Do You Know For Sure that You Can Pay for College?

Answering This Question Makes the Choice of College Easier

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NPR Ed recently posted a very interesting blog about the minds of prospective college students. In it they expounded on information from the paper, “What High-Achieving Low-Income Students Know About College,” by Caroline Hoxby and Sarah Turner. Hoxby and another author had previously shown that low-income high achievers do not tend to apply to selective colleges despite being extremely likely to be admitted with financial aid so generous they would pay less than they do to attend the non-selective schools they apply to.

To determine how to combat this lack of knowledge, the Expanding College Opportunities project devised a trial that provided students with information about the college application process and the net price of potential colleges. The authors show that this additional information substantially increased a student’s probability of applying, being accepted at, enrolling, and progressing at more selective colleges.

One key finding is that the more comfortable a student is about his or her ability to afford a particular college, the more likely he or she is to apply. This could have a significant impact on the way parents, high school counselors, and college financial aid offices provide information about college costs to high school students. Here are a few crucial pieces of information every student must have to help him or her decide whether a particular college is affordable:

  • Net Price: Many colleges will post a “net price” figure on their websites. This is an average of what typical students pay to attend that institution, minus what a typical student might receive in grants and institutional scholarships. But this figure isn’t necessarily true for all students. You can talk to the college financial aid office and ask what kind of additional programs are available for students in situations similar to yours.
  • You Can’t Receive Aid if You Don’t Apply For It: A surprising number of students and their parents fail to take the simple step of completing the FAFSA. Industry statistics from 2011-2012 revealed that about 2.0 million students did not file the FAFSA. If they had, they might have qualified for approximately $4700 each in Federal Pell Grants, along with a potential $1400 each in state and institutional grants. This $6000+ could have made the difference in attending a four year institution or a local community college.
  • Determine if You Will Be Able to Repay Student Loans: Another part of the financial aid package may come in federal and private student loans. Put together a rough estimate of how much you will borrow over four years after the school’s financial aid and your outside scholarships are added together. Find out what your monthly payments might be, taking into consideration that there could be income-based repayment plans available. Then visit your school’s website to determine how many freshmen graduate in four years, how many become employed in their field after graduation, and how much they typically earn in their first year of employment. This will give you a good idea of whether you will be able to afford those student loan repayments.

Finally, try to pay cash for as much of the out-of-pocket expenses as possible. This will keep you from adding credit card debt to any student loan payments. Plan to participate in a federal work-study program, if it is available, or look for a part-time job near campus. Use your breaks and summer vacation to earn more spending money. With knowledge and planning, you might be surprised at what you can afford.