Should the Cost of College Influence Your List?

“Total student loan debt at graduation should be less than the student’s annual starting salary, and ideally a lot less. If total debt is less than the annual income, the student will be able to repay the loans in 10 years or less. If total debt exceeds annual income, the student will struggle to make the monthly loan payments and will need an alternate repayment plan like extended repayment or income-based repayment. The average debt at graduation for bachelor’s degree recipients last year was about $27,000.”

I cringed while typing the title of this blog. After reading Mark Kantrowitz’s tips on filing the FAFSA (Free Application for Federal Student Aid), I felt compelled to follow-up with a few thoughts on the above mentioned advice.  First, I cringe because it bothers me to think that a student’s options can be altered or even diminished due to financial constraints, but even worse, is a student’s debt after four years because they weren’t provided an accurate picture of what the end result will produce.  For myriad reasons and figures, a student’s financial-aid award is created.  While each story and situation merits conversation (and different results), there are a few thoughts to keep in mind:

1) It is necessary to be realistic about the cost and affordability of college today.  A conversation at home about this reality is paramount, and it is best done during junior year while the college list is being created. Each college website offers a net price calculator to determine your estimated family contribution.  From there, you will know how the aid preliminarily offered fits within the family’s budget, and how much will be left to the student to pay later as a loan payment.

2) Mr. Kantrowitz is right! Debt shouldn’t exceed a student’s starting salary after college.  Therefore, if financial-aid is a necessity, it is important to include more likely schools on the list as a way to capitalize on being at the top an applicant pool. Often, schools offer more grant assistance to those at the top of the pyramid.  This tactic is also likely to provide a greater number of healthy financial-aid offers that can be compared at the end of the search.

3) Federal and institutional aid is your best bet.  While there are many outside scholarships, and depending upon the parameters for which a student is applying, outside scholarships often do not lead to a substantial amount of additional resources. They should be considered a bonus at the end, but not money that will make or break one’s ability to attend a given school.

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