College is undoubtedly an intimidating financial responsibility, which makes narrowing down college choices overwhelming and extremely difficult. In order to make an effective and worthwhile choice, it’s imperative to strategically shop and analyze the following factors.
- Net price vs. Sticker Price
After identifying your desired institution(s), it’s easy to get turned off when looking at each school’s extraneous tuition costs that can range anywhere from $15,000 to $60,000. Don’t worry, that’s just the sticker price. The sticker price refers to the total yearly cost published by a school, which includes tuition, room and board, and oftentimes campus fees and books. In contrast, the net price is what students will actually pay for college by accounting for federal aid and in some cases, merit or academic scholarships. For example, Harvard University has a sticker price that’s around $56,000 for the 2013-2014 school year, but that’s not what most students pay, according to Tuition Tracker, an online tool that shows the net price by income group. Depending on a student’s family income level, Harvard students actually pay anywhere from $5,000 to $35,000.
If you’re curious about the net price of your desired school, you can take a look at Tuition Tracker to assess your financial circumstance (link provided below). In addition to Tuition Tracker, the government has mandated all institutions publish an online net price calculator on their websites, so feel free to go to each school website. Once you’ve identified the net price of prospective schools, you can begin to make a more informed decision and choose your desired school.
- Return on Investment
What will you get out of college? That’s a serious question to consider when nailing down your options. Typically, when we think of return on investment (ROI), we think of how we will profit from a particular investment. When shopping for college, the same principle applies. You’d calculate the amount of years required to get a degree, the total cost of your degree for all years, the median pay in your desired industry, and the amount of debt you’ll accrue from loans, if any. Once you’ve identified these quantities, compare your salary projection to the amount you’ve spent including student loan debt. Determine when you’ll break even with college payments and salary, and then figure out whether it’s worthwhile to spend the price for that particular school.
- Federal Financial Aid
If costs are still overwhelming, remember to factor in federal financial aid. Typically, federal money is allocated to students in three ways – grants, loans and work-study. Grants are considered “free money,” – financial aid that you don’t have to pay back. This can be through the Federal Pell Grant, which awarded a maximum price of $5645 for the 2013-14 school year and is given only to those with a demonstrated financial need. There are four types of federal loans – direct subsidized loans, direct unsubsidized loans, Federal Perkins Loan programs, and direct PLUS loans. Each federal loan has its own requirements – and majority are need base. With federal loans, the interest rate is lower than with most private loans. Another form of federal aid is the work-study program that is offered on all colleges and universities. The work-study program allows students to work at a job on campus to get money that is either allocated for school or living expenses. Federal work-study is practically a part time job where you collect a check to help pay for college. All federal aid forms can be combined. So, don’t fret too much about costs, as there is available financial aid, but also remember to be practical when selecting a college.
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