Mark Stevens, CFP®
mark@wealthcarenetwork.org
 
 




Evaluating College Acceptances

For the majority of high school seniors, spring is crunch time. Most college acceptances arrive in March or April, and a deposit must be received by the college the student plans to attend by May 1. The period of time between acceptances and deposit can be intense as students and their parents weigh a number of factors. Here are two questions to ask as your family evaluates college acceptances.

How well does the college meet your child's needs?

Presumably, all the colleges your child applied to would do a good job of meeting your child's needs; otherwise he or she wouldn't have applied there in the first place. But now that your child has a definite list of options, it's time to look at things a little more closely.

Most colleges host an accepted students day geared exclusively to incoming students. Even if your child has already visited the college, visiting again might be helpful. Your child will meet other accepted students, hear in more detail about the offerings related to academics, extracurricular activities, and student life, and possibly notice things on campus that he or she might have missed the first time around. Some colleges even offer overnight stays in the dorms that can give your child an extra taste of life at that college. Your child might also have the opportunity to explore the surrounding area and see what it would be like to travel back and forth from home. Does the college still have the same appeal that it did when your child applied? If not, why?

If your child can't visit, there are other ways to do additional research. Your child might e-mail a particular department, professor, or student ambassador with specific questions. Your child could also browse online forums for student reviews of specific colleges. While no college is immune from the occasional "sour grapes" reviewer, there might be a ring of truth to a particular issue if more than one student brings it up across multiple forums. At the very least, a cluster of negative reviews might prod your child to investigate further.

Finally, don't overlook academic flexibility. Many college students end up changing their majors down the road. If your child decided to change majors, would he or she be able to find another one relatively easily? Or is the school very focused in one area--for example, business, creative, or technology--where that would be difficult?

What is the cost to you and your child?

Parents of college-bound kids have likely seen the steady stream of news stories about skyrocketing student loan debt and the debilitating effects of taking on too much debt. For many parents, a thorough review of the affordability of each college is mandatory.

A college acceptance packet should include a detailed breakdown of any financial aid the college is offering, whether it's loans, grants, scholarships (need-based or merit-based), or a work-study job. Make sure to read the fine print carefully and understand exactly what the college is offering. For example, a college might say, "Congratulations! You've been awarded $25,000..." which you might think is a scholarship but which actually includes $5,500 in loans. As you review the award, keep in mind that if a college says it is meeting "100% of your demonstrated need," the college is the one who defines your need, not you.

The goal is to compare your out-of-pocket cost at each college. To do this, look at the total cost of attendance for each school (this figure includes tuition and fees, room and board, plus a discretionary sum for books, personal expenses, and transportation). Next, list any grants or scholarships the college is offering--this is "free" money. If the grant or scholarship is merit-based, find out whether it's guaranteed for all four years and the requirements that must be met to qualify each year (for example, a 3.5 minimum GPA, participation in certain activities). If the grant or scholarship is need-based, find out whether you can expect a similar amount each year as long as your income and assets stay roughly the same (and you have the same number of children in college), and ask whether it increases each year to match any annual increases in tuition or room and board.

The difference between a college's total cost of attendance and any grant or scholarship aid is your out-of-pocket cost or "net price." Compare your net price across all colleges. Next, with your net price in hand, determine how much, if anything, you or your child will need to borrow. Multiply this figure by four to get an idea of what your total borrowing costs might be over four years. Then use a loan repayment calculator to show your child what the monthly loan repayment would be over a standard 10-year term at a fixed interest rate. Armed with this information, you'll be in a better position to make a sound financial decision for your family.

Comparing costs

To compare colleges based on costs in an apples-to-apples way, determine your out-of-pocket cost, or net price, at each college. Your out-of-pocket cost is the total cost minus any grant or scholarship aid the college is offering. Once you know your out-of-pocket cost at each college, determine how much, if anything, you or your child will need to borrow. Then calculate what the monthly loan repayment amount would be for borrowing amounts at different colleges.




This communication is strictly intended for individuals residing in the state(s) of GA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.