Understanding the total cost of college – Newton Daily News
By Christine Hensley
Member of the Board of Directors of the Iowa Student Loan Liquidity Corporation
At the start of a new school year, you and your middle or high school student may be thinking about what will happen after high school. Before embarking on one of the most expensive journeys of their life, your student should understand the total cost of getting the education needed for a specific career.
why is it important
• The overall image is important.
Although your student will receive financial aid notifications before enrolling in college or a certificate program, these only indicate costs and aid for the first year. Making a final decision based on only a quarter or less of the necessary information is like agreeing to pay for a car knowing only the cost of tires and insurance.
• It’s time to plan for the unexpected.
Your student and family should understand the estimated financial situation for each year of a specific program. Each year, families of students after one, two or three years of university career realize that they do not have the necessary funds to complete their studies, forcing students to take one or more years off to make money, switch to less expensive programs or undertake crippling studies. debt.
What your student can do now
• Make a realistic estimate of the duration of the program.
Will your student be able to complete a chosen program in four years, or is five years more likely? If your student’s chosen path is a two-year degree or certificate program or, conversely, involves advanced degrees like a master’s or doctoral degree, then your student must make adjustments to adequately plan funding for the appropriate duration. . Your student may take longer or shorter than average depending on credits already earned, difficulty enrolling in high-demand courses, and other considerations. Encourage your student to do a web search for the common data set for each institution under study for average times to graduation.
• Consider real-life income, savings and expenses.
If your student has been earning money for a while or making purchases, they should have a good idea of how much of each paycheck goes to savings versus living expenses. Using this information, you and your student should be able to make a realistic estimate of what you can earn and save while focusing on education. Use this information to decide how to close the gap between the cost of participation and the resources available for each year of the program.
What your student can do later
• Use a net price calculator.
The net price is the amount a student pays to attend an institution of higher learning during an academic year after scholarships and grants have been subtracted from the total cost of attending the school. Often referred to as “the bottom line,” students and their families need to determine how that amount will be paid, whether from savings, college savings accounts, work income, loans, or some combination. of all that.
• Make a financially wise decision.
Using the results of the exercises above, your student should be able to determine which programs make financial sense without unmanageable debt. A guideline is that the total debt for all years of a program should not exceed a realistic estimate of the first year’s salary.
• Continue to monitor progress.
As your student progresses through a higher education program, periodically check their current income and expenses as well as the time remaining to complete the program. These checks should help your student avoid some of the more serious consequences, such as being forced to drop out for financial reasons. As one-year or short-term scholarships expire, your student should look for ways to replace them with other funds other than loans.
what you can do
• Keep your feet on the ground.
Much of this type of financial planning relies on realistic estimates of actual expenses, income and buying habits, and starting salary after graduation. Help your student work with real numbers based on available data.
• Provide emotional support.
If your student’s dream seems financially unrealistic, be prepared to encourage them to consider other ways to achieve the goal. Even if the program your student ends up choosing isn’t the first choice, a positive attitude and willingness to seek out opportunities will often lead to success.
Did you find this useful? Sign up to receive more information
You can receive information tailored to your student’s grade level directly to your inbox twice a month by simply signing up for the Student Planning Pointers for Parents service at www.sp3.org.
This free service offered by ISL Education Lending is for parents of eighth through 12th graders to help them work with their students to prepare for what’s next after high school.
Registered parents also have the opportunity each month to enter quarterly sweepstakes for deposits into a college savings account.