Monday, July 28, 2014
Planning or Saving For College

Too many people are financially unprepared for retirement. Are you one of them? Don't worry . . . it's never too late to start saving. Use the checklist to the left to plot your strategy.

Determining how much Money you will need

How much does college cost? More than you think.

To most parents, the annual cost of college simply refers to tuition and room and board. To the federal government, it means the full cost of attendance. The difference can add up to tens of thousands of dollars over four years.

First step in college planning: scoping out the total cost

Twice per year, the federal government calculates the cost of attendance for each college (over 3,000 of them), adjusts the figure for inflation, and, if your child is applying for financial aid, uses this number to determine your child's financial need.

Five categories of expenses are used to determine the cost of attendance at a particular college:

Tuition and fees: Usually the same for all students

Books and supplies: Can vary by student, depending on your child's courses and his or her requirements

Room and board: Can vary by student, depending on the meal plan your child selects and whether he or she lives on or off campus

Transportation: Can vary greatly by student, depending on where your child lives in relation to the school

Personal expenses: Can vary by student (e.g., health insurance, pizzas, telephone bills)

In the last four categories, the federal government sets a monetary figure even though the exact expenses incurred will depend on the individual student. Thus, depending on these variables, your child's actual cost may be slightly higher or lower than the cost used for official purposes such as financial aid determinations.

If you're interested in obtaining the monetary amount allotted to each category for a particular college, contact that college directly.

Take care of your wallet

It's likely that you'll be more interested in financial factors than your child will be. In fact, your own financial constraints may limit your child's ultimate choice of colleges. It's important to evaluate colleges from a financial standpoint during the research process so there won't be any surprises down the road.

First, ask yourself whether the college provides an overall good education for the price. Remember, tuition is not the only cost. Your child will need money for room and board, books and supplies, transportation, and other miscellaneous fees. This combined cost is known as the cost of attendance. Compare the cost of attendance at colleges that interest your child.

Next, see whether the college offers any special cost-cutting measures. For example, is there a flexible tuition payment plan that lets you spread costs over 10 or 12 months? A three-year degree program? A five-year joint graduate/undergraduate degree program? A tuition discount for siblings or alumni? An opportunity to take courses online?

You'll also want to examine the college's record on financial aid. What percentage of students receive need-based financial aid? Of these, what percentage of students have 100 percent of their need met? If costs are a main concern, you'll want to target those colleges that consistently meet a high percentage of their students' financial needs. This statistic is readily available from college guidebooks.

You might also ask what percentage of students take advantage of work-study programs. Does every student who requests a work-study assignment get one? Also, does the college offer merit aid (not based on financial need) for academic, athletic, musical, or other abilities? If so, whom should be contacted?

While you're in the financial arena, now may be a good time to discuss any related concerns with your child. For example, will you expect your child to contribute to his or her education? With savings? With student loans? And how much? It's important for your child to have an awareness of the financial implications (for you and for him or her) of choosing a college.

One final note: Even if a college's sticker price is daunting, your child should consider applying if the college is otherwise a good fit. Remember, the college may award your child a generous financial aid package that may translate into a lower actual out-of-pocket cost for you over four years, compared with a less expensive school on your child's list that didn't offer as generous an aid package. However, you'll need to set a financial limit on what you can afford to pay before the acceptance letters start arriving—it's hard to resist the lure of having your child accept a slot at a prestigious university, even if it means overextending yourself financially.

© 2003 by Forefield Inc.


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