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Friday, November 18, 2011

Net Price Calculators - Another way to mislead parents?
Net price calculators are tools which are supposed to help parents and students determine how much a given school is likely to cost, after financial aid is factored in.  This is a terrific idea!  Many parents grasp the notion that their actual price will differ from the published, official price of the college their child attends.  Everyone hopes the price will be very small; their family will receive large scholarships and grants.  Obviously, this cannot always be the case.  A few students will pay very, very little.  A number will pay full price. Most will pay something in between.

However, a look at the net price calculator the Department of Education has online reveals some of the challenge parents face when trying to sort all of this out for themselves.


Dept of Education’s site - http://collegecost.ed.gov/catc/
College Affordability and Transparency Center!

            The fine print at the bottom of the page says:

Note: Average net price is generated by subtracting the average amount of federal, state/local government, or institutional grant or scholarship aid from the total cost of attendance.

 Total cost of attendance is the sum of published tuition and required fees (lower of in-district or in-state, where applicable), books and supplies, and the weighted average for room and board and other expenses.

Average net price is for full-time beginning undergraduate students who received grant or scholarship aid from federal, state or local governments, or the institution. 

Let's take a moment to understand what this means.The first paragraph is pretty straightforward.  The average net price is the cost of attendance less grant or scholarship aid.  That is as it should be.  Now, the next sentence defines the way cost of attendance is defined.  Note the parenthetical information - the figure used is IN STATE.  Therefore all the costs are skewed down significantly.  If that weren't enough, take a good look at the third sentence of their fine print.  First, they used data for Freshman, who typically receive the most aid, period.  Second, they only used the data for those Freshman who received grants or scholarships!  They EXCLUDED all those who PAID FULL PRICE!

Consequently, parents cannot trust the net prices listed on the website at all!  They are less than what most families will pay.

Please realise that this is critically important.  All schools were required to have a net price calculator on their website by October 2011.  If the Department of Education's data is this misleading for parents, how reliable are the numbers on the schools' own sites? 

When I work with my clients, I calculate the net price for each of the schools under consideration myself.  My clients have a realistic estimate of their costs.  Then they can judge the affordability of the schools their child is considering.  For more information, please visit my website: www.celticcollegeconsultants.com.  Schedule your initial consultation today and start working with a seasoned professional who has your best interests in mind! 

Thursday, November 3, 2011

Student Debt Rising Fast

Two thirds of the 2010 college graduates had federal student loan debt.  The average debt was 5% more than the class of 2009, with an average over $25,000.   Those students will start to pay about $270 per month next month, after their six month grace period ends.  They will carry that debt burden for the next decade.

Is there a way to avoid debt?  How can you be part of the one third of graduates without any debt?  Proper college funding planning, starting as early as possible, can alleviate the need to take on loans.  Our clients have not needed to take loans.  Some have seen their net worth increase during their family's college years.  Creating a strategic plan and implementing it empowers multigenerational success.

One simple strategy used by past generations with great effect is often completely ignored by the current high school and college students.  They worked.  Some held two jobs while they were in school.  Some only one but two during the summers.  Students in some fields chose schools with internships and coop programs, building professional work in their chosen field right into their college experience.  Flipping burgers is not glamorous but it can be quite motivating when a student needs to finish a paper or requirement to graduate - since they don't want to flip burgers forever.  Additionally, college students have far more skills, and are able, even in this economy, to work in capacities with greater responsibility and higher pay.  Some high school and college students have successfully started their own businesses.  Structured properly, a small business can create a significant income with a small, regular investment of time.

To explore having a custom college funding plan created for your family, See the Proven Results page of my website.