Here’s some basic information that doesn’t change much… for more help on college planning go to www.collegelifeplanning.com
Financial Aid 101
Financial aid is simply money that helps you pay for college. There are three kinds:
Grants, also called scholarships or gift aid, are the best kind of financial aid. They are free money that you don’t have to pay back. Generally, grants are awarded for one of three reasons:
Merit: The student is being rewarded for good grades, athletic skill, musical talent, etc.
Employment benefit: The student or the parent qualifies for tuition assistance through an employer. Many universities, for example, give employees’ children a break on tuition.
Loans are debts that you have to pay back and are obviously not as good grants. Some loans, such as federal Stafford and Perkins loans for students, are considered financial aid because taxpayers subsidize the rates so that students can borrow at a lower cost than they would get from a bank. A few charities and schools are even offering college loans at zero percent interest. The federal government calls its PLUS loans for parents financial aid. But many counselors note that some parents with good credit can borrow more cheaply from banks than from the PLUS program.
The federal government subsidizes some campus and nonprofit jobs for students. Generally, work-study jobs are awarded only to students who the college says are financially needy. The jobs typically don’t pay especially well. Students may find better-paying jobs off campus. But work-study jobs have advantages. Their earnings don’t reduce the student’s future financial aid awards. Their schedules coincide with the school’s. They are typically on campus, which reduces any commute hassle. And they are typically limited to fewer than 15 hours a week, so they jibe with studies showing that students who work between five and 15 hours a week actually get better grades than those who don’t work at all or work more hours.
Pay attention to this stuff, it may help save you thousands.
For more college planning help, go to www.collegelifeplanning.com
7 Ways to Cut College Costs
Does anybody else out there think it’s obscene that dozens of schools now charge more than $50,000 a year?
These price tags are frightening, but they are also largely meaningless. That’s because most families will not pay anywhere close to $50,000 for a school.
1. Don’t just look in your backyard. About one out of every three college students attends a school that’s no more than 50 miles away. And most of these schools are public institutions.
For some students, however, distant private colleges will cost less than public universities after financial aid and scholarships. My son’s best friend in San Diego, for example, will be attending Carleton College in the fall after receiving a large financial aid package from the liberal arts college in Northfield, Minn.
The price tag for Carleton College’s tuition and room and board is more than $52,000, but it will cost my son’s friend just $7,000 or $8,000 a year. That’s some deal.
2. Pay attention to graduation rates. Most families mistakenly assume that their children will graduate in four years. Fewer than 60 percent of college students graduate in six years! Always examine a school’s graduation rates and find out what it takes to get out in eight semesters. The U.S. News Best Colleges rankings and College Results Online are resources that can help you pinpoint grad rates.
3. Look for the schools with generous financial aid packages. A good place to evaluate the generosity of a school is to look at its financial aid statistics on the federal College Navigator site.
4. Obtain a preliminary EFC. Before you begin looking at schools, check what your family’s Expected Family Contribution will be. This will be the amount of money, at a minimum, that you will need to cough up for one year of college. In many cases, you will have to provide more than that figure. You can find online EFC calculators at FinAid.org and the College Board.
5. Apply for aid regardless of your income. Families that make $150,000 to $200,000 a year can sometimes qualify for significant need-based aid at pricey colleges. If you don’t file the FAFSA—and the CSS/Financial Aid PROFILE for some private schools—you won’t qualify for need-based help. Without completing the FAFSA, you also won’t have access to federal college loans.
6. Look for merit scholarships. At private schools, 82 percent of students receive merit aid. About two-thirds of students at public and private institutions combined receive some type of grant. An excellent resource for scholarships that colleges offer—the biggest source of college grants—is MeritAid.com.
7. Beware of reach schools. The danger of reach schools is that they often give little or no financial aid or scholarships to students who barely get in. Most schools reserve their best aid packages to the students they really covet.
As if us Gen Y-ers need another reason to be depressed about our economic futures.
According to The Chicago Sun-Times, our generation is the first generation in 100 years that is “unlikely” to do better than our parents financially.
As the article explains, the recession, a poor job market and low wages have added to our burden of student loans and credit card debt—not to mention the siren song of ever-improving hi-tech gadgets. All of these things have caused us as a whole to sink deeper in debt.
As The Sun-Times details, Generation Y-ers have “high, unrealistic goals” and “many don’t manage money very well.”
Graduating with an average of $23,300 worth of student loan debt and little job security, though, has apparently given us a much needed dose of reality.
Well, thanks for that helpful advice, Sun-Times.As a Gen Y-er, I have to say that, unlike the individuals The Sun-Times seems to be talking about, neither I or nor my friends have any illusions about our financial state.
We’re more than aware of our debts and many of them, like student loans, are beyond our control. Tuition and housing costs have been raised in response to raises in the cost of living, the addition of new technology and the addition of new buildings on campus.
We also know our bills and our living expenses, and, as a result, have made sacrifices in other areas of our lives to make sure that our debt doesn’t get any more out of hand. And most of us have been working since we were 16-years-old, if not before.
We have a work ethic and an awareness of the financial woes at hand, even if our counterparts on shows like “Jersey Shore” suggest otherwise. I’m pretty sure that there are very few Gen Y-ers who don’t make more than Snooki.
In short, yes, we know the mess we’re in, and yes, we’re working to rectify it—even if you’re only just covering it now, Sun-Times.
We are not, however, going to cry about it.