For many families with college-bound high school students, defining what a “dream school” means taking a close look at campus life, curriculum, academic culture, career-building opportunities, location and the school’s reputation. But one essential factor often goes unmentioned in family conversations, and it’s a big one: cost.
I have personally survived the stress fest known as the college admissions process for two of my kids. So trust me when I say that your child’s dream school is only the best choice if there’s a solid plan in place to cover the costs, like a 529 plan you’ve contributed to since they were born, or other large savings account. You’ll need to talk through and weigh many factors before making the final decision—and your child should be a part of all those conversations.
Set the Stage
The competition for college admissions is known to be fierce—and is getting more so all the time. To prepare our kids, my wife and I started having college conversations with them at the beginning of high school. We wanted them to be aware that their grades and test scores throughout high school would be vital to their college careers. They weren’t serious student athletes, so there would be no athletic scholarships—and we weren’t participating in any pricey, illegal schemes like the recent college admissions scandal uncovered, either.
Even for prepared students with helpful high school guidance counselors, there’s an overwhelming amount of choice when it comes to colleges and universities. The United States has nearly 3,000 four-year schools and more than 1,000 two-year schools, which offer degrees or can be used as stepping stones. The options may seem daunting—and even more so as kids feel friction between the desire to aim high, targeting elite, expensive institutions, and the desire to be pragmatic and focus on affordable schools.
College guides are a helpful resource in whittling down the field by listing important details such as costs and financial aid information. As you’re comparing schools, pay close attention to the average amount of financial aid that each provides. Check out the public colleges in 17 states that offer tuition-free programs to students who meet residential, income and—-usually—-grade requirements.
About 100 schools across the country—usually highly competitive institutions with huge endowments—are “need blind,” meaning they don’t look at any prospective students’ finances, and provide aid and loans to cover the costs of attendance for any accepted students.
Frame the College Experience
After you’ve done initial research and gathered data on potential schools, sit down to have a practical conversation with your future college student. I recommend beginning with a question: How do you view college? Is it a gateway to a career, a four-year party (that’s an expensive party) or a place for personal discovery and development? It can be a bit of all those things, obviously. But according to a survey by college loan giant Sallie Mae, the vast majority of students and parents—90 percent—see college as an investment.
Data suggests it’s a wise investment. On average, an individual with a four-year bachelor’s degree will earn nearly $1 million dollars more over the course of her lifetime, when compared with a person who has only a high school diploma, according to a Khan Academy analysis.
Thinking about school as an investment provides a useful metric to size up schools. The average tuition at an in-state public college was $9,716 for the 2018–2019 year, versus the average sticker price for private colleges at $35,676, according to U.S. News. (Those costs do not include room, board or travel.) And Sallie Mae reports that the average family spent over $26,000 on colleges in the 2017–18 academic year.
Reality Checks
So now that your child has an idea of the value of a college degree—and the cost—it’s time to be frank with him or her. Ideally, you will have come into the conversation having honestly assessed your finances and knowing what you can afford to pay on an annual basis. Let your kid know precisely how much money you have budgeted for their schooling.
This was a critical moment in setting the “dream school” expectations with our children. My wife and I recited the same essential information to each of our kids: We would contribute a set amount, and if they wanted to go to a school that cost more than that amount, they would need to get financial aid and scholarships. We advised them that they could seek out loans, but that taking on a lot of debt for school wouldn’t be ideal—and it could take decades to pay off. After that conversation, we came up with a list of affordable “dream schools.”
Not every parent is comfortable discussing money with their kids. But in my experience, the sooner you get used to it, the better. Discussing the real numbers will provide critical guidelines as your child’s search for the right school continues.
Understanding Financial Aid
Family income and savings are only one part of the tuition mix. In the 2017–18 academic year, 28% of college costs were paid from gifts, aid and scholarships, while 24% was paid with loans, according to Sallie Mae.
Applying for financial aid or federal loans starts with filling out the U.S. Department of Education’s Free Application for Federal Student Aid (FAFSA). The application asks for parents’ tax returns and information about personal savings and home ownership. Many private colleges also require applicants to fill out a CSS profile (College Scholarship Service), which asks for even more fiscal details.
The FAFSA application is used to determine something called the Expected Family Contribution (EFC). School administrators use this number to issue aid packages. These include need-based Pell grants of up to $6,095, work-study programs that provide hourly jobs and low-interest loans.
Other federal aid programs exist to help offset college costs and may be worth investigating. Teacher Education Assistance for College and Higher Education (TEACH) Grants are available for some students who plan to become teachers. Students who join the Reserve Officers’ Training Corps (ROTC) can also apply for scholarships. In addition, private colleges have cash reserves to dole out grant and scholarships for students they want to recruit.
Because colleges select who attends, the process can feel like a seller's market. But once accepted, it can also be a buyer’s market. Multiple acceptances and aid packages can sometimes be used as a bargaining tool, especially with private colleges. For example, if a student receives a small aid package from their dream school and much bigger package from a school that’s lower on their wish list, they can present the more generous aid package to the dream school to negotiate a better deal. It’s never a sure thing, but the admissions team at the dream school may reevaluate their offer.
Financial Reaches, Targets and Safeties
Categorizing schools as financial “reaches,” “targets” or “safeties”—in the same way that guidance counselors categorize a school based on a student’s chance of meeting the academic standards—can be a helpful way of reigning in expectations about where to apply, or as acceptance letters arrive.
My own children’s dream schools were financial reaches. But they knew it from the start, because we’d told them the set amount we could pay, and they saw it would not cover full tuition at these schools. They had the good fortune to be accepted by schools that offered financial aid and scholarships. If the aid packages had been smaller, however, both kids were fully prepared to turn down the acceptance letters, adjust their dreams and enroll in a financial “target” school or “safety.”
If they did, they wouldn’t have been alone. College consultants EAB tracked 54,810 students who were admitted to their first-choice schools in 2016. More than 6,000 turned down the offers. And 40% of those who declined their “dream school” cited cost as the determining factor.
Smart kids.
Seth Kaufman is a journalist and ghostwriter based in Brooklyn. His work has appeared in The New York Times, The New Yorker online and many other publications.<
Read how to help your young adult manage their first credit card in Teach Your Kids to Use Credit Wisely.