This week we are looking at the questions students should consider as they make their final decision on where they will attend college before May 1st. Yesterday, we looked academic questions to think about when examining the difference between the colleges you are considering. While finding a college where you will be successful academically is very important, figuring out whether or not the college is going to put a tremendous financial burden on you or your family is more important.
So the fundamental question you need to ask yourself today is:
Is it worth the financial expense for me to attend this college?
College debt is a hot topic these days, and for good reason. Many students struggle with the thought process of choosing their dream college over a college that has given them a better financial aid package. The key to this dilemma is to identify what you love about your dream college, and then see if those opportunities are available at the more cost effective college.
Let’s start with the basics:
How do you compare financial aid packages?
During our financial aid series, Andrea provided students and parents with a good list of “details” to look at when comparing two financial aid packages. You also need to look at the overall cost provided by each college you are considering. Are there other cost not included that you need to consider (i.e. travel expenses, additional fees)? Also, look at the amount the cost of the college has increased over the last few years. Is there a plan already in place to increase tuition while you will be a student there? If so, how much will it increase?
Now, let’s look at the student debt issue.
If part of your financial aid package includes student loans, you need to consider how much debt is too much? According to The Project On Student Debt, two-thirds of students who graduated in 2011 had student load debt. That debt averaged $26,600. With unemployment still being a major concern for recent college graduates, students should consider how they will pay off a loan if they don’t immediately have a job after graduation. Also, students often don’t think about the interest that may come with a student loan. My colleague, Mark Montgomery, pointed out in a blog post that a student loan of $27,000 can end up being more than $37,000 if paid out over 10 years (at an interest rate of 6.8%). Just the amount paid in interest is a lot of money.
Now think about the amount of money your parents are going to need to take out in loans in order for you to attend each college.
A NY Times Article: Child’s Education, but Parent’s Crushing Loans, highlights the burden some parents take on in order to fund their child’s college education. Parents need to consider the long term financial ramifications if they are taking out huge loans to fund college. There are so many components to this issue, but some basic questions to consider are:
- How will this affect my ability to pay for college for my other children?
- Will I still be able to save for my future needs (i.e. retirement)?
- What if unexpected hardships occur (i.e. job loss or illness)?
While for some parents, one of the most difficult things to do is to say “no” to your child, you have to remember that sometimes saying “no” is the best thing you can do for your child.
Finally, as mentioned above, the best way to deal with this issue, is to look at the what you love about your dream college and try to find the same things in the more cost-effective options. The key is to look beyond the cost-effective college and see if the things that you love are in the surrounding community, if not immediately available on campus. For example, do you love your dream college because they have amazing school spirit and athletic programs? Is the cost-effective college located in a city that has vibrant athletic programs?
This just scratches the surface of this issue, but you get the idea. Tomorrow will look at the idea (or illusion) of fit in further detail.