Saving and paying for college is a test of endurance, often a forced march on a 50-year parade in which a hodgepodge of strange numerical codes and meaningless letters traverses routes Waze can’t map. It shows.
Start a $529 college savings plan for your child at age 0 or earlier, whether born or not. As your children enter their teens, talk to their universities. net price calculator (NPC) to see how much financial aid they can get.
Next, fill out the FAFSA (which stands for “Free Application for Federal Student Aid”) and determine how much you want. student aid index (Sai). The main product of the FAFSA was formerly known as EFC (Expected Family Contribution), but recent legislative efforts aimed at “simplification” have replaced one acronym with another. Ta.
Did you get into a great school? That’s all well and good, but grants that are offered based on SAI or other data or different data. CSS profile, burping is probably not enough to pay an affordable amount for college.Therefore, you can apply to the federal government plus loan For my parents, it could take 25 years to pay it off.
As the acronyms pile up, parents may be tempted to push back by asking the perfectly understandable question, “Why does it have to be this way?”
This complexity is driven by countless well-meaning people inside and outside of government who have made incremental improvements over decades to increase access to higher education.Because I’m a college graduate You can add many If getting a degree and not incurring large amounts of debt affects a person’s lifetime income and assets, then it is good public policy to try to make it more affordable for more people. is.
But as income inequality widens and college tuition costs rise, each new student needs more support than ever before. More counselors, programs, regulations, and remedies almost inevitably lead to conflicting advice, new rules, strange loopholes, and bad actors.
“There is little in this country that resembles a coherent higher education system,” he said. Brian RosenbergPresident Emeritus of Macalester College and Visiting Professor at Harvard Graduate School of Education.
This means that, unlike many countries around the world, the United States does not have large, easily accessible public universities. Instead, each state developed its own flagship school or regional branch school, and the scope of subsidies to its residents increased or decreased as political considerations changed or the economy stagnated.
So Americans have many options, including community colleges, which most people can enroll in but aren’t always affordable. One of the main reasons (though not the only one) was that “the more people who wanted to go, the more expensive it was because states weren’t willing to put in enough money for everyone to go.” I am. sandy bauma higher education economist and non-resident senior fellow at the Urban Institute.
Private universities were first established in the United States in the 17th century, but as they grew they had to invent and improve financial aid. Some gave the benefits to a few low-income students who could not afford to pay anything, while many others used wealthier students’ tuition to cross-subsidize low-income students.
It helped, but not enough. An elaborate menu of federal aid was rolled out. loan For both parents and students.money for campus work; and blatantly Subsidy For low-income and other students.
Each state has developed its own loan and grant programs. Each also created 529 savings plans (he often has two plans per state) and tax benefits. different types of For people to use it.
As tuition fees rose, people found it difficult to pay their loans. The federal government’s response was all-encompassing, making it increasingly difficult to pay off debt through bankruptcy, but making it easier to cancel debt if you worked as a public servant or if your income remained low.
It’s easier, at least on paper. The Department of Education hired outside debt collectors to collect debt payments and provide counseling for the millions of calls from troubled young people.Many servicers provided bad advicesimilar to telling people they had to continue making loan payments in the early years of the pandemic to remain eligible for the Public Service Loan Forgiveness Program.
The full federal grant (money the family did not have to pay back) was never provided. especially generous. As a result, most schools have a difficult time assessing an applicant’s ability to pay the additional amount and inferring his or her willingness to pay.
To measure ability to pay, many of the more expensive schools required a second form, the CSS Profile. The CSS profile asked for information such as the family’s ownership stake in the home, if any.
complicated? of course. Is it getting worse? perhaps. But schools at least try to be fair when deciding, for example, whether a family’s home equity is an asset that a family should use to pay for college.
“Two families with the same income (one renting, one owning) are not equally well off,” Baum says. The school would then claim a portion of that housing equity each year. Or, if you can afford to meet your family’s financial needs without asking your family to use it, you may not ask at all.
As list prices rose, fewer households had the means (or ability to borrow) to pay them in full. Currently, all but the 35 or so schools that reject applicants at the highest rates and are therefore largely immune to the laws of supply and demand offer financial incentives to at least some of the wealthy students they admit. It is necessary to provide such information to encourage enrollment.
Schools call this merit aid (Presidential Scholarship, Academic Scholarship, etc.). He might get nothing at all, or he might get more than $100,000 over four years, but he often doesn’t know what that amount will be until after he’s paid the application fee and waited months to hear if he’s accepted. there is. Price quote.
“I don’t think colleges have an incentive to make merit aid simpler,” said Rosenberg, who has worked at three universities that offer a lot of merit aid. “The reason they don’t want to do that is simply because it sounds offensive. ‘We’ll give the students money.’ those who don’t need itBecause if they choose to participate, it will be beneficial to their bottom line. ”
But he hardly blames them, given that without it the school might not get enough students. people like expensive thingsTherefore, a private university may keep its list price at $70,000 and offer an average discount of 50 percent. If you can get a student to say “yes” to a $15,000 merit aid offer, that $55,000 is $20,000 better than the average $35,000.
However, no one needs to know that. “It sounds much better to say, ‘We’re giving merit scholarships to talented students,'” said Rosenberg, author of .Whatever it is, I’m against it: Resistance to change in higher education”
Private universities are not the only ones causing these problems. With rumors of multiple stages of application and a quagmire of high debt, many students who would benefit most from college don’t bother applying. “Low-income students can basically already attend community college for free,” he said. Beth Acres, a senior fellow at the American Enterprise Institute. “So complexity becomes a barrier.”
Without some federal regulation or new legislation, opaque pricing and aggressive discounting will continue. However, some existing state laws encourage student bids. For example, the University of Alabama has proven adept at using merit aid to attract students from out of state at a net price that remains favorable to the school. Eventually, the Illinois Legislature got tired of it. created a new program It’s to make sure the smartest teens don’t take their talents to Tuscaloosa.
But if schools come together to bring more order to the pricing process, other branches of the federal government could step in and block it. At one infamous meeting in 2013, A group of presidents of private universities thought this way. This is to ensure that there is no such underbidding when it comes to voluntarily giving up arms based on merit aid. The Department of Justice noticed this, letter sent Participants were asked to preserve all documents for antitrust investigation. No one went to prison or anything for this, but discussions like that don’t happen anymore in big rooms with lots of people.
Reasonable proposals either don’t get a hearing in Congress or stall in various committees for years. For example, there is no universal net price calculator.a proposed law Entering data once and getting results for all schools no longer works.
Applicants who are accepted into a university often receive a so-called award letter, or term sheet, actually a letter explaining the price.Over the years, they have included more than 100 different terms For unsubsidized federal student loans, there are no laws or regulations that standardize communication. “It’s better to understand than not to understand,” he said. katherine bond hillformer president of Vassar College and managing director of consulting firm Ithaca S+R.
Any attempt to simplify things and stop scaring people is welcome. But for Rosenberg, that effort may not be enough. After all, the complexity is that tens of millions of people were willing to pay for hundreds of different degrees from thousands of schools, including for-profit and non-profit, religious and secular, public and private. This is the result. The choices are all American, so there’s no need to scale down the menu significantly.
However, college may be cheaper, which may solve many problems. “When the cost of producing education continues to rise, it’s like chasing a rabbit you’ll never catch,” Rosenberg said. “Lowering the price is the only way to make it more accessible.”
Ron Lieber is the New York Times’ Your Money columnist and most recentlyprice to pay for university”