Our son graduates this spring. He's a National Merit Finalist, so he's had plenty of scholarship offers ranging from a completely free education to an award of merely $1,000 for his accomplishments.

It's been, well, interesting, to learn the strategies of colleges, the College Board, and others in the business of "helping" parents find out how to pay for college! The approach is similar to that of a car salesman, or a realtor, "helping" you find a way to pay for a car or house you just might not be able to afford.

In every other area of responsible adult financial life, planners encourage people to look at their household budget and cash flow situation to determine if they can afford that house, car, big-screen tv, vacation, or whatever. When it comes to college costs, however, you'll notice a different strategy. Rather than determine what you can *afford*, you are encouraged to see what your "expected family contribution" will be. When you see the resulting number, it may look so ridiculously high you don't believe it's possible your family will be expected to pay that much per year for college. I assure you, that number is about right, and yes, they do expect you to pay that much each year. (But not to worry --- you will be flooded with information about loans, even if you have indicated no interest in going into debt! In other words, forget the price tag, just buy what you want - on credit.)

*Nowhere* in the college planning assistance areas will you find advice to sit down with your budget, look at your total annual household costs and savings and determine how much per year you can pay for your child's education. But if you do this *first*, you'll have a much clearer idea of what your options are -- especially if you want your child to attend college without mortgaging his future, or the family's.

I sat my husband and son down and showed them our actual expenses for the last year. I showed them what we had coming in, and where it all went. (And my husband works 3 jobs so I can home school.) Looking at what we could actually afford *finally* took the stars out of my husband's and son's eyes. I had kept telling them there was no way to afford most of the schools being considered, but they somehow kept believing there was an extra pile of money somewhere, or that money would fall out of the sky, or something!

I wish we had sat down and done this earlier. I would have been able to steer my son to a more realistic choice of schools. (Kind of like figuring out what kind of car you can afford, and then looking at cars in that price range.) There is not much merit money out there for really smart non-minority students. Just look at the college web sites and check out "merit-based aid" in the financial aid area. You might have to look hard, but you ought to be able to find the dollar amounts. Did you know the Ivy league does not award any merit scholarships? Only need-based; if your family household income is less than 20,000, you are in good shape. But if that is not your situation, use the College Board calculator to see what your expected family contribution will be. Be aware that the expectation *is* that you will pay that EFC each year. But if you can't afford it, you are encouraged to go into debt to cover the expense. Work-study is sometimes offered in a limited number of cases...to the tune of about $2500 per year. If your EFC is $18,000 or more, that work-study ain't going very far!

Because he is a National Merit Finalist, my son chose a college which offered him more financial incentive than the token $1000 award. We are in good shape, and he can go to college practically for free. But without the merit award, a smart kid like him, from a middle class home like ours, would have few options for 4-year college besides going into debt.

We have a couple other sons who are bright. Now that I know what we can afford, we are being more realistic about where to encourage them to apply. I'm convinced they can be happy anywhere, and would be accepted, like my eldest son, at some great and competitive schools. But there is no value in dreaming about, or getting emotionally committted to a school we can't afford.

There's the song and dance about how borrowing to go to a "good" college will pay off as an investment, but again, that's like buying stock on margin (borrowing money to invest in "good" companies in the stock market). Dh and I attended excellent colleges, and the undergraduate insitution did not determine our futures. However, having to pay off the educational loans very definitely affected our family, savings, and ability to cover emergencies for many years after. I hated it.

The whole thing kinda makes you feel like there's a bit of a conspiracy the way all these folks avoid suggesting that you look at your own family finances *before* you start the college application process!

Sorry this is so long! I wish someone had spelled this out for me a long time ago. Maybe I would not have believed it back then, but maybe I would have sat down, run the family budget numbers, and used the College Board calculator to get a clue.

Because we live in Florida, we have Bright Futures which will provide 100% tuition plus 600 for books etc. each year if Alex goes to a Florida university.
He has applied here, there and everywhere, hoping that his test scores and grades and extra curriculars will net him some merit aid. If that doesn't happen (and we'll be finding out soon) he'll be staying in-state.

I filled out the FAFSA and CSS. What a waste of time! Our EFC is a joke. We can't afford 1/3 of what our EFC number is, and I don't want Alex coming out of college loaded down with debt.

I'll let you know what we end up finding out.

Melissa

Melissa,
You're in the same boat we are. The first of our kids is off to college this fall. If we begin to take on debt with kid #1 for just the first year, what kind of debt load will the family as a whole have when the last child finishes up? And what if his career path requires graduate school next? Further, with more kids in college, there's not much help (even though you may be led to believe that having additional kids in college at the same time will change things). First of all, we won't have them *all* in an undergraduate college at the same time, but they will be there serially for 8 years. That's a long period of draining the family resources for that yearly EFC.

You may hear that there are "allowances" for having more than one child in college at the same time. This is a bit more deceptive than you might at first realize. I ran theoretical numbers on the College Board calculator with the scenario of 2 kids in college at the same time. What happens is that your total EFC stays the same. If it was $18,000 for one student, it becomes a total of $18,000 for the two students. I suppose the idea is for you to think that you are getting a break because it means you can think of this as paying $9,000 per child, instead of realizing you are still paying out $18,000 total. But your bottom line will remain the same.

Anyway, for me, the lesson is, ignore those all-too-common vague generalities about college costs and financial aid. Understand why there is the the glib ease with which all these institutions talk about, say, 80% of their students receiving "financial aid". Remember, for most middle class families, "financial aid" = loans. If you are a family which has practiced careful budgeting and conservative spending, you have the kind of credit rating which means you can qualify for loans any time. You have earned that credit rating---so a loan isn't some kind of lavish benefit some college has put together just for you.

An indebtedness package is not a gift or a prize - no matter how cleverly the phrasing is styled ("Here is your Financial Aid Award!!" in your "Financial Aid Offer!!" which you can "accept" or "decline".)

For anyone not yet starting the college application process, I suggest you do the numbers. Do the numbers for this year, and also for future scenarios which your particular family will face. It's an eye-opener, but a useful one if you want to look realistically at paying for college.

The need-based formulas assume a certain figure as a reasonable amount required to feed, clothe, and shelter a family for a year. I called one of the colleges ds applied to and asked what number they used for this calculation. She told me the federal formula used about $25,000 (she gave me the exact number but I only remember the ballpark figure) for a family of 5; they had an alternate (I think it is called the "institutional") figure which was around $27,000.

This is useful information. If you live in an expensive section of the country, you can see how this may work against you in terms of what the government thinks you have available for college costs, and what your "need-based" aid should be. I added up just our electric, water, and taxes for last year and that figure alone came to $11,000. I hadn't even gotten to the food, clothing and housing costs!

Curious, I went back and ran numbers on the College Board calculator and used different states as my state of residence. The numbers varied slightly, but not by much. I think the calculator considered state taxes in arriving at the EFC -- not cost of living -- but again, state of residency didn't make a significant difference in the big picture.

Alex has been officially accepted to UF, UNC and GW. Tuition +600 a year is covered at UF. No offer of aid yet for UNC, but the letter made it look like that could come in a week or so. 18000 from GW (half the tuition cost). Still waiting to hear from University of Chicago, FSU, and the official word from NYU.

What do you think of calling a school and asking for more merit aid? Do they do that? I'm wondering if they might come up with any extra funds. I'm sure that the financial aid packages will be a laugh, if they come at all.

Isn't this FUN???

Glad there's someone to commiserate with. Everyone around here would be so happy to get into UF that they don't understand the lure of better schools. Not that we'll be lured if we can't afford it, but we have at least LOOKED beyond the Florida state university system.

Melissa

Those are tough schools to get into! We lived in Chapel Hill for years and I love UNC, but ds had no interest. Ds is still waiting to hear from Duke, both for $ and acceptance. Was accepted everywhere else he applied, and has some merit and a little need-based grant money, but with costs being what they are, $$ will be a huge determinant of decisions.

He has received $13,000 to $22,000 in merit/needs based money but with a $33,000 - $45,000 price tag for the schools involved, we're still looking at paying $20,000 to $23,000 per year. He can go to UF almost for free. Even if we had to pay full price for UF, it's only a $12,000 per year education. We can do that math.

We still are waiting to hear from UNC regarding aid, but NYU's "package" was a joke- 12,000, most of which was work and loans. Given that their initial offer was so paltry, I don't think we'll even ask for more. Even if they double the first offer, he still can't go there.

GW was more generous, and we may see if they can do more. But I think that UNC is a better school. Both have NROTC, so that's an option to explore if DS really wants to go to either one.

UF and FSU will be tuition-free.

Lots to think about in the next few weeks.

Melissa