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Financial Steps to College

Article appeared in Worcester Magazine, January 2009

In the world of high tuition, low consumer confidence and no immediate resolution in sight to the worst economic situation our country has faced in years, it is no wonder that this year promises to be the most unpredictable college admission year in decades. After years of reading blaring headlines about single digit admission rates, today's families face daily media updates on the impact that the economic crisis is likely to have on college admissions.

The reality is that just as each family is affected by, and copes differently with, their current financial situation, colleges also implement a range of strategies to cope with their financial difficulties, while doing their best to continue to serve the academic and financial needs of their students.

It has always been the goal of the family and student to determine which colleges are most likely to meet the student's academic, social, extracurricular and financial needs. Although 'good fit' between student and college remains a priority, increased financial constraints complicate the process for many families. Families would do well to follow the 'calculate, assess, act' plan.

They should begin by calculating their Expected Family Contribution (EFC), the amount of money that colleges believe the family should pay. Calculators are available on the College Board website (www.collegeboard.com/parents). Parents have the option of calculating their need according to two methodologies, the Federal Methodology (FM) and the Institutional Methodology (IM). All colleges that receive federal money use the FM, while colleges that have their own discretionary funds also use the IM.

Parents should then assess the amount of money they believe they can pay for each of their child's four year college, and the amount of debt they can comfortably handle. For parents who are not used to thinking in terms of major debt and borrowing, the debt and loan calculator on College Board (www.collegeboard.com/parents) is a good place to begin. Parents should also use this site to determine how much debt they will allow their child to assume, given an anticipated salary range after graduation. They should become familiar with government loan programs, specifically the Stafford loan and the federal parent PLUS loan, and begin to gather information about private loans should they be necessary. The government website http://federalstudentaid.ed.gov gives valuable information on government loan programs. Many families begin their search for additional loans at www.mefa.org.

Once parents have calculated and assessed, it is time for them to act. Financial 'fit' is crucial. That means that the family should consider a college's resources and the way it plans to disburse its funds to applicants. College guidebooks that include information on the percentage of students who receive financial aid are a good place to begin gathering information, but families should confirm this information with the college. Specifically, the family needs to know what percentage of students with demonstrated need receive aid, what percentage of their need is met, and what percentage of their aid package is in the form of grant rather than loan. According to U.S. News and World Report, Massachusetts colleges that meet full demonstrated need of their students include Amherst College, Boston College, Harvard, MIT, Mt. Holyoke, Smith, Tufts, Wellesley and Williams.

In addition to need based aid, colleges offer merit aid to students who excel in an area that is important to the college. This may include academics, the arts, leadership or athletics. It may reward personal or demographic characteristics that bring diversity or interest to the college community. The more desirable the student, the more likely he is to receive a generous financial award. Many colleges announce specific criteria for these awards. At other schools, it is a more subjective process. Because this money is intended to woo the applicant, it is likely to be in the form of grant money. Attending a college that really wants you can be a good way to earn financial assistance.

In this difficult financial environment, it is necessary for students to be especially active in gathering the money they will need to cover their expenses. Many private organizations and foundations offer scholarship programs, and students should begin to explore these opportunities long before they begin their college search. One search engine, www.fastweb.com, should be a first stop in the process of identifying appropriate scholarship programs. Students should also stay in close touch with their school guidance counselor for information on local scholarship opportunities.

Once the student has received a financial aid package from each of his schools, the family should return to the College Board calculators to compare their packages. Parents may want to discuss money saving strategies with their child, such as considering anticipated debt load when selecting a college or graduating in less than four years. Most schools will review a student's award if the family considers it to be inadequate. In order to be considered for review, the family should prepare a well documented account of financial circumstances that either did not exist at the time the application was filed or that the family believes were not fully considered. The student's commitment to the school and how eager the school is to have this student are also factors in the review decision.

College is an investment as well as an experience. It requires preparation and planning and, in some cases, compromise. A student's ultimate success depends on what he takes away from his experiences, rather than the nature of the experience itself. There are many ways to have a successful college experience and many colleges where a student can grow, learn and prepare for the independence of adulthood. Financial circumstances may dictate a college decision, but they need not determine the course of a student's life.

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