Beware the Sticker Price Mistake

I think about money a lot, and it's generally in three categories: how to make it, save it and spend it wisely -- and that includes college.

My parents didn't go to college. There were many reasons, I am sure, but a primary one was that their parents didn't appreciate the value of education or know how they would pay for it. Here's an updated version of that belief: we can't afford a private college; a state school is your only choice.

As John Nettleton, a certified college planning specialist at The College Financial Network, says, "Parents make the sticker price mistake."

A Mom's College Cram Course panelist/admissions officer had restrictions placed on her choices. Her parents, who hadn't attended college either, assumed they wouldn’t receive financial aid and that meant they wouldn’t be able to afford our panelist's private college choice.

As our panelist stated, "There’s no question that state colleges and universities can be excellent choices for some students; my concern is that many people assume it’s their only choice. My advice: at least apply to private universities and see what financial aid you might receive."

As parents, we shouldn't shut down the dream process prematurely. Our teens should be able to consider a wide world of possibilities.

So even if money is an issue -- and it is to nearly all of us -- don't let perceptions about costs limit the application process. What's to lose by applying?

With some planning, there just might be a wonderful surprise.

The Menu of Life, College Edition

Bear with me. This is college-related.

I've never been good at spending on myself, or on discretionary activities in general. I think about the money too much. And that means when I go out to dinner (other than local, casual places), I spend a lot of time wondering what makes a small portion of cod, however tasty and prettily presented, worth $32.

I sound so provincial that I blush in embarrassment. But now I will go a step further and say something even crazier, something that belies my feminist tendencies. Sometimes I wish for the very old days, when the lady's menu had no prices on it. Then I would select my dinner based on what sounded good, and how hungry I was, or what I was curious about, rather than what it cost.

In fact, I wish colleges could be selected that way. Students would search for colleges offering the best fit, the most simpatico campus, the strongest professors in a given field, and apply to those schools, regardless of cost. The final decision about which college to attend might well be influenced by money, but it would not be the overriding factor.

And that is the way a number of the Mom's College Cram Course panelists are approaching college selection. Starting tomorrow, and then continuing now and again over the next few weeks, we'll look at specific strategies panelists have in mind; whether there is any conscious limiting of choices due to cost; and whether teens are worried about cost.

Funding College in Times of Divorce

Paying for college isn't easy -- as we all know. It is a painful process. Even if families have tried to fund 529s, there's likely never enough. Especially if there are children within a year or so of each other. As one panelist says, the reality is that while it is a good exercise to look for scholarships, they are difficult to obtain unless there is serious financial need or the student can qualify as a minority. As for merit scholarships, they are scarce.

Then add the complication of divorce. Think about this situation: a single mom, who describes her salary as average, knows that legally the dad's financials must be used for the aid forms. He has indicated he might not contribute; he thinks it's optional for him to do so. So she doesn't know how she will manage with one child a sophomore, the other a junior.

One of our admissions experts says, "You’ll definitely want to speak with the financial aid offices at the schools your children decide to apply to. Having two children in college at one time often makes a big difference in the amount of financial aid you’ll receive. Unfortunately, as long as their dad is still in the picture, there is an expectation at most colleges that he contribute, too."

Her advice to parents who are negotiating divorce settlements: "Make sure college is part of the conversation."

If You Can Stand It, More on Money

Aside from various calculators available for families to help determine their contribution to college, there will now be more help from colleges, since each college is different in how it grants aid, and in what form.

By Oct. 29, 2011, all colleges that participate in Title IV student aid programs (assuming that is most schools) must post a net price calculator on their Web sites, providing that school's data to show estimated net price information to current and prospective students as determined by the individual student's situation. Here's a summary of the law, under What's New on this U.S. Department of Education bulletin.

Good news for sophomore families -- a little more enlightenment!

Some other interesting news on college costs comes from the 2010 "Trends in College Pricing" and "Trends in Student Aid". Public universities raised tuition and fees nearly 8% in 2010 to cover shrinking state support and private colleges increased 4.5% But there was also a large increase in financial aid, supplied by federal government sources, which lowered the amount actually paid.

My concern: how long can the Feds keep up the largesse?

Parents' Lament -- Where Will the Money Come from?

By the time your teen is in high school (and given today's economic environment), there may not be a lot of opportunities to boost the college fund. But whether you're in good shape to pay for college or losing sleep over it, it is still important to have The Talk. That's when you sit down with your teen and discuss all elements of college admissions, including cost. The Talk may involve some probing on the parents' part as well as offering some guidelines.

Vince Pattillo, a certified financial planner and a certified college planning specialist, puts it in simple terms. Have the student focus on what she wants to be when she grows up. It doesn't have to be precise, but just a general sense is useful in this exercise. Then start identifying schools where the student will excel and get a good grounding for the next step -- the best graduate school possible. He recalled someone who went from associate degree to Rutgers to a Wharton MBA. This may not be the path we've dreamed of for our kids, but it's one that works if the student is driven and determined.

Whatever direction is taken, it must be paid for. Here's a good place to start grasping your family's contribution in paying for college.

Meanwhile, if your child is a sophomore and you are looking ahead to writing those big checks in less than three years, here is some sensible advice from Vince:
-- if you haven't done so, speak to an expert who can look at your financial situation and offer advice.
-- if you don't have a 529 plan, don't start one now; the fees will kill you. Instead, just be diligent about saving and keep it in a conservative fund.
-- manage your own expectations, and help your child manage his; be open-minded and look for the right fit, not necessarily a school with a famous name.
-- parents and child, be patient with each other. You've got some exciting (and maybe a little stressful) times ahead.