For More Information Contact:
Tara Kamin
Corporate Communications Manager
Iowa Student Loan Liquidity Corporation
(515) 273-7404 | tkamin@StudentLoan.org
Understanding Total College Cost
By Steve McCullough, CEO Iowa Student Loan Liquidity Corporation
With the new school year, you and your middle or high school student might be looking ahead to what happens after high school. Before starting the higher education journey toward a career, your student should understand the complete cost.
Why It Matters
The total picture is important.
The financial aid offers your student will receive before enrolling in college or a certificate program only show costs and aid for the first year. You should consider the full length of the program before making a final decision.
You need a plan for the entire expense.
Your student, and your family, should understand the estimated financial picture for every year of a specific program. Each year, students who are one, two or three years into their college careers realize they dont have the funds to finish, requiring one or more years off to earn money, a transfer to a less-expensive program or taking on crippling debt.
What Your Student Can Do Now
Make a realistic guess about program length.
If your students chosen path is a two-year degree or a certificate program or, conversely, will involve an advanced degree like a masters or doctorate, then your student should plan financing for the right length of time. Your student may also take more or less time than the average based on previously earned credits, difficulty registering for high-demand classes and other considerations. Encourage your student to do a web search for the Common Data Set for each institution under consideration and look at the average graduation timelines.
Consider real-life earnings, savings and expenses.
If your student has been earning money or making purchases for a while, they should have a good idea of how much of each paycheck goes to savings and how much they regularly spend. Using this information, you and your student should be able to estimate how much can be earned and saved while focusing on education. Then, you can decide how to meet the gap between cost of attendance and available resources for each year of the program.
What Your Student Can Do Later
Use a net price calculator.
Net price is the amount a student pays to attend a higher education institution in one academic year after scholarships and grants are subtracted from the schools total cost of attendance. Students and their families must determine how the remaining amount will be paid, whether from savings, college savings accounts, work earnings, loans or a combination of all of those. Net price calculators are available on colleges websites.
Make a financially sound decision.
Using the information above, your student should be able to determine which programs make financial sense without more debt than they can manage. One guideline is that total debt for all years of a program should not exceed a realistic estimated first-year salary.
Continue to keep an eye on progress.
As your student progresses through a higher education program, they should periodically check on current income and expenses as well as remaining time to complete the program. These checks should help your student avoid having to drop out for financial reasons. If your student has a lot of one-time or short-term scholarships or grants, they should look into ways to replace them with other non-loan funds.
What You Can Do
Keep it real.
Much of this financial planning relies on realistic estimations of actual expenses, earning and purchasing habits, and starting salary after education. Help your student work with actual numbers based on available data.
Provide emotional support.
If your students dream appears to be financially unrealistic, be ready to encourage your student to consider other ways of reaching the goal. Even if the program your student ends up choosing is not the first choice, a positive attitude and willingness to seek out opportunity will often lead to success.
Did You Find This Helpful? Sign Up to Receive More Information
You can receive information tailored to your students grade level delivered directly to your inbox twice a month simply by signing up for the Student Planning Pointers for Parents service at www.sp3.org.
This free service offered from ISL Education Lending is for parents of eighth- through 12th-grade students to help them work with their students to prepare for the next step after high school.
Registered parents also have chances each month to sign up for quarterly random drawings for deposits into a college savings account.
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