College Fit. Financially.

Why is financial fit (in addition to academic and social fit), a critical consideration when identifying colleges to apply to and attend?

Reality check. The cost of college continues to increase and student debt has risen over the past several years to $30K on average. College debt could straddle students and their families with financial burdens spanning ten years or more beyond graduation.

Choosing schools to apply to requires careful research and evaluation, including financial vetting, to avoid a hard earned diploma being anchored to unreasonable debt.

First and Foremost!

Determine How Much You Saved for College

This can include funds in a savings account, a 529, or other accounts you determined to be allocated for college expenses. Total up this amount.

Determine "Reasonable Student Debt"

How much student debt is "reasonable"?

“If total student loan debt at graduation, including capitalized interest, is less than the borrower’s annual starting salary, the borrower will be able to repay his or her student loans in ten years or less. This corresponds to monthly loan payments that are between 10% and 15% of the borrower’s gross monthly income." Edvisors (full article)

How can a student estimate starting salary upon graduation?

Payscale offers information about salaries in various industries and careers.

The College Scorecard provides estimated starting salary information based on the school attended.

Using the "rule of thumb" mentioned in the Edvisor article and estimated salary information, families can determine the maximum amount of borrowed money that is "reasonable".

What You Can Afford Annually = (Saved Funds + Reasonable Debt)/4 yrs

After Determining "What You Can Afford Annually",

Let's look at Cost of Attendance (COA)

COA is the "sticker price" or published cost of attending a particular school for one year. This isn't necessarily what the actual cost will be for students (more on this in the next section, Net Price). COA represents the maximum price of attending.

The COA includes the following expenses:

Tuition

Room & Board

Fees

Books/Supplies

Travel

Personal Expenses

There are a couple of ways to find COA information for schools:

1) Each school website includes COA information. Go to a schools' website and type in "Cost of Attendance" in their search bar. You will be directed to either the Admissions or Financial Aid pages of their website to obtain their COA information.

2) Use College Data, type in the name of a college or university to obtain COA information.

3) Use College Navigator, type in the name of a college or university and select "Net Price" to obtain information about what your estimated COA may be based on your income level.

As part of your list of schools, jot down the COA for each of the schools you may be interested in applying to and attending.

Next, Use the Net Price Calculator

COA isn't necessarily what students pay to attend a college or university. The COA can be reduced by need-based and merit aid offered to students.

According to the U.S. Department of Education, "Net price calculators are available on a college’s or university’s website and allow prospective students to enter information about themselves to find out what students like them paid to attend the institution in the previous year, after taking grants and scholarship aid into account."

The Net Price Calculator is a useful tool to ESTIMATE what the actual price of attending a particular school may be. The key word is ESTIMATE. The actual price may differ when the acceptance package arrives from the various schools. Therefore, the benefit of using the Net Price Calculator is as a planning, evaluation tool to vet schools based on financial feasibility.

On the same list you started to build above, jot down the Net Price of each of the schools you may be interested in applying to and attending. The actual price you will pay most likely will be somewhere between the COA and the Net Price. You will never pay more than the published COA.

Financial Reach Schools = What You Can Afford < COA

Financially Fit Schools = What You Can Afford > Net Price