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Countdown to College: Some basics about paying for college

Lee Shulman Bierer, Tribune News Service on

Published in Education News

If you're the parent of a high school senior and you're thinking about how to pay for college without going broke, it's a whole new, expensive world. "Paying for College Without Going Broke" is a bestseller from Princeton Review that can teach you a lot.

From my perspective, there are two kinds of money: "great money," or "free money" (gifts, grants and scholarships), and "not-so-great money" (loans that need to be paid back).

Free money

"Free money" is a grant or scholarship that does not need to be paid back. There are two types of free money: need-based aid and merit-based aid.

The amount of need-based aid a family will receive is determined by the Free Application for Federal Student Aid, also known as FAFSA (www.fafsa.ed.gov) and the CSS Profile (www.collegeboard.com/profile).

Merit-based aid in the form of tuition reduction, grants and scholarships is a tool used by most private colleges and many public universities to entice the strongest students to apply and attend. Students can receive scholarships for their athletic, artistic or debate talents as well as for demonstrated scholarship — great grades and strong standardized test scores. Many public universities have also created prestigious honors colleges, and these opportunities often come with a variety of perks, including early class registration, smaller classes, honors dormitories and attractive scholarships.

 

The Ivy League schools and a few of the other most selective colleges in the country, including Stanford and Georgetown, do not offer any form of merit-based aid, but they typically have very generous need-based aid. If a student has what it takes to be accepted to any of these colleges or universities, finances will likely not be a barrier. According to Harvard’s website, “parents making less than $65,000 are expected to contribute '$0' and 90 percent of American families would pay the same or less to send their children to Harvard as they would a state school.” I bet that would shock most families.

Loans

I’m terrified when I meet with parents who are so afraid of disappointing their children that they say they'll do "whatever it takes" to make it happen. Frequently, this means taking out loans in both the student’s name and the parents’ names, cashing in policies early, paying penalties or even forfeiting their own retirement money.

While I don’t think high school students should be forced to select their future careers, I believe it’s irresponsible to advocate attending a high-priced private institution at $75,000 per year if the family must borrow substantially. This is especially true if the student is undecided. I don’t believe that a student’s college education should be allowed to disrupt a family’s normal spending patterns, and I think it’s unwise for parents to abandon their own needs.

Remember, there is no one perfect college. Most students can be happy at a variety of schools. Parents need to be the responsible ones here and consider future employment opportunities and future debt responsibilities.

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