The headlines about the rising cost of college (and college debt) have led many families to hit the panic button. Here's a reality check.
These common assumptions about paying for college can unfortunately influence parents and students to take missteps in their college planning.
1. If my parents save for college, it will hurt my financial aid offers
Most colleges expect parents to use only 5.6 percent of their savings to help pay for college per year. And some savings—including money in retirement funds—are not counted at all.
2. My chances of getting in are better if I don't apply for aid
Your need for financial aid will likely not be a factor in admission to public universities and to most private colleges. If you are a borderline applicant, your need for aid may be considered. Your chances of admission and generous aid are best at schools where you are a desirable candidate.
3. Financial aid will cover all of my financial need
Colleges are not required to fully meet students' financial need. According to the Institute for College Access, over three quarters of undergrads do not get their financial need fully met. If the student is under 24 and not declared an independent student, both parents and student bear primary responsibility for paying for college. In fact, if such a student applies for aid without parental financial information, only an unsubsidized loan will be offered.
4. I'll be drowning in debt by the time I graduate
You don't have to graduate with six-figure debt. To control college debt, apply to colleges with low graduate debt levels, work part-time during college, graduate in four years, and pay loan interest while you are in college so it does not get added to your loan balance. According to the Project on Student Debt, the average debt of college graduates is $30,000. If you take precautions, you can end up on the low side of this average.
5. Private colleges are too expensive to consider
The published "sticker price" of private colleges is intimidating. But most private colleges offer merit aid and tuition discounts that bring the net price down for students they want to enroll. The most selective private colleges generally offer only need-based aid, but their definition of "needy" includes incomes many consider affluent. So let the financial aid process play out before deciding on a college.
6. I should attend my top-choice school even if it is outrageously expensive
It's hard to turn down a college you've fallen in love with. But imagine what it would be like to graduate with a crippling amount of debt. So give your alternatives a second look. For example, many public colleges offer honors programs with high levels of rigor and robust alumni connections. College is more about what you make of your experience and less about what the college experience makes of you.
- Get a college cost reality check by looking up the net price you might pay for the colleges on your list.
- Use College Match to look up any four-year college and see stats on factors that impact your potential cost, such as average student debt at graduation, four-year graduation rates, and financial aid generosity.
- Check out Finding Financially Friendly Colleges for tips on searching for colleges likely to be affordable.
- Use the Student Loan Calculator from 1FBUSA to find out how student loans may affect your financial future. See what your loan payments will be compared with how much you can afford to pay based on your expected salary after graduation.
Note: Financial information provided on this site is of a general nature and may not apply to your situation. Contact a financial or tax advisor before acting on such information.