Many of you are packing your bags for that great family getaway. For the Buhrmann Family, it’s for one final look at some colleges. Last year, I told the story of finding the perfect school for our “horse crazy” daughter. She’s beginning her sophomore year at Georgetown College in the heart of horse country. One down … One to go …
Our younger daughter, Kristen, will soon be embarking on that wonderful voyage as well. She will be a senior this fall and we’re already reviewing college applications. Here are some tips we’ve learned as we received our “college education.”
Sorting through the Information
Selecting a college can be a huge undertaking. Our mailbox is stuffed with a daily barrage of brochures. The College Board can help cut through the clutter by sorting through colleges by particular features and characteristics.
It can also produce a detailed report for a given school, containing much of what we need to make decisions like cost of attendance, demographics, entering student statistics and financial aid information. This has been a life saver and has saved countless hours of searching school websites.
Speaking of Costs
One of the eye-opening moments we had was seeing the net costs of attending a specific school. To be honest, we hadn’t considered private colleges until our oldest child visited one. After weighing all the costs, minus scholarships and grants, we’re paying less than if she attended a public institution.
That discovery was truly amazing. We’re using that knowledge as we help our younger daughter search for her school. For years, parents excluded many colleges because the only information they had were the “rack rates” for schools. Much like the “rack rates” for hotels, which few ever pay thanks to online deals and discount packages, a college’s basic tuition cost is often inflated.
Last year, “net cost calculators” began appearing on college websites. Students enter information about their finances, academic performance and interests. A report provides early indications of scholarships, grants and other aid that may be available, reducing the actual published cost of attendance. While they’re no substitute for talking to admissions counselors, they can help you whittle down your choices. Don’t overlook them.
No Substitutions
Neither websites nor net cost calculators are replacements for sound, financial planning. Be sure to start saving early, keep your end goal in mind and find ways to rein in costs. Is there one “perfect school” for your child? Maybe. But don’t overlook the multitude of really good schools and good values out there.
Anyone else on the hunt for the perfect school? If so, what have you learned?
One lesson I learned is to apply to all of the colleges and universities you are interested in. The real decision does not come in until 1. you are accepted and 2. the Financial Aid Award letter is presented and based an educated decison then.
What did you learn about 529 plans and fasfa reviews. I understand finacial aid “penalizes” responsible parents who save for college for their kids. I spoke to a man recently who is looking for his kids to be pell grant eligible and a 529 would hurt that chance. Why isn’t 529 plans like LTC partnership plan to encourage people to save?
Rich -
“Financial aid” can be a huge misconception. “Financial aid” is the combination of grants, loans, and work-study programs. Grants, such as the Pell Grant program, are generally hard to come by for most and are truly for those with low income and low resources. More comonly, students receive packages of loans and college work-study. It’s important to remember that qualifying for large amounts of financial aid often means taking on large amounts of debt.
529 plan assets are generally included in the FAFSA formulas. In most cases, 529s are owned by a parent for the benefit of a child. From a FAFSA perspective, the assets held by the parents are only included at a rate of 5.6% — versus a 20% rate for assets held by the child. So, while 529 assets are clearly designed for college expenses, they have a relatively small impact to the FAFSA calculations.
529s can be a great way to accumulate funds tax deferred and distributed tax-free for qualified education expenses. And with college costs ever increasing and the amount of aid and scholarships seeming to be in decline, it’s more important than ever to “save early – save often” for one of the largest expenses facing American families.
Hope this helps!