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Know Your Budget and Sources of Financial Support

July 26, 2018

Students walking between classesCollege is an investment and probably one of the most significant you'll make. Unfortunately, in my experience, it’s also the least budgeted item for most students and their families. If I asked you, "where are you applying for college?", you'll probably have a long list. If I follow up with, "what's your budget for college?”, what would you say?

The universal truth too often ignored is that college is not free. Even students who receive generous financial aid packages will have some expenses. It's critical to understand what is affordable for your family.  

Have Conversations Early

To get started, have a conversation with your family or other financial supporters about what they plan to contribute to your education. This can be tricky, particularly with parents who keep their finance cards very close to the chest. Understand though that your student account is in your name. If something goes sideways it's your credit that will be impacted, not mom or dad. Once you understand the contribution others will make, determine what you can contribute through savings, work or debt. Understanding debt is also important and will be a topic for a future post.

Look Beyond Your First-Choice School

I find that students will often make their budget work to fit their first-choice school, but you need to understand the real gap you need to fill with financial aid. It's key to have "your number" before you start researching the cost of schools. That number should be the amount you can afford to pay for your total degree, not just the first year. Then you can research to see what aid is available to help fill that gap.

Calculate the Full Cost of Attendance

To calculate the gap, determine each schools’ cost of attendance. This information should be available on all schools’ websites. The cost of attendance is a federally dictated rubric, so it’s the best way to compare cost. 

An example of annual cost of attendance is:

Item  Cost
Tuition & Fees     $30,000
 Room & Board (and food)   $10,000
 Books & Supplies  $1,000
 Travel  $2,500
Miscellaneous   $2,000
 TOTAL  $45,500

It’s easy to only think about tuition, room and board, but the other numbers cannot be ignored.  You will need books and supplies, you will probably want to go home every now and then, and the folks at college really appreciate it when you buy shampoo and deodorant on a regular basis. Remember, the cost of attendance is an annual number. Make sure to multiple that number by the number of years you except to be in college. Don’t stop here if the total number greatly exceeds your budget.

Where Else to Look

All schools should have a net price calculator on their website that can estimate your aid package at that school. Research federal and state grants to see what they can contribute to your aid package. If the schools on your list don’t provide enough aid to cover your gap at that that school, expand your list. There are thousands of colleges and a significant number, particularly private schools, offer substantive financial aid.

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