Mar 19, 2015
In this episode, we continue our series on getting ready to apply
to college by sharing some approaches to having the money talk
about college with your child. Check out the show notes at
http://nycollegechat.org/24 to link to the resources and programs
we mention, or to leave a comment on this episode. We said in an
earlier episode that it was important to talk with your child about
how much you have to spend on college and about what that might
mean for the colleges your child should consider applying to. We
are going to make the assumption that most families cannot pay
outright for four years at a private college where your child would
live in the dorms; for that scenario, you might be looking at a
total bill of $160,000 to $240,000 in round numbers—and that figure
might get higher every year. But public colleges cost money, too.
Just two years at a public community college, where your child
would most likely live at home, might come to a total bill of
$4,000 to $10,000, depending on where you live—and that figure will
likely get higher every few years. So, let’s look at some options
for parents. 1. Do Not Borrow Any Money Some parents simply do not
feel comfortable borrowing money. Some object to buying anything
“on time” and paying interest on that money until they can pay it
all back. Some feel that their past credit history or job history
won’t support whatever background checks are made before money can
be lent to them by banks or government programs. If you feel this
way, that is your business, and no one is really in a position to
tell you that it isn’t right. But if you feel this way and do not
have enough money saved or a high enough salary to pay for your
child’s college education, then you need to have that discussion as
a family—and you need to start looking hard for scholarships that
might make up the difference. As we have said in earlier episodes,
scholarships are hard to get. Many times, we have found that
parents and students do not accept the fact that scholarships are
hard to get. If you have a child who is great in your eyes, but
just average in terms of his or her high school GPA and college
admissions test scores, then a substantial enough scholarship (or
maybe any scholarship at all) is going to be hard to come by—at
least at top colleges. You might have some luck with less selective
colleges—perhaps especially very small ones—because they might not
be as well known and might not get as many applicants. You might
also have some luck with less selective, smaller colleges in a
state that is far from your home state, because such a college
might be interested in diversifying its student body by attracting
out-of-state applicants; however, that scenario poses its own
problem of running up expenses because your child would have to
live on campus rather than at home. Of course, maybe a great
scholarship would cover housing expenses, too. People say that many
interesting scholarships exist and go unused for lack of
applicants. Such scholarships might, however, have a variety of
specific restrictions on their applicants—for example, ethnicity,
geography, family background, subject field of future study,
extracurricular achievements, and more. These scholarships do
undoubtedly exist and may indeed go unused, but you cannot base
your decision about where to have your child apply to college on
the outside chance of getting one or more of them. If your child
has a great GPA or very high college admissions test scores—or
preferably both—then he or she might get a scholarship based solely
on the merit of those academic achievements (especially if you
cannot afford to send your child to that school without it and you
have indicated that on the completed college application). I was
counseling a student recently who had very good SAT scores (over
700 on two of three subtests), an outstanding ACT combined score
(34), and grades that were good, but not great (he is the kind of
kid who has an 88 GPA, but who could have gotten well above 90 if
he had cared more, sooner). He applied to a big, well-known, good
private university in a state far from home—the kind of place that
I thought might look favorably on his application. He was accepted
and received a great scholarship of $68,000 over four years. Wow, I
thought. The only problem was that the scholarship was just about
half of what he needed to go there. How could his parents come up
with the rest—without borrowing all of it? So, even a great
scholarship that sounds like a lot of money cannot necessarily make
it possible for a kid to go to a college that has accepted him.
There is one other way to get money for college if the parents do
not want to borrow any: Have the student take out the loans. There
are both private sources of loans (like banks) and public sources.
We hesitate to say too much about the world of public student loans
because it is always the subject of political discussion and could
change between when you hear this episode and when you need to use
the information. Suffice it to say that the federal government will
lend your child some money for each year of college, at a
reasonably low rate, through the Federal Direct Loan Program; one
type of loan is based on financial need, and one type is not.
However, what your child is going to get will be between, say,
$5,500 and $7,500 a year. While that would go a long way at many
public colleges, it would not go very far at all at any private
college. Additional loans from private sources (like banks) would
be needed to pay private college tuition, and those might require
some sort of co-signing by you. Somewhat like the federal
government, your state government can also be a source of financial
help. For example, the New York State Tuition Assistance Program
(commonly referred to as TAP) will cover most of the tuition
expenses at the tuition rate of a New York public college, if your
family meets the income eligibility requirements. However, if your
family income is too high, your child will not be eligible for TAP
funds. The bottom line here is this: If you as the parent do not
feel comfortable borrowing any money for college costs for your
child, then the chances are good that your child should look only
at or, at least, primarily at public colleges—unless you already
have all the money you need to pay for the college of your child’s
choice, unless you would feel comfortable having the child take out
all of the loans himself or herself (including from private
sources, like banks), unless your child has posted an outstanding
high school GPA and outstanding college admissions test scores, or
unless your child is a recognized outstanding high school athlete
who is being recruited by college coaches. 2. Borrow Whatever You
Need This is the opposite of the previous option. Some parents feel
that borrowing money—in whatever amount is necessary—to send a
child to the best college that accepted him or her is worth it. You
might wonder how incurring a huge debt—maybe as much as, say,
$200,000—could ever be worth it. But those parents would say that
putting a child into the best possible college setting could set
that child up for life—whether it is the best academic education
the child could have gotten, or the best sports training the child
could have gotten, or the best theater group or college newspaper
the child could have been part of, or the best circle of friends
the child could have landed in (friends who would turn out to be
friends for life, have their own successful careers, and be major
influences on and supporters of each other for decades to come). In
the interest of full disclosure, this is exactly my own personal
feeling, and it is exactly what my husband and I did for each of
our three children. We borrowed every penny that we needed and did
not already have—for three private undergraduate colleges and three
private graduate colleges. I would do it all again tomorrow if I
had to. In our case, the federal government made it easy. Our loans
were all Direct Parent PLUS Loans, which do require a credit check,
which could prove problematic for some borrowers (by the way, if
you are not eligible for a parent loan after your credit check, the
federal government will actually raise the limit somewhat on what
it will lend your child by four or five thousand dollars per year).
To be eligible for all of these federal loans—both student and
parent loans—you must fill out the FAFSA (Free Application for
Federal Student Aid). The filling out of the FAFSA is much
discussed. Free assistance in how to fill it out is available
online, and often high schools and colleges run free workshops for
parents about how to fill out the application, which will have to
be updated and resubmitted each year your child is in college. I
want to make it very clear that I am not a FAFSA expert. I am so
much not a FAFSA expert that I got help from a private company,
whose services I paid for each year for each child. The company
literally filled out the FAFSA application on the telephone with me
every time and made sure that I got it submitted properly. I
consider the approximately $100 a year per child that I paid to
that company as money well spent. If you look at the FAFSA
application and are confident that you understand it, then that’s
great. If you look at the FAFSA application and are not confident
that you understand it, then get help—free if you can conveniently
find it, but paid if you can’t. You don’t want to fool around with
completing the FAFSA application. It is the easiest way to borrow
money for college at a reasonably low interest rate. FAFSA
applications should be completed ideally in January for the
following school year, or as soon thereafter as possible. You will
need your tax information from the previous year in order to
complete the application, so you might not be able to do it as
early as January. My understanding is that at least some money is
given out on a first come, first served basis. So be first. One
more note: The CSS/Financial Aid PROFILE (where CSS stands for
College Scholarship Service) is administered by The College Board
and is the way to access nonfederal financial aid from almost 400
colleges and scholarship programs. The form can be filled out
online and needs to be done only if one of the colleges or
scholarship programs your child is applying to requests it. It is
easier to do this one after your FAFSA is already completed because
you can use the FAFSA to help with this one. 3. Split the
Difference: Borrow Some Money, But Not Too Much Well, there’s
always a compromise position, and it is often the wisest. This
compromise is that, as parents, you find a way to borrow some money
to pay for your child’s college education and, in so doing, you and
your child agree to keep those costs under some control so that you
don’t have to borrow any more than is absolutely necessary. So what
would be some compromise college choices for your child, in likely
order of expense to you, from least to most: Apply only to public
colleges, but not limited just to two-year public colleges. In
other words, your child would be permitted to apply to four-year
public colleges, which are more expensive than two-year colleges
and which would always include the flagship state university, which
is usually a reasonably good choice. Apply only to public colleges,
but include out-of-state public colleges in that list. While those
colleges will be more expensive—really, considerably more expensive
—they will still not be as expensive as private colleges. However,
opening your child’s search up to out-of-state public colleges will
put a lot of great state universities within reach, which might be
more highly respected than the flagship state university or other
public colleges in your home state. Add some private colleges to
the list, but only if they are at the lower end of the private
college price range and only if your child agrees to live at home
and commute to the private college. How good this option might be
depends entirely on where you live and on how many reasonably
priced, good private colleges are nearby. If you live near in or
near a great college town like Boston, which is populated with many
private colleges, this option could be appealing to your child. Of
course, there are other compromises that we could invent, but you
get the idea: Consider borrowing enough to give your child some
choice among the best colleges you can afford—whether those are
only public two-year colleges, where your child might be able go
full time and live on a campus not near your home if you borrowed
the money, or indeed private four-year colleges, which would open
up the whole world of college to your child if you borrowed the
money. Whatever you decide—to borrow a lot, a little, or nothing at
all—make sure your child understands where you stand before he or
she gets too far down the track on a college search that you are
not comfortable supporting. Listen to the podcast to find out
about… Federal Pell grants that don’t have to be paid back The
unique perspective of the seven Work Colleges The complications of
divorce when filing financial aid applications Check out the show
notes at http://nycollegechat.org/24 to link to the resources and
programs we mention, or to leave a comment on this episode. Connect
with us through… Subscribing to NYCollegeChat on iTunes, Stitcher,
or TuneIn! Following us on Twitter @NYCollegeChat Reviewing parent
materials we have available at Policy Studies in Education at
http://policystudies.org/parents/ Inquiring about our consulting
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