A new report shows that six in 10 American families rule out some colleges based on their sticker price, despite the fact that their net price, or the actual cost after grants, scholarships, and other tuition discounts are factored in, is often much lower, according to the American Enterprise Institute.
With filings for the Free Application for Federal Student Aid (FAFSA) set to begin on January 1, students and parents need to dramatically shift their focus from figuring out how to finance college after a school has been selected to considering affordability first.
The AEI report closely matches the message that I have delivered to more than 200,000 parents, guidance counselors, and students in the Chicagoland area:
Beginning your college search based on preferences, such as size, location, majors, and academic profile, too often leads to exploring schools in a financial vacuum, without really considering whether schools are affordable.
In the Financial Fit College Search program, families start by having that very important financial conversation, to determine what exactly is affordable. Parents need to know how to assess affordability and be willing to communicate that figure to their children. Parents and students need to get on the same page—pursuing colleges whose net prices match that personal affordability threshold.
The AEI report suggests three corrective measures to address this issue:
I have attempted to accomplish all of this and more with two websites, managingcollegecost.com and myfinancialfit.com. Managingcollegecost.com is a free educational website that features 30 videos, as well as timely articles and important links, all designed to help improve college financial literacy. Myfinancialfit.com is a subscription-based software program that helps families find affordable college options.
If we truly want our young people to experience a life after college that is not marred by excessive student debt payments, then we must make this principle of affordability paramount. It should be at the center of the conversations that we, as parents, have with our children about college, and at the center of the college counseling presentations and services that we, as counselors, offer to students.