One of the biggest concerns for college students is how to pay for it. The Notebook asked Karen Campbell and Thomas Butler, two college placement experts, to explain how students can finance their post-secondary education without breaking the bank.
What do you suggest in terms of researching the money issue?
Thomas Butler: The starting point is applying for a Stafford loan with the federal Department of Education. You’re going to be eligible for that, and that’s what we call good debt. You don’t have to pay it back until six months after graduation. But – and this is big – if you leave school and stay out for six months, then you’re going to get a bill.
At the same time, it’s increasingly hard to find dollars for students beyond the Stafford loan because many of the families we work with are not able to sign off on a second and third loan. If your parents are in a position to do that, then you can borrow more money from your bank or other institution.
Students themselves have few options, either that Stafford loan or nothing. Any other loan will need a cosigner.
Karen Campbell: Borrowing money for your education is a sound investment. So, it’s not the borrowing itself that’s the problem. It’s borrowing outside of your means and outside of the potential of your earnings. If I want to major in philosophy, and I’m going to borrow $20,000 every year, I have to multiply that by four to understand how much debt I will graduate with. But then I need to consider how much I can realistically earn with a degree in philosophy.
Talk more about taking out non-Stafford loans.
Campbell: Families have to be very careful when it comes to this. So, they can borrow privately above and beyond what they’re getting from the government. But they need to be very careful, and it’s not something that we typically advise because the private loan industry can come up with their own terms for repayment and disbursement and for use. And a lot of times, quite frankly, they are terms that low-income students and families cannot meet and keep up with.
Butler: The technical answer is they can apply for loans in their own name beyond the Stafford loan. The reality of it is if they are a dependent student, more than likely, because they don’t have a credit history, they’re going to need someone to cosign it.
Campbell: So, the governmental loan is really all you can get that is truly yours.
Butler: Yes. Exactly right. Which really gets us to this whole notion of having second, third, fourth-choice schools because we’re going to be ratcheting down on schools you can afford –because realistically you won’t have the kind of money.
I should probably just live at home to save money, right?
Campbell: There are a lot of things that will drive where you live. But you shouldn’t just limit yourself by automatically saying I should live at home. That’s not always a cost-saver because sometimes you end up getting so caught up in things at home, it takes you longer to finish, and you lose financial footing
Butler: And financial aid offices take into account whether you’re living on campus, off campus or at home, so you may be able to borrow enough money to avoid living at home.
My mother and I are having a difficult time discussing money issues.
Campbell: This is a very common issue within families. I’ve had parents tell me, “Do not talk to my child about money.” She says, first, that’s adult business, and second, she doesn’t want the child to worry about money. So, this is a very real thing for poor families, where this might be the first time there have ever been any discussions around money. This is related to filling out the FAFSA (Free Application for Federal Student Aid) form. All of a sudden, students have access to information about how much their parents earn and their financial obligations. The student might not have known those things before because the parents have found a way to make ends meet and to shelter the child from some of the realities of being poor. But it all comes open like a Pandora’s box in this FAFSA process. The parent doesn’t want the child to be dissuaded from going. That’s a very real issue for a lot of our kids and families.
What is FAFSA, and is it important?
Campbell: Oh, it’s the gateway to everything, the difference between going and not going, because all grant money that you might be eligible for hinges on you submitting the FAFSA eligibility form in a timely fashion. You can find the form online.
Butler: Federal Pell Grants are for low-income students and they don’t have to be repaid. And there are state grants too. But if you miss the FAFSA deadline, regardless of that money sitting there waiting for you, you can’t get it. So, talk to your school’s college counselor about FAFSA the fall of your senior year so that you won’t miss the deadlines next spring.
Campbell: What I say to families is to think of grants as being one big pot of money, right? January 1 the pot opens. People are taking out coins the whole time. If you don’t tip your hand in until March, the coins are pretty low at that point. What is really important is determining the deadline for financial aid at your institution and doing your FAFSA before that.
I hear the college sends all the bills to the student, not the parent.
Campbell: That’s right. The college deals with the student, not the parent. If there’s an issue, the parent won’t learn about it until the child relays the information. That’s because of the confidentiality rules. Students have to give permission for their parents to talk with colleges on their behalf. And even then, they still aren’t calling you first as the parent. No matter how much you are personally giving out of pocket, they’re emailing the student, they’re doing everything with the student.
Butler: When I do presentations, I tell parents their children have to be involved in this loan-application process. Stop enabling your student. Involve them in filling out the FAFSA. Because if you don’t, when they get to school, they won’t know jack about what’s going on with their stuff. I ask students all the time, do you know how much it costs to go Temple on a year-to-year basis? And they don’t.
I want to enroll at an out-of-state college. Will that cost more than if I go to school in my area?
Campbell: State colleges charge extra if you’re not a resident. In this current economic climate, if you want to go to a school in another state, you really need to ensure there’s a good financial fit to give up the savings you would have if you stay in your home state. You will need to search out and acquire a scholarship to help pay the extra cost.
What about the tuition at a private college?
Butler: Even though the cost may be more, private colleges may have much more money endowed where they can give you more institutional aid versus a public institution.
Campbell: A school that really values you and understands you for your talents and gifts will give you the money you need to attend, no matter whether it’s public, private, any of that. They’ll put their money where their mouth is.
What kind of books can I check out to find out how to pay for college?
Butler: I recommend you get your hands on this document put out by the U.S. Department of Education called the “College Preparation Checklist.” It lays out everything you and your parents need to do from elementary all the way through high school, what you should be doing at certain periods of time in your process. You can find this document online.