According to a recent Sun-Sentinel article, college students are racking up credit card debt to pay for their education. 30% charge their tuition compared to 24% in 2004. 92% of undergrads charged textbooks, school supplies and other educational expenses compared to 85% in 2004.
Marie O'Malley, director of consumer research for Sallie Mae, thinks families are underestimating college costs and opting for more expensive credit card debt in lieu of applying for cheaper financial aid.
"Too many students are at risk of overpaying for college by pulling out credit cards...instead of using less-expensive financial aid..." said O'Malley.
Duh! Sound familiar?
"College Pete" and I have been warning about this, broken record-style, for years. Why don't parents apply for financial aid? Put another way, why do 53% of all eligible families not bother to apply?
One reason is intimidation. You "need a PhD" to figure out the FAFSA, according to Secretary of Education Arne Duncan. The forms are annoying and a pain the in the rump, with multiple land-mines to stumble on and blow up all chances of aid.
Another reason is that parents put off their college planning until it's too late. The best time to start the college planning process is the second half of sophomore year, junior year at the latest.
What are the consequences to your children if you don't take this seriously?
One FAU graduate who maxed out his credit cards to pay for college fretted, "I wonder if I'll ever be able to get a home...with the debt I have now and the marks against my credit."
On a personal level, I’m extremely sympathetic to this student as I racked up $100,000 in debts between undergraduate and law school. My wife and I have four children and have sworn a blood oath to never put them through what I had to endure. That’s why I’m in the college planning business.
So learn about the financial aid process while there is still time to do something about it!
Andrew Lockwood, J.D., and Peter “College Pete” Ratzan, M.B.A., co-authors of the book, Never Pay Retail for College, conduct free college funding workshops throughout South Florida. Topics include: How even millionaires can save 20% off the cost of college; Think you make too much money to qualify for financial aid? You're probably wrong, dead wrong! And, Can you legally "position" yourself to receive more financial aid? More information is available at: www.CollegePlanningAdvice.com/events.
Monday, April 27, 2009
Monday, April 13, 2009
Parents of College-Bound Children - Are you holding up your end of the bargain?
If you have a high school senior, this can be a stressful time of year. By now, most seniors have heard from most of the colleges they've applied to about whether or not they got 'in.'
But now, more than ever, another letter is being eagerly anticipated - the award letter from the financial aid office.
If you didn't plan, these award letters can be crushing, when a student learns that she can't go to her top choice college – after working her tail off for years, loading up her schedule with AP's, club memberships and extra-curriculars.
She held up her end of the bargain, but mom and dad didn't - they didn't look into what college really costs and how they'd afford it.
Those that planned are being rewarded this year. Yes, the economy has caused some colleges to be a little stingy with aid, but overall, this has been a very strong year for financial aid packages.
If you've got a college-bound sophomore or junior, the time is NOW to get serious about how to pay for college.
You wouldn't buy a car without knowing the sticker price, why go "shopping" for college without understanding the costs and looking into how to cut those expenses.
Record numbers have applied for aid this year; next year it might be even worse – more families chasing fewer financial aid dollars.
Here are some questions to ask each college you are considering:
· What percentage of "Need" do you meet?
Most financial aid is based on "Need," calculated by the Federal Financial Aid formulas. The greater your Need, the more aid you should receive. However, the percentage of Need met by each university varies greatly. The schools with the biggest endowments typically are the most generous.
· How is Need met?
Financial Aid packages include free money – grants and scholarships - that does not have to be repaid, and loans, which require repayment.
Typically, the colleges with the largest endowments award a greater percentage of free money than loans. You’ll want this information before you apply.
· What are your deadlines?
Some colleges have early deadlines. You want to be among the first application, since money can be doled out first-come, first-served. Last month, we had a student who was offered a $1,000 "Early FAFSA" scholarship simply because we got his forms a few weeks early!
Of course, there are many other factors that go into your college plan - this is just the tip of the iceberg.
If you are the parent of a high school sophomore or junior, it’s time to make college planning a top priority. Before you know it, it will be April of your student’s senior year and you’ll be hoping for good news to arrive in your mailbox!
Andrew Lockwood and Peter "College Pete" Ratzan co-authored the book, Never Pay Retail for College. His firm sponsors free community workshops on college funding. Visit www.CollegePlanningAdvice.com for more information.
But now, more than ever, another letter is being eagerly anticipated - the award letter from the financial aid office.
If you didn't plan, these award letters can be crushing, when a student learns that she can't go to her top choice college – after working her tail off for years, loading up her schedule with AP's, club memberships and extra-curriculars.
She held up her end of the bargain, but mom and dad didn't - they didn't look into what college really costs and how they'd afford it.
Those that planned are being rewarded this year. Yes, the economy has caused some colleges to be a little stingy with aid, but overall, this has been a very strong year for financial aid packages.
If you've got a college-bound sophomore or junior, the time is NOW to get serious about how to pay for college.
You wouldn't buy a car without knowing the sticker price, why go "shopping" for college without understanding the costs and looking into how to cut those expenses.
Record numbers have applied for aid this year; next year it might be even worse – more families chasing fewer financial aid dollars.
Here are some questions to ask each college you are considering:
· What percentage of "Need" do you meet?
Most financial aid is based on "Need," calculated by the Federal Financial Aid formulas. The greater your Need, the more aid you should receive. However, the percentage of Need met by each university varies greatly. The schools with the biggest endowments typically are the most generous.
· How is Need met?
Financial Aid packages include free money – grants and scholarships - that does not have to be repaid, and loans, which require repayment.
Typically, the colleges with the largest endowments award a greater percentage of free money than loans. You’ll want this information before you apply.
· What are your deadlines?
Some colleges have early deadlines. You want to be among the first application, since money can be doled out first-come, first-served. Last month, we had a student who was offered a $1,000 "Early FAFSA" scholarship simply because we got his forms a few weeks early!
Of course, there are many other factors that go into your college plan - this is just the tip of the iceberg.
If you are the parent of a high school sophomore or junior, it’s time to make college planning a top priority. Before you know it, it will be April of your student’s senior year and you’ll be hoping for good news to arrive in your mailbox!
Andrew Lockwood and Peter "College Pete" Ratzan co-authored the book, Never Pay Retail for College. His firm sponsors free community workshops on college funding. Visit www.CollegePlanningAdvice.com for more information.
Subscribe to:
Posts (Atom)
