Remember:
- **Approximately seventy percent of college students take out loans to help finance their education. **
- Despite the media reports around insurmountable college loan debt, the average college student loan debt in the United States is estimated around $30,000.00. Most of the national loan debt is accumulated by students who have attended for-profit colleges, grad students (think med/dental/law and other professional degrees).
- The average starting salary for four-year college graduates is approximately $50,000.00.
- The average monthly loan payment for recent college graduates is $400.00.
Three things to consider:
- Estimated costs (components & total)
- Financial aid (need vs. merit)
- Resources
**Questions to ask: **
- Does the college offer generous scholarships or grants?
- Does the college have the ability or history of meeting students financial need? (use your college planning list for statistics)
- Do they offer 4-year merit scholarships and/or aid packages? It is rare, but some schools do not adjust aid with increased costs each year, or only offer one-time(year) scholarships.
- What is the average student debt upon graduation?
**Things to watch for: **
- Four-Year Cost
- Four-Year Graduation Rate - most schools report average graduation rates, which could be 6-years - they do not specify the time it takes to complete a degree at their institution.
- Average Financial Aid Package
- Net Price (the actual amount you will pay after scholarships, grants, etc.)
The financial planning for college has to begin well before the search process. Talking about money can be uncomfortable. Having honest conversations with your family early in the process will save a lot of grief in the end. We have heard many families over the years say "we will figure it out" - while that can work, we recommend keeping the following in mind:
Some schools have more generous merit scholarships or need-based aid (grants - money you do not have to pay back).
Every school offers some type of loan option (how much debt are you and your family willing to take on?) in their financial aid package.
The notion of a full-ride scholarship is not realistic for most students. Even athletes should be cautious about expecting "full-tuition" scholarships.
Use the merit and need-based aid scores on your custom college planning document. These will guide your search for a school that is a financial fit.
Terms you should become familiar with:
- Cost of attendance
- Net Price Calculator
- Merit Scholarships, Grants, Loans
Things your parents/guardians should expect to gather for any financial aid forms:
- Previous year's tax return data
- Adjusted gross income (found on tax return)
- Family context (ex. any other children in college, custodial and non-custodial parental information)
- Extenuating circumstances (health, natural disasters, deaths, etc.)
Remember:
- **Approximately 70% of college students take out loans to help finance their education. Most parents want their kids to have some type of responsibility in this - it is very common for families to have their student take on some student loans, regardless of their financial situation. **
- Despite the media reports around insurmountable college loan debt, the average college student loan debt in the United States is estimated around $30,000.00. **Most of the horror stories you hear or read about are from for-profit schools, grad school/med school/law school/dental school/etc. debt. Look at the breakdown of the trillion-dollar report. **
- The average starting salary for four-year college graduates is approximately $50,000.00.
- The average monthly loan payment for recent college graduates is $400.00.
**Additional Questions to ask or things to research: **
- What is the typical tuition increase each year?
- Is the college need blind or need aware? If a school is "need aware," the financial situation of a student can impact the admission decision - with one caveat - it can hurt or help. For example, schools may be over budget and if a student has a large amount of demonstrated need, they might choose to admit a student without demonstrated need. **However - schools do have a certain amount of funding available each year. We have seen students hesitate to apply to schools where they could have ended up receiving substantial merit aid. They avoided it because they could not see past the "sticker" price. **
- Is the college a 'no loan' institution?
scholarships.com is a trusted resource - please visit their site to search for scholarship opportunities.
If you are considering HBCUs, please visit HBCUMoneyGuide.com for scholarship opportunities. @hbcumoneyguide on IG. Paula Dofat is eager to share how to turn HBCU dreams into debt-free realities.
Key Financial Aid Terms & Types of Loan Options:
Public Loans:
- Public loans, also known as federal loans, are those borrowed from the United States federal government. These loans have terms and conditions (fixed interest rates, repayment plans, etc.) that are set by federal law
- Public loans offer the safety of the above benefits in comparison to private loans, which are not regulated or protected in the same way.
Private Loans:
- Private loans are made by a private organization like a bank or credit union. Terms and conditions are set by the private lender, offering no federal protection or regulation.
- Private loans typically have higher interest rates (more expensive in the long term) and do not offer loan forgiveness programs.
Public Service Loan Forgiveness:
- A program that forgiveness the remaining balance on your Direct Loans if you are employed by a eligible entity.
Qualifications:
- You must be a full-time employee of a U.S. federal, state, local, or tribal government or qualifying non-profit organization (this includes U.S. military service)
- You must have Direct Loans (or consolidate other federal loans into a direct loan)
- You must repay your loans through an income-driven repayment or a 10-year Standard repayment plans
- You must have made a total of 120 qualifying monthly payments (qualifying payments do not need to be consecutive, but should total 120 payments
FAFSA:
Merit Aid:
- Form of financial aid that is awarded on academic, athletic, talent-based, or special interest merit and accomplishment; it does not consider a student’s financial need
Gift Aid:
- An umbrella term used to describe any form of financial aid that does not need to repaid
- Common examples of gift aid include grants and scholarships
Interest Rate:
- The amount a lender (in the case of student loans the lender will be the federal government and/or a private entity) charges a borrower for the loans borrowed
- Interest is charged on top of the principal amount borrowed
- Example:
Financial Need:
- Cost of Attendance (COA) - Expected Family Contribution (EFC)= Financial Need
Expected Family Contribution (EFC)* - Please note the FAFSA is changing for 2023-2024 and this term will be updated to the Student Aid Index (SAI) - The formula will be changing slightly and we will keep you updated as new information is released:
- A calculation that measures how much financial aid a student is eligible to receive, which will impact how much a school will expect your family to contribute to your study
- It is calculated using information shared on the FAFSA form
https://studentaid.gov/understand-aid/types/loans
https://fsapartners.ed.gov/sites/default/files/2021-08/2223EFCFormulaGuide.pdf
Cost of Attendance (COA): the total estimated expenses a student will incur for one year of study. COA accounts tuition, room and board, and projected costs for textbooks and course materials, loan fees, and miscellaneous expenses (transportation, etc.) you may incur.
Example:
Academic Year of 2023 - 2024:
Tuition: $500
Room and Board: $400
Books: $150
Supplies: $100
Loan Fees: $200
Miscellaneous: $300
COA: $1,650
Work Study:
- Work Study is a federal program that issues part-time employment to undergraduate and graduate students with financial aid to help pay for the costs associated with college
- Work study is only available to students with financial aid who are enrolled in school either full-time or part-time
- The program is facilitated by colleges themselves; check with the college’s financial aid office to confirm if the college participates in the work-study program
- Hours worked under this program cannot exceed your individual work study award
- Common work-study jobs on campus: dining, help desk, and library attendant
https://public.tableau.com/views/BuyersSellers-InstitutionalProfile/SingleInstitution?:language=en-US&:display_count=n&:origin=viz_share_link
