25 Jun How Much College Can Your Family Afford?
How much is this college going to cost? It’s a question that strikes fear into the hearts of parents, and misunderstanding into the minds of students. The student, on the one hand, has a grand idea of attending a particular college. He or she has visited there, is enthralled by the campus, and is already planning activities with new-found friends. The parents, meanwhile, can only see money flying out the door as they struggle to pay for a home and college expenses.
While most parents want the best for their children, the cost of college is a legitimate concern. It can’t be so high that the family will face financial failure, but how much is really too much? Here are some factors to keep in mind when trying to determine how much college your family can afford:
• Be upfront: It shouldn’t get to the point where a student is looking at colleges that are obviously out of the family’s reach. Unless the child is likely to be actively recruited with generous scholarships, be upfront with your student about how much money the family has available. This should set more realistic expectations from the start.
• Do some research: Start early and help your student put together a list of potential colleges, and discuss the probable costs associated with each. Help your student determine which ones are within the family’s budget.
• Start narrowing: After completing the FAFSA you will be notified of your Expected Family Contribution, or EFC. This provides an initial understanding of your student’s eligibility for federal student aid, including federal student loans, and the amount your family will be expected to contribute. Keep in mind that this may not be the final figure, once all state and institutional financial aid is taken into account. The amount will, however, give you a pretty good idea of how much money you might have to earn or borrow from outside sources if you do not have a college savings plan in place.
• Compare financial aid offers: These provide a much better understanding of how much aid your student can anticipate receiving from each college. Compare these offers carefully, including the amount of student loan debt that will be acquired, and make value decisions based on the anticipated quality of the education received versus the financial burden that will be acquired.
• Look at loan debt: After graduation is not the time to think about how much student loan debt is too much. Talk about whether the student or parents will be expected to repay student loans, project anticipated earnings after graduation, and calculate estimated monthly student loan payments. If the figures don’t work out, your family might need to make alternative choices.
There is no easy answer to figuring out how much college your family can afford. Some families feel it is worth a sacrifice, but be very knowledgeable about what the future consequences will be.