After 12 years and over 200,000 miles, my wife and I think it may finally be time to move beyond the minivan.
Ideally, we would like to have a vehicle that would hold our family of four plus the occasional additional passenger or two. Since we live in Minnesota, all-wheel drive would be nice especially when we make winter road trips to visit out-of-town family. Throw in at least 4 suitcases, a dog, a cooler and some extras like sleeping bags, fishing gear or Christmas presents, and before you know it we need the equivalent of a small truck just to go to out of town for the weekend.
When I saw the sticker prices for cars that meet our wish list our old minivan suddenly became a lot more attractive. Numbers for a new car ranged from $50,000 to $75,000 or more. Even used vehicles can hover around $50k depending on mileage and extras (like wheels and stuff).
Granted, it’s been a while since we bought a car, but wow.
As expensive as new cars can be, however, it is nothing compared to what some parents could end up paying for their kids’ college educations. In fact, with today’s college sticker prices exceeding $60,000 a year at many schools, paying for college might compare to buying a brand new SUV every year for the next four or five years – for every kid in your house!
That’s a carload of coin.
October 1 kicks off “financial aid season” as it is the first day you can submit your Free Application For Federal Student Aid (aka FAFSA) for the 2019/2020 school year.
My college planning workshop “Pay Less for College” also kicks into high gear this month. For a list of upcoming workshops try clicking here.
Through out the month, I am going to share with you some of my best tips and strategies to help you pay less for college.
No matter what your financial situation or how great of a student you have, the key step in your action plan to pay less for college should be this:
Determine which schools are the best financial fit for you and your family.
How much you pay for college almost always comes down to the school your kids choose to attend.
Super obvious, right? Well, not always.
On the surface, expensive, elite schools like Harvard University appear to cost much more than a local state college like Mankato State. The websites of these schools quote their total cost of attendance at $76,500 and $20,500 respectively.
However, Harvard University will meet 100% of your student’s financial need. This means that Harvard will put together a financial aid package that will cover the difference between what they think you can afford to pay and the total cost of attendance.
For some families this can be a massive savings. According to their website, families making less than $65,000 a year will pay $0 to attend Harvard University, and 90% of all students pay the same or less at Harvard than they would at their local state college.
Harvard isn’t unique. Many schools claim to meet 100% of a student’s financial need. Even middle-income families and those with fairly substantial assets may qualify for need-based financial aid at the most expensive schools. Often, as the Harvard website suggests, families can attend these highly selective, elite colleges at a price that is not too much different than what they may pay at many of the other schools on their list.
For some families, Harvard University and other schools like them, may be your least expensive option.
Unfortunately, this isn’t true for every family. Some, especially those with high incomes, will be expected to pay up to the full cost of attendance at the most selective colleges on their list.
Every spring I get calls and emails from frantic parents of high school seniors who are scrambling to come up with enough money to send their kids to the expensive, elite college or university that they promised. Only to find out, that there are few, if any, options other than to choose another school.
If you are a parent with significant income and assets and have a talented student, there is some good news. Most private colleges and universities focus their financial aid dollars on students with the strongest academic merit. Known as merit-based financial aid, these financial aid awards are given to students regardless of their financial situation.
Merit-based financial aid awards can range from a few thousand dollars per year to full tuition. Typical merit awards often range from $15,000 to $20,000 per year. Students may also qualify for additional scholarships based on music, leadership or other unique qualities that are valued by that school such as geographic diversity.
To find out ho much you might ultimately pay at the colleges on your list, visit the schools’ Net Price Calculator. This is the tool that will give you a reasonable estimate of what you and your student might be expected to pay after factoring in income and assets, as well as grades, ACT scores and other merit-based data.
Choose a school that is a good financial fit for you and your student. If you do your research, you should be able to get an idea of what specific schools will cost before you start making promises and commitments to your student. Once you know the approximate net price, then you can start to have conversations with your family about what you can afford, how you will pay for college and whether it makes sense to pay more to attend certain schools on your list.
Remember, how much you pay for college ultimately comes down to the school your student chooses to attend. Don’t let your student dictate which schools are on your list. Take an active role in helping find schools that are both a good financial fit as well as a good academic fit for your student.
My free college planning workshop “Pay Less For College” is being offered at several high schools in the Twin Cities area. This 90-minute workshop helps parents determine which schools are most likely to be the best financial fit for them and their student, identify their best opportunities to receive financial aid, and find ways to pay less for their student’s college education.