How Many Gs for That Diploma?
When I was helping my parents fill out college loan applications -- I won't say exactly when -- I had little idea at the time how much $280 a month would mean to me just four years later.
You could say I was caught up in the whole "my parents-came-here-so-I-could-go-to-the-best-school thing." Because I sure wasn't thinking about what my parents could afford, let alone what I could afford to pay. (And neither were they, for that matter.)
Suffice it to say, I picked an expensive private school instead of going to a perfectly good state one. Even with the scholarship money and financial aid I received, and all the work study hours and part time jobs I had, I left school with healthy amount of debt. When I finally paid it off about three years ago -- 10 years after I graduated -- it was a bittersweet moment. I had loved my college experience. I value the education I got there. And, of course, I adore the friends I made there, but I had to face it: Financially, it wasn't worth it.
I had never aspired to a more lucrative career. Besides journalism, the only other career path I had ever seriously considered was academia. So $280 a month, which is what my student loan payment was for a time, was always going to be a hardship. While I was an undergrad, it never occurred to me that I would end up choosing not to go to graduate school because I didn't want to assume more debt. (Well, that and relearn trig.)
Now that I am getting ready to start saving for my own kid's education, of course the cost of college is even more staggering. Which is why I found my colleague Kathleen Day's story yesterday so sobering and useful.
In a nutshell, community college and state college never looked so good.
A quick litany of facts I'm sure all you student loan debtors are well aware of:
In the past 10 years, tuition, fees and the cost of room and board have increased 31 percent at private four-year colleges and 42 percent at public four-year institutions, according to the National Association of Student Financial Aid Administrators. For the 2006-2007 academic year, for example, living on campus at a private university such as Georgetown costs more than $180,000 over four years. Four years on campus at a state school can also be daunting -- $68,000 over four years to attend the University of Virginia for state residents, $130,000 for out-of-state students.
Financial planners have a few tips for parents of the college-bound:
- Save early and often. Put the money into a 529 account, a state-sponsored, tax-advantaged savings plan. An unlimited number of people -- parents, grandparents -- can each contribute up to $12,000 a year per child without triggering gift-tax rules. If one child doesn't end up using it, you can use it for the next one.
- Don't plunder your retirement to pay for your kids' education.
- Involve your kids and make sure they understand what you expect to pay, if anything, and the trade-off between public and private school costs.
- Get an estimate of what your expected family contribution will be -- and compare it with what you can afford -- using worksheets, also available at http://www.fafsa.ed.gov. Ask your children why they are drawn to certain schools and gauge whether those goals can be met less expensively.
As Everette B. Orr, head of Orr Financial Planning in McLean told Kathleen: "There's a feeling in the middle class that we want our kids to go to the very best school and that that means yearly expenses of about $40,000, no matter what.... I'm alarmed by the debt people take. They think everyone's doing it. They think it's normal -- parents and kids -- and it's not."
Wish I'd known that all those years ago.
Here are more online resources:
- www.fafsa.ed.gov -- Where families fill out the Free Application for Federal Student Aid. Features information on how to apply for federal aid and worksheets to calculate how much families will be expected to pay for college.
- www.nces.ed.gov -- Provides a concise profile of schools, allowing families to make comparisons, including by price.
- www.studentaid.ed.gov-- Has a good rundown on federal financial aid options.
- www.finaid.org-- Offers tips on when you can use tax breaks and has a good overview on financial aid.
- www.fastweb.com-- Features a search engine for finding a scholarship that matches your profile; it's free, but users must register.
- www.collegeboard.com-- Offers calculators to estimate college costs and whether you are saving enough.
- www.savingforcollege.com-- A clearinghouse for information on 529 college savings plan, including a state-by-state comparison. Includes links to the Web sites for the District, Maryland and Virginia. Most of the site is free.
- www.seo.dc.gov-- Includes information on federal subsidies for District residents attending state colleges around the country. Click on "financial aid."
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