WHEN THE COST OF COLLEGE BECOMES PROHIBITIVE
by Stephen Wells
May 11, 2017
Many people believe that todayâs middle class is being squeezed out of existence, and the cost of American colleges is part of that dynamic. This year I worked with three students who were accepted to the college of their choice, but couldnât financially justify the expense of going there.
Whatâs interesting is that none of them went to a lower-cost in-state public institution instead.
Fortunately, we had urged them to include on their application lists a few highly respected universities that are among the more generous ones with financial awards, and these excellent-but-not-top-of-the-class students each received a merit scholarship in excess of $30,000 per year. For these students and their families, $120,000 in savings over four years was sufficient incentive for them to forego their first choices, especially as they werenât opting for a less respected school.
High school guidance offices donât usually take financial considerations into account beyond the obvious âpublic costs less than private,â but this is the type of factor that we include in our conversations when working with students and their families. Simply put, the average family needs to know which colleges have a history of being more generous with money than others.
One of the first rude awakenings parents get is the realization that most colleges offer need-based aid that doesnât even remotely bridge the gap between their Estimated Family Contribution on the FAFSA (the calculation of which already results in an inflated, often unrealistic number) and the overall Cost of Attendance. Sure, some top-tier schools promise â100% of demonstrated need,â but be careful how thatâs defined; most colleges include loans as part of the package they offer. Of course, you donât need a collegeâs permission to take out student loans up to the Cost of Attendance, so they really arenât âgivingâ you that except in the case of subsidized federal loans, which are almost always quite small.
Part of the reason students apply to several colleges is to give themselves options. Shouldnât the inclusion of colleges that have a history of sometimes (though, of course, not always) providing families with more appealing net cost options be part of that planning?
Another option that one student I worked with chose this year was to apply not only to U.S. colleges but to colleges in Europe as well, where the cost of attendance is a fraction of what we pay here in the States. His parentsâ unshielded savings of about $800,000 essentially disqualified him from receiving need-based financial aid, even from the Ivy League college where he wanted to go and was accepted. (Merit monies arenât usually an option at the Ivies or others of their ilk.) The cash for him to âgo Ivyâ was readily available, but there was a serious medical issue within his immediate family, and for his parents to spend 25% of their savings on college when there was a far less expensive alternative without compromising the quality of his education didnât make sense to any of them. As a result, he will be pursuing his Bachelors at a world-class university in France starting in the fall. Even with the travel expense back-and-forth several times a year, his parents will still save tens of thousands of dollars over his undergraduate career.
These approaches wouldnât work for everyone, but itâs great to have options. Just remember, the more you make of your high school years, the more options you will have across the board. Let us help you find and explore themâ¦and the earlier you start, the better!
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