College Planning Questions Answered

Despite the media hype about rising college costs, a college education is more affordable than people think. College graduates typically earn an average of $1 million more over their careers than high school graduates. With the average yearly cost for tuition at a four-year public school in 2010-2011 being $7,605 it makes sense. There are some expensive schools, but high tuition is not a requirement for a good education.

Student financial aid in 2010-2011 rose to a record level of more than $154 billion. Most students receive some form of aid. Less of this aid now comes in the form of grants. Most aid is awarded through low-interest loans. You should consider carefully the financing packages you’ve been offered by each college to determine which makes the most financial sense.

College financial aid administrators often take into account not only income, but also other family members in college, home mortgage costs, and other factors. Aid is awarded to many families with incomes they thought would disqualify them. You’d be surprised at how many families that make really decent incomes still apply for financial aid— a lot.

Saving for college is always a good idea. Since most financial aid comes in the form of loans, the aid you are likely to receive will need to be repaid. Tucking away money could mean you have fewer loans to repay, and it won’t necessarily mean you’re not eligible for aid if you need it. A family’s share of college costs is calculated based mostly on income, not assets such as savings.

It’s true that many scholarships reward merit, but the vast majority of federal aid is based on financial need and does not even consider grades.

Families are not obligated to accept a loan if it is awarded to them. “In my opinion, everybody should apply for financial aid,” says Tally Hart, Director of Student Financial Aid at Ohio State University. “Student loans are at all-time low interest rates.” She recommends applying and comparing the loan awards with other debt instruments and assets to determine the best financial deal.

Students who attempt to juggle full-time work and full-time studies do struggle. But research shows that students who work a moderate amount often do better academically. Securing an on-campus job related to career goals is a good way for you to help pay college costs, get experience, and create new ties with the university.

Experts recommend deferring cost considerations until late in the college-selection process. Most important is finding a school that meets your academic, career, and personal needs. In fact, you might have a better chance of receiving aid from a private school. Private colleges often offer more financial aid to attract students from every income level. Higher college expenses also mean a better chance of demonstrating financial need.

Professional scholarship search services often tout this statistic. In fact, most unclaimed money is slated for a few eligible candidates, such as employees of a specific corporation or members of a certain organization. Most financial aid comes from the federal government, though it’s also a good idea to research other sources of aid.

Home value is not considered in calculations for federal financial aid. Colleges may take home equity into account when determining how much you are expected to contribute to college costs, but income is a far greater factor in this determination. No college will expect your parents to sell their house to pay for your education.

Many colleges will be sensitive to a family’s specific financial situation, especially if certain nondiscretionary costs, such as unusually high medical bills, have been overlooked. However, most colleges adhere to specific financial aid-award guidelines and will not adjust an award for a family that feels it got a better deal at another school.