CONQUERING COLLEGE COSTS

Transcription

1 CONQUERING COLLEGE COSTS 30 steps to: pay for college without excessive debt save thousands of dollars of college costs Frank Palmasani

2 Changes in Family Income: Since 1966, family income for every income group has increased Constant Dollars

3 Changes in Family Income: But since 2000, it is down as much as 14% Constant Dollars

4 How Do Colleges Respond? On average, private colleges in Illinois have increased tuition 29% since This is adjusted for inflation.

5 What Is the Problem? College Sticker Prices are incredibly high Resources are limited Borrowing has skyrocketed/ national crisis Student > 25k; Parent > 35k

6 Right College, Right Price (The Perfect Fit)

7 Have a discussion with your student about reasonable student debt

8 Have a discussion with your student about working on the college campus

9 Have a discussion with your student about summer job savings

10 Analyze your own financial situation and determine reasonable parent debt

11 Using FASFA4caster, calculate your estimated EFC number

12 Assess whether organizational changes to your income and/or assets could reduce your EFC number Parents Income Parents Assets Student s Income Student s Assets

13 Understand the key aspects to the EFC number < than 6000 = PELL GRANT ELIGIBILITY < than 9000 = State Grant (MAP) < cost of college = NEED BASED COLLEGE GRANT?

14 Analyze your personal affordability threshold Tax credits? Cash flow? Available savings? Reasonable borrowing?

15 Get the academic data ready Test score (ACT, SAT, PLAN, PSAT) GPA

16 Understand Value of Net Price Calculators Department of Education Mandate October 2011 Estimate net price at any college in country EFC number, composite test score, GPA

17 Review the 7 college categories and the 2 back up options Flagship State School (in state) Non-flagship State School (in state) Flagship State School (out of state) Non-flagship State School (out of state) Highly Selective Private Mid-size Private Traditional Private Back ups (Commuting / Community College)

18 Using Net Price Calculators and example colleges, find your financial fits Your personal affordability threshold matches the approximate net price of the colleges in a category Handouts

19 Determine whether the Highly Selective Private College is appropriate

20 From your list of financial fits, find academic fits/ feel fits College Search Software that compares your test results and grades to students at that school College Search Software that lets you know if the college has your major and/or course of study College websites Conversations with college representatives Campus visits

21 Take multiple tests

22 Resume and Relationship

23 Find 2 Reach Schools Financial reaches Slightly beyond affordability threshold

24 Find 3 back up options 2 schools where student could live at home Community College Option

25 Review Colleges that are financial/academic/feel fits Reaches (financially) Backups

26 Apply to 5 to 8 schools 3 to 4 from list of financial fits 1 or 2 reaches 1 or 2 backups

27 Pursue Independent Scholarships Local scholarships Regional scholarships National scholarships

28 Organize self financially CSS Profile after October 1 of senior year, only those schools that require FAFSA after January 1 of senior year, list all of the colleges

29 FAFSA Updates Once taxes are completed, update the information you recorded on FAFSA Do not miss amount you paid in federal taxes IRS Data retrieval system

30 Plan out your Appeal Strategy Loss of Income Medical expenses Private grade/high school costs College expenses Unusual circumstances

31 Be Ready for Verification

32 Parent Loan Options Equity against your home Borrowing from your 401k/403b PLUS Colleges acting like bank Alternative student loan (co-sign)

33 Await Award Letters March or April Don t decide too soon

34 Analyze Award Letters Properly

35 Conversation Not negotiation Must have a plan Honesty

36 Make Final College Choice Accept Award Letter Take online loan class Sign promissory note Hunt for a campus job at orientation Make your first payment

37 Common Questions Divorced Families Scholarship Competitions Midwest Tuition Exchange State residency options

38 Several key points are important here. Your EFC number is not what you will pay the college. Your EFC number is not what you can afford. Your EFC number is used by the colleges to determine if you are eligible for the need based programs that can supplement their money in your award letter. Simply filing the FAFSA, allows you to obtain the maximum student loan (direct or Stafford loan) allowable; $5500 in freshmen year, $6500 in sophomore year, $7500 in each of junior and senior year. It also typically allows a student to work on campus. Thus, in all of our illustrations, we are going to use the net cost as shown from the college s net price calculator along with the maximum $5500 freshmen year loan and a $2500 campus job. The categories that will provide you net cost variety are: Flagship State Schools (in your state) Non flagship State Schools (in your state) Flagship State Schools (out of state) Non flagship State Schools (out of state) Highly Selective Private Colleges Mid size Privates Traditional Privates Two other categories are also available; each of which can lower your net cost substantially: Commuting where you might be able to save 8 to $12k of room and board costs The community college option in your district where your net cost will likely be zero

39 Four variables typically determine your net cost. The sticker price of the college, your EFC number, your ACT or SAT score, your GPA. The most unusual category is the Highly Selective Private College category. These schools typically do not use merit scholarship to determine your net cost. Rather, they make their determination on need only. Thus the test score and GPA are used to determine acceptance but not the award. They also require a supplemental document to the FAFSA, the CSS Profile. Here are four family examples and three highly selective private college examples. In each case the student is gifted enough academically to get accepted at these schools.very high test scores and grades. In each case, we are assuming that the student will accept a $5500 direct student loan and will earn $2500 working on campus. They are all a family of four with one in college. No appreciable assets are held in any of these families. ( family income) ( family income) (85000 income) (65000 income) Northwestern U of Chicago Harvard

40 Now let s assume that each of these families has a different academic background and each family has assessed their personal affordability threshold. Let s examine the net costs (once again using a 5500 freshmen year direct student loan and a 2500 job) at each of the college examples. Family A (EFC 42,708 ACT 30, GPA 4.0/4.0) Personal affordability threshold 30,000 (Flagships) U of I Urbana U of Wisconsin/Madison Iowa Kansas (Non flagships ) Illinois State Truman State U of W/Whitewater (Mid size privates) St Louis U Marquette University of Tampa (Traditional privates) Benedictine St Xavier St Mary s Minn With a threshold of 30,000, this family has financial fit options in all categories.

41 Family B (EFC 26,321 ACT 27, GPA 3.7/4.0) Personal affordability threshold 19,000 (Flagships) U of I Urbana U of Wisconsin/Madison Iowa Kansas (Non flagships) Il State Truman State U of W/Whitewater (Mid size privates) St Louis U Marquette U of Tampa (Traditional privates) Benedictine St Xavier St Mary s With a threshold of 19,000, this family has a few categories that are affordable and a few categories that appear not to be. Some colleges in what appears to be a category that would be unaffordable are worthy of consideration. Remember that commuting to any local college might save another 8 to 12000, and choosing a community college creates a zero net cost.

42 Family C (EFC 11,500 ACT 23, GPA 3.2/4.0) Personal affordability threshold 12,000 (Flagship) U of I Urbana U of W/Madison Iowa Kansas (Non flagship) Il State Truman State U of Wisconsin (Mid size privates) St Louis U Marquette U of Tampa (Traditional privates) Benedictine St Xavier St Mary s 9700 This family s threshold suggests that they may want to apply to some colleges above their threshold but must work very diligently at other opportunities that might lower that net price. However, they should also look very closely at colleges in their local area where commuting is a possibility. Remember, that the commuting option could save the family 8 to 12,000 from these net prices listed above. The community college may also be a viable option for year one and or two.

43 Family D (EFC 5,100 ACT 21, GPA 2.9/4.0) Family affordability threshold 4,000 (Flagship) U of I Urbana U of W/Wisconsin Iowa Kansas (Non flagship) Il State Truman State U of W/Whitewater (Mid size privates) St Louis U Marquette U of Tampa (Traditional privates) Benedictine St Xavier St Mary s 9850 With a threshold of 4000, this family should clearly look at the commuting option or the community college option as it appears as if all other options are not affordable.

44 Examples of Colleges in categories which are likely to produce differences in net prices Flagships State School (in state) University of Illinois/Urbana Non flagship State Schools (in state) Western, Eastern, Northern, ISU, UIC, Southern/Carbondale, Southern/Edwardsville, Chicago State Flagship State Schools (out of state) Big 10 Schools Non flagship State Schools (out of state) Truman State (MO), Grand Valley State (MI), University of Wisconsin/Whitewater, Stevens Point, Eau Claire, Milwaukee Highly selective Privates Ivy s, Northwestern, U of Chicago, Notre Dame, Wash U Midsize Privates U of Tampa, Creighton, Loyola, Marquette, St Louis U Traditional Privates St Xavier, Benedictine, St Mary s Minnesota, Loras

45 Videos, links, and worksheets available on the financial fit program at collegecountdown.com The Planning Phase The Execution Phase Affordability Understanding Affordability Including the Student in the Process Assessing Affordability An Affordability Calculator (software) College Fits What Is Net Price? Net Price Calculators Your Categorical Financial Fits Financial Fit College Search (software) Links to (fafsa4caster, pins) College Comparison Searching for Value The Commuting Option The Community College Benefit Financial Aid Documents FAFSA Filing the online FAFSA FAFSA verification Variables used to establish EFC Special Circumstances CSS Profile Asset Repositioning Links to (fafsa, css profile) Paying the Bill Variables to establish net price Maximizing Benefits The 10 loan options Award Letters The Appeal Process Award Letters

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