Except for the very wealthy, money and financial aid are always important factors in deciding which college to attend. It seems logical to want to maximize the amount of financial aid received, but sometimes a question can persist—would it be better to spend a little more of our own money to send our child to a different college? With so much attention being placed on the Early FAFSA, the actual process of how to select a college is getting lost in the frenzy.
Many families are willing to accept a little more financial hardship if it means a better life for their students, but how do you really know if that money is well-spent? Fortunately, there are some criteria you can look at which might be helpful in making an objective decision. You can look at the school’s figures about graduation rates and employment statistics for alumni, but another factor to consider is the student loan debt that students acquire to obtain a degree.
Checking the College Scorecard
Data is available through the Department of Education’s College Scorecard. Each year this scorecard is updated with the latest government statistics and made available for your use. The College Scorecard includes factual information on over 7000 educational institutions, so the chances are good that your student’s top colleges will be included. Some critical findings include:
Check graduation rates: Among the top 10% of four-year colleges by completion rates, more than four out of five students graduate within six years; while at the bottom 10% of four-year colleges, fewer than a quarter of students graduate within that timeframe. It is crucial to know how long you can anticipate that your student will be in this college. This knowledge needs to be correlated with expected cost increases. You also need to determine if there are any time limits on the amount of financial aid your student receives so you can better forecast your specific financial requirements.
Earnings vary significantly: There is a difference in the benefits and costs associated with attending certain colleges. Earnings also can vary significantly across both degree types and institutions. If the college itself has not updated its website, use this site to determine whether your student will be able to earn enough money after graduation to repay any student loans that were acquired.
Different factors affect the ability to repay student loans: Certainly, one factor that affects repayment capabilities is the overall financial climate. During the recession, student loan borrowers had a difficult time getting on track to repay their loans. While it can be difficult to foresee dramatic economic swings, it is best to borrow as little as possible so that the impact is much less severe if the economic climate does change. Also, make sure that your borrowing is in line with the education being provided. Students at for-profit schools and other two-year institutions who over-borrow often tend to have an especially difficult time managing debt.
Be sure you can finish what you start: The Department of Education reaffirms the fact that the most expensive degree is the one that the student never completes. Data show that borrowers who graduate from college have the ability and skills to make progress in paying down their debt within three years of leaving school. But only 56 percent of those students who left school with debt and no degree were successfully paying down their loans. If you are thinking about taking on a substantial amount of debt to send your student to college, be very sure that it is one where he or she stands a good chance of graduating.
Other information that is available from the College Scorecard includes costs students can expect to pay according to family income, financial stability of the institution itself, the likelihood of completing a degree, and what alumni can expect to earn as far as 10 years out after first entering the school. Although this data has been incorporated into some college search sites, it is always best to go straight to the source to evaluate your individual situation.