Extension Educator, Consumer Economics
College attendance costs more than when I was an undergraduate – actually a lot more. The U.S. Department of Education National Center for Education Statistics has done a nice job of comparing the costs, all in 2008-09 dollars. The average total charge (undergraduate tuition, room, and board) for college attendance at a 4-year public university in 1980 was $6,320; in 2010 it was 14,870. While we may have all read the numbers, this is the time of year when parents of 17 and 18 year olds fully begin to grasp what this means to the family budget.
While many families do manage to save for college costs, the reality of the cash flow crunch hits when youths begin to apply for colleges. How do you guide your teenager to college when it's hard to calculate just how much money will be needed from the family budget?
First, remember there are many paths to a college education. I encourage parents to speak openly with their teenagers about what they can reasonably afford, and to compare costs of different college options.
The U.S. Dept of Education has a new website to help families compare costs. The College Affordability and Transparency Center (http://collegecost.ed.gov/) has data about college tuition and fees, including lists of colleges with the highest and lowest costs. Start at this website to get a feel for the range of college costs. The website is part of the Higher Education Opportunity Act to increase the transparency around college costs.
Another part of this new initiative requires each college to provide a net price calculator. Typically you can find these calculators on the college's website under the financial aid section. The calculators go beyond the "tuition and fees" price to include other costs and to help estimate grants and scholarships – and how this affects the net cost for students. Take time to play with these calculators during the college application process.
Part of the conversation parents can have with their students is, "who will pay for the different costs while in college?" For many families, college is paid for from a variety of sources: family budget, student labor, and financial aid. Remember, financial aid may take the form of loans, scholarships, and work study. Some financial aid students need to pay back, some may be loans to parents, and some may be scholarships which don't need to be paid back. One good source to learn about the basics of college financial aid is the website FinAid.org. For additional information, visit the financial aid section of colleges' websites.
To apply for federal financial aid, families need to complete the FAFSA (Free Application for Federal Student Aid) form available online at www.fafsa.ed.gov/. The deadline for the completed FAFSA varies at different schools, but if you have a student going to college next year, now is the time to get this done! This year's FAFSA will ask you for information from your 2011 income tax return. Don't worry if you haven't completed this yet – you can estimate the amounts and then revise the FAFSA when your taxes are completed.
When you're comparing college options, keep in mind that student loans and interest will need to be repaid. Take time to read the fine print of loans: understand how interest accrues and when repayment will be required. Even though a college education can be costly, data from the Bureau of Labor Statistics shows education pays in higher earnings and lower unemployment rates. In 2010, the median weekly earnings of a person with a Bachelor's degree was $1,038 compared to $626 for a person with a high school diploma.
If you're just beginning the process of looking at college options, you may want to try the FAFSA4caster (www.fafsa.ed.gov) – a calculator that allows you to estimate your federal financial aid potential.
While it is difficult to say exactly how much college will cost, these resources can help you estimate costs. Now is a good time to start calculating ... before the first tuition bills are due!