08 Jul How Much Can You Really Afford to Spend on College?
Remember the movie where a fishing vessel is caught between a hurricane and two powerful weather fronts as it tries returning home with its late-season catch? Or winter weather forecasts in some parts of the country where wind direction, temperatures and precipitation team up to dump feet of snow on a locality? They call these events a “perfect storm” because everything has to line up perfectly for them to happen. But, for people trying to survive them, it must seem more like an “imperfect” storm.
And that is what families are feeling right now as they try to figure out how they can pay to send their student to college this year or next. Between COVID-19, high unemployment figures, and an uncertain economy, they are facing an “imperfect” storm of worry and indecision.
Parents who thought they had two reliable sources of income might find themselves furloughed or living on unemployment. Healthy 529 college savings plans could look a little less healthy now. And that top-tier college with the sky-high tuition could suddenly seem like it is out of reach for their student.
So, how are parents and their student supposed to cope with this situation? First, breathe, and then take proactive steps to determine exactly where you stand when it comes to paying for college. Take everything that has changed into consideration and come up with a “new normal” assessment of your family’s financial situation:
• How much income can you realistically expect to bring in for the next year? Are there any ways to increase that amount?
• Where do your savings accounts stand?
• What are your projected expenses? Are there any ways to decrease these amounts?
Families with students who plan to attend college this fall should contact their schools immediately. They need to update decision-makers on the family’s current situation, supply documentation, and ask if there are any tuition discounts for the coming year, or if there is any additional college financial aid available.
Families with students in the process of applying to college for the fall of 2021 may have to take a different approach than originally anticipated:
• Determine your new college budget: Be brutally honest as to how much money you will have available to pay college costs. Assume best-case and worst-case scenarios for your family’s specific situation, and talk about ways to change any of the variables.
• Look at your student’s college choices: Have a frank discussion with your student about the colleges on their possibility list. Spend time together looking at the Net Price Calculator on each college’s website to find out what the typical family is expected to pay. This may call for some discussion about applying to different colleges in light of the current situation.
• Learn about and APPLY FOR FINANCIAL AID! Through the years I have seen far too many families that simply did not apply for financial aid because they thought it was too difficult or assumed they could not qualify. But there is money available from federal, state and institutional sources, and even some scholarships, where the first step to qualification is file the FAFSA. For the 2021-22 college year, the FAFSA will be online beginning October 1, 2020.
• Involve your student: Your student may need to earn money during the college years through the Federal Work-Study program or private job opportunities. You may need to rely on federal or private student loans to cover the costs, and should have an agreement in place as to who will be responsible for repayment after graduation.
Above all, you must get serious about the search for scholarships. The CFAA Scholarship Program is now available to help you locate, organize and apply to personalized scholarship opportunities. Visit our website, and be sure to enter your name and email to receive a FREE COPY of “Top 5 Tips for a Successful Scholarship Search.”
With proper planning and solid teamwork, your family can weather the COVID storm perfectly. For the latest information, look for my weekly JustAskJodi emails and tune in for my weekly Twitter chat at #CollegeCash every Thursday at 5pm Pacific/8pm Eastern.