use some form of preferential packaging for financial aid. This means they give more desirable financial aid packages for the students they really want. Students at the top of the admission office admit list will get larger packages with fewer loans. Students whose qualifications would place them in the bottom half of admitted freshman will find themselves with smaller awards that consist of more loans.