I got accepted to my #1 school. Can I afford it?
Worried about if you can afford college? Putting the pieces of the puzzle together, pro-actively and with careful planning, is paramount to performing your college search. So many families look at the financial piece of the puzzle after all the acceptances are in, which can be devastating and possibly result in student loans that will be with you for decades after you graduate.
Here are the legs to the stool that you MUST research and understand prior to searching for colleges that are your SAFE match, socially, academically, financially and emotionally. There are colleges for everyone for the spectrum of any family’s financial boundaries, I promise.
1. Understand your financial boundaries. How much can you and should you put towards your child’s education? I hear more times than not, “I will do whatever it takes to get Johnny through college”. Does that mean taking out a second mortgage on your home that you will be bogged down with way into your retirement? Are you going to take out a $100K+ Parent Plus loan at over a 7% interest rate or a Sallie Mae loan at a 10%+ plus rate over a 4-year period (or 6 – Remember, 6 is the new 4!)? Plan and understand the financial ramifications to what it would take to “do whatever it takes” to send Johnny to school. Living in the moment when it comes to financially planning your child’s education could be a disaster down the road.
2. Know your financial aid picture. I cannot stress this enough. Even if you think you won’t qualify for financial aid, do the calculation and understand what your EFC, Expected Family Contribution, is (You can use the Big Future – EFC Calculator). No matter what your EFC is this is a key component to and leg to your stool. Many families come to me thinking they won’t qualify for aid and, in reality, they will, depending on the school’s sticker price and how generous they are.
3. This brings me to the third leg of the “college financial puzzle” stool. Understand how generous the colleges are that you are considering, from both a merit aid and financial aid standpoint, and where you fall in their applicant pool, which could result in merit funds awarded to you vary greatly. There are colleges that won’t give merit aid at all and if you have no financial need and your financial boundary is $25K per year and that school’s sticker price is $65K, don’t apply, or, if you do, buyer beware.
The lesson here is to be an educated consumer. Don’t listen to your neighbors and friends since everyone’s college financial puzzle is different. Trust me, I have worked with over 250 families and I see it every day. Understand YOUR “college financial puzzle” and make sure all of the pieces fit together seamlessly.
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