Students Entering College This Year Could Pay More Than $190000 For A Bachelor’s Degree Meanwhile Others Will Pay Next To Nothing
Most people will fall somewhere in between.
But how much is too much?
CNN asked six experts to weigh in, including the head of a public university, financial aid officers, and student loan lenders.
The answer depends on personal circumstances like your family’s finances and values. It also depends on where you live and what you’ll study.
“It seems like something that should have a set cost, but it’s a complicated question,” said Carol Folt, the Chancellor of the University of North Carolina at Chapel Hill.
Here are a few tips to help you figure out your number:
Explore Refinancing Your Mortgage
Refinancing from a 15-year mortgage to a 30-year term may drop your monthly payment, freeing up cash for college. You might also save by refinancing to a lower interest rate on the same mortgage term.
Sometimes a significant amount can be saved with a lower interest rate mortgage, Hughes says.
But this process could take 30 days, so its not an immediate solution. You could also open a home equity line of credit at the same time, Stanganelli says, but plan to draw only if you absolutely need to. Also, be wary of a cash-out refinance at this juncture because you dont want a pile of money sitting in a bank account when you file Octobers FAFSA for next year, he says.
Net Price Vs Sticker Price
Lets start off by defining two very different terms used to illustrate a schools cost.
Sticker price is the posted cost of attendance at a college. This is the number that can make people think twice about even applying. For example, the current sticker price at Stanford University is just over a $69,000per year! Its an intimidating number, but dont cross schools like Stanford with high sticker prices off your list just yet.
The net price is what youll actually payaka the cost of attendance after scholarships and institutional aid have been deducted. This can drastically lower the sticker price. In fact, Stanford students with demonstrated need can earn upwards of $40,000 in institutional aid. Private colleges tend to offer their students generous offer letters, helping them afford colleges and making attendance there fairly affordable. The net price is what you should focusnot the sticker. So, how do you determine what the net prices at your target schools actually are?
Net Price Calculators
A net price calculator is a great tool to gauge if a certain school is an affordable option for you.
While all colleges will have a Net Price Calculator on their website, it can be tedious providing your information to each school youre interested in. Save time by filling in your financial information once on College Raptors free NPC and discover your personalized net price estimate at any 4-year institution in the US!
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Is College Still Worth The Tuition
If you’re still deciding whether it’s even worth paying a high tuition bill this semester, take a serious look at the various learning models your child’s school is offering and whether they’ll fit into your student’s degree requirements.
Some classes, such as pre-med, don’t translate easily online, Tayne says. In fact, before the COVID-19 pandemic, medical schools like Johns Hopkins School of Medicine and Georgetown School of Medicine didn’t even accept or consider prerequisite courses taken online because they value how you work in-person with others in a classroom or laboratory.
For many students, like Tayne’s children, a completely virtual model takes away the social interactions built into college culture.
“It’s between you and your student to determine the kind of education they want,” she says.
While there’s no right or wrong answer applicable to every family, it’s worth exploring alternate options until the situation improves. A local community college or state school operating in a different learning model or even a less expensive online program may be a more cost-effective choice for the time being as your child can take transferable courses.
“This can be a good option for freshmen or sophomores, especially,” Tayne says. “As your student gets further into their course of study, many schools won’t accept the transfer credits. You may need to discuss this with your current school because you wouldn’t want to lose the admissions spot to re-apply.”
Does A Divorced Dad Have To Pay For College
California Divorces Do Not Offer Provisions for College Tuition. Even though it only seems fair that both parents pay for the childs tuition, there is no legal obligation to do so in California. If you included college costs in your divorce settlement, however, that plan would kick in once your child begins college.
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How To Decide Between Saving For Retirement And College
When you have kids and start thinking about the potential cost of their college years, it might seem like saving for retirement is something you can put off for a while. Rafael Rubio, president/owner of Stable Retirement Planners in Michigan, says he gets this question a lot from new parents.
The one thing I always tell them, just like the flight attendant tells you to fix your air mask and take care of yourself first, you need to take care of your retirement first, he told The Balance in a phone interview. Its not being selfishits being realistic.
Thats because more and more, retirees need multiple sources of income in order to live comfortably. According to 2019 Federal Reserve data, eight in 10 retirees had one or more sources of private income in addition to Social Security. Denying too much money to that retirement nest egg could potentially disrupt your future quality of life.
What you really need to do is sit down and think about your retirement income. Look at your Social Security, look at your pension, if you have one, Rubio said. Then figure out what you need from your retirement funds to supplement that income to cover your standard of living.
As long as you are contributing all you can to your 401, individual retirement account , or other investment vehicles during your working years, then you can also make some room in your budget for other goals like college savings.
Retirement First College Second
When in doubt, stick with the rule of thumb that retirement savings should always be your priority over college savings. However, with careful planning, you could do both.
Speak with a financial advisor to help you set priorities to meet your goals, and to customize a plan based on your familys situation.
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Paying For College With Tax Reductions
The government offers tax breaks for higher education. These allow some taxpayers to subtract certain college-related expenses from the tax they owe.
Tip: Get to know the government’s rules for these programs. You can take only one credit or deduction per year, in addition to the student loan interest deduction.
Make Sure Your Student Has Skin In The Game
Stanganelli recommends students contribute their savings if they have savings before a family considers taking parent or private student loans.
That will also set them up for the financial aid forms in October because by then there are minimal student assets to show, he says. Twenty percent of student assets are counted toward the FAFSAs expected family contribution , whereas parent assets are assessed at up to 5.64%.
A part-time job wont help with the fall bill, but students can cover personal expenses, other fees, and spring semester books. A full-time summer job helps next years bottom line, too. Plus, student earnings up to $6,970 dont count as income on the FAFSA, and work-study earnings also dont count as income, though they are taxed.
How To Pay For College With No Money Saved
If you have no money for college, there are several options that could help, such as scholarships and student loans.
Eric RosenbergUpdated July 28, 2021
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
If you dont have this kind of money saved for college, paying for it might feel impossible. But dont worry there are options that could help.
Here are seven ways to pay for college with no money:
Take Out Federal Student Loans
If youve exhausted all of your other options for getting money to pay for college, consider borrowing federal student loans.
Federal loans are relatively inexpensive, especially for undergraduate students. If youre an undergrad with financial need, you may qualify for subsidized loans, where the government pays the loans interest while youre in school and during future deferment periods.
To apply for federal loans, all you need to do is fill out the FAFSA. For most loans, theres no credit check, and youll get the same interest rate as everyone else who qualifies for the program. When you receive your financial aid award letter, you can decide how much you want to borrow based on what youve been offered.
Federal student loans are typically the first choice for students who need to borrow money for college, since they come with benefits that private student loans cant offer. For instance, they have extensive deferment and forbearance options, plus opportunities to have some of your balance forgiven through income-driven repayment plans or Public Service Loan Forgiveness.
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Limit Borrowing To One Year’s Income
Once the acceptance letters arrive, stay focused on making the financially smart choice. You can always appeal for a better aid package, but if the final offer means your family’s EFC is more than you can cover from savings and cash flow, carefully consider a safe amount to borrow.
Kantrowitz says that if students borrow no more than what they expect to make their first year out of school, and if parents borrow no more than a year’s gross income , they should be in good financial shape.
Financial Aid Options For Paying For College
Tayne, who is using a mix of cash savings and loans to pay for her children’s tuition, suggests looking at all options when it comes to affording college.
Naturally, starting early with a 529 plan lets you save up in advance, especially when paired with a card that lets you invest cash back, like the Fidelity® Rewards Visa Signature® Card and the Upromise® Mastercard® . But if you or your family’s finances have been affected by the pandemic and you’re currently in need of assistance, there are options.
The appeal process: If you haven’t already, contact your school’s financial aid office to explain your situation and ask about any available sources of funding. They can adjust the financial aid for students whose parents’ income has changed since filling out the Free Application for Federal Student Aid . “In fact, because the FAFSA uses income information from two years ago, you can appeal your financial aid at any time, including in the middle of a semester,” Tayne says.
Submit a written, one-page letter of appeal detailing and providing proof of financial distress. This could be a notice of termination or furlough, reduced working hours, unemployment or medical bills.
“Being as specific as possible about your hardship will help your case,” Tayne says. “Continue to follow up with the financial aid office to keep track of the progress with your account.”
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Understand Your Award Letter
Your financial aid award letter will break down exactly how an institution that admits you plans to help you afford your studies. Unfortunately, it can be technical and difficult to understand for those not deeply involved in the financial aid process.
The key to success in this step is simple: know exactly what your prospective college is offering you. Understand the terms they use, the differences between grants and scholarships, and how much money you will actually get. Then, use that information to choose the best college for your financial situation.
Free College Advisers Make A Hard Decision Less Lonely
So it should not really come as any surprise to us that money is being used as leverage, even with children, because children have a role to play in this process. I’m in enough teenagers’ inboxes looking at this stuff to know that the money pitch is more common than it used to be and absolutely resonating, but also confusing the hell out of people because they don’t really know how this all works.
So where do parents even begin when determining how much money is appropriate to spend on college?
What I encourage people to do, first and foremost, is to take a look at something called the common data set that most schools make available. This is the document that schools send to U.S. News and World Report and other ranking organizations. Look for Line H2A. It tells you the number of students who did not qualify for any need-based aid, but still got merit money. So that gives you a sense of how desperate the school is and how much of a merit package it might offer even to people who do not need the money because of their assets or income. You start to get a sense of where you stand.
For students applying to college this year, what should they do if their financial situation has changed because of the coronavirus?
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Different Loans For Different Folks
Before getting into the different types of available loan programs, lets do a quick refresher on how exactly student loans work. Like any type of loan , student loans cost some small amount to take out and they require interest and principal payments thereafter. Principal payments go toward paying back what youve borrowed, and interest payments consist of some agreed upon percentage of the amount you still owe. Typically, if you miss payments, the interest you would have had to pay is added to your total debt.
In the U.S.A., the federal government helps students pay for college by offering a number of loan programs with more favorable terms than most private loan options. Federal student loans are unique in that, while you are a student, your payments are deferredthat is, put off until later. Some types of Federal loans are subsidized and do not accumulate interest payments during this deferment period.
Retirement Savings Come First
Joyce Chan / The Balance
When it comes to saving for retirement versus saving for college, the rule of thumb is this: Your retirement should take priority over your childs education. However, you dont necessarily have to choose one goal and ignore the other.
As long as you have a solid long-term retirement savings plan in place, you can certainly leave room for other financial goals, including helping to fund your childrens college education. Learn more about why your retirement savings should remain your most important financial objective, along with some tips on how to set aside funds for college at the same time.
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What Happens If I Dont Pay College Tuition
What Happens When You Have Unpaid Tuition? An unpaid tuition bill can also end up in collections. Your school may have its own collection department or it may sell unpaid tuition debt to a collection agency. If collections arent resolved and the amount owed paid, your school may choose to take legal action.
Student Loans Are A Bad Idea
I get ityoure willing to do whatever it takes to help your child succeed. But way too often, I hear from people who wanted the dream so badly they went into debt to make it happen. Thats a huge mistake. What I want you to understand is that the borrow money or skip college dilemma is a myth. You dont have to do either one! The truth is, there are many ways to get a great education and find excellent career opportunities without borrowing a dime.
Take it from someone who went deep into student loan debt in college: If you think youre worried about money now, its nothing compared to the stress and pain of life with student loan payments. Just look at the huge financial headache facing todays college borrowers and the parents who cosigned for them:
- According to the Federal Reserve, Americans owe over $1.7 trillion in student loan debt.2
- The average student debt per graduate reached a record high of $38,792 in 2020.3
- There are about 44 million student loan borrowers in America right now.4
- Depending on the repayment plan and loan amount, it can take anywhere from 10 to 30 years to repay student loans.5
The good news is, your kids can graduate debt-free and ready to succeed. There are so many ways to cash-flow a degree or get trained for an awesome career without borrowing. So if youre feeling anxious about the best ways to pay for college without student loans, lets look at the options.
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