Money and More© August 10, 2019 Pay Less have Smaller Student Loans

Evaluate College Costs: it is the net cost not advertised price that counts toward lowering Student Loan debt

 

Finding the college discounts will ultimately reduce student loans.  Colleges post their prices online.  This is just like hotels have rates on room doors and car dealers have sticker prices on car windows.

Don’t Pay Sticker Price

Most folks realize that they can pay less, often much less, than the price on the side of the car or on the price on back of the hotel room door.  Many parents don’t realize they can often pay much less than the advertised price at many colleges through a variety of means.  The hard thing to do is to determine the net or final out of pocket prices for individual schools.  Comparing cost between various schools is easy once the net prices of the schools are known.  Knowing which schools cost substantial less can save thousands on student loans.  Paying less doesn’t mean lower quality of education.

Today colleges are running a business and know exactly how much money they need to take in on average for each incoming student.  Very competitive schools, like those in the Ivy League, will often only discount based upon the ability to pay.  This is need-based aid.  Other schools that are slight less competitive desire topflight students and will provide aid on merit or academic achievement as well as need.  A student’s high school academic record and SAT/ACT test scores determine their qualification for merit aid.  A great student may be able to go to one of these very competitive schools for half the price of an Ivy type school.  The education is likely to be comparable with a much lower net price to student (and parents).

Understanding the Financial Aid Award Letter

Colleges send letters indicating the financial aid awards after student acceptance.   These can also be comparing apples and oranges when comparing schools.  For example, one trick of some schools is to show loans, especially parental loans, as part of the financial aid package to reduce cost.  This does not reduce the net cost of the school. Rather, it just delays the payment over time and is misleading.

Appealing the Financial Aid Award

If one school has provided a great financial aid package and is not the student’s first choice, it is possible to appeal the aid package at the desired school.  The desired school will sometime meet the package of the other school. While a bit more formal, this is just like shopping identical cars between car dealers of the same brand.  Your desired car dealer might not match a lower price but will likely set a new lower competitive price.

Enjoy the results of paying less–smaller student loans

Reducing the net cost to the parents and student has powerful ramifications that help both the parents and students in the long term.  First, the student will be saddle with a lower student loan balance and resulting lower monthly payments after graduation.  This will make it much easier for the new graduate to get a jump on their adult financial life.  Second, with lower tuition payments parents have smaller outflows of cash from their accounts and have more money for retirement.

Shopping schools by net cost can be a very rewarding process.  A few hours of work often net a family ten to twenty thousand dollars of savings on college education.

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