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The Paying for College Primer
What Every Parent and Student Needs to Know
Families should start early in planning for college. If you are like most families who don't, it does not mean that the kids cannot go. It just takes a little effort. No U.S. citizen should forego college because their parents don't have the money in cash. It's a big game that is worth hundred of thousands if not millions of dollors; that's the difference in lifetime earnings between those with and without a degree. That does not include the quality of life and value of communication and expression skills an education can bring.
Paying for College - Parent's Brush With Reality
- A national survey of parents of high school juniors found that 62% believe that grants and scholarships will pay a significant portion of their cost for higher education.
- About 58% of parents surveyed expect to contribute half or less of the cost with a combination of personal savings, current income and loans, yet 47% of the families had not established an education savings or investment program.
- Most families have very unrealistic expectations when it comes to scholarship awards and other forms of debt-free financial assistance.
- Most families in a recent lender survey indicated that they rely on their schools for guidance, but only 21% felt they received adequate information.
- According to a Consumer Report survey, 37% of respondents said they had saved nothing for their children's college education and 15% of the families borrowed $20,000 or more to pay for college.
- Don't rule out a college based on the sticker price, the costlier the school, the greater your financial need and your eligibility for aid.
- Students can attract merit aid by applying to schools where their class rank and test scores will place them in the top 25% of the applicant pool. The most generous colleges tend to be second-tier, private liberal-arts colleges that boast large endowments but face stiff competition from more-affordable and academically comparable state schools. It is generally recommended that students apply to competing schools that can be played against each other.
What Does College Cost -- The Facts
- College Board data shows that four-year private institution students paid an average of $16,332, $814 more than last year, while the costs at public institutions was $3,510, a $148 differential.
- Two-year private institution costs were $7,458 ($490 more than last the previous) and public institution costs were $1,705 ($56 more than the previous year).
- Estimated sample budgets range from $7,024 for a student who lives at home and commutes to a two-year public college, to $24,946 for a student in on-campus housing at a four-year private institution.
Don't Be the Weakest Link - Know These Facts:
Before you tackle the financial aid forms--the Free Application for Federal Student Aid (FAFSA) and possibly the
CSS/Profile form used by about 350 private colleges, try to reduce the income and assets your family will have to include on these forms. Some college consultants and advisors suggest that you consider paying off credit card bills, making gifts of appreciated securities or purchasing big-ticket items. In addition, you also want to shift money from assets that you have to report on the FAFSA (such as mutual funds) into assets that the FAFSA ignores (such as 401 (k) s or annuities). Always consult with your financial advisors when doing such to assure that your total financial plan continues to meet your goals.
File the FAFSA as soon as you can. Try to make, January 1st your deadline. This gives you early processing and the financial aid office the earliest opportunity to make an award offer -- when they have the most funds available. Early processing also allows you to respond or make corrections and not be in the late consideration group for aid.
In filing an early FAFSA you will need to have completed your taxes early.
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