College Finances: How To Haggle For Money
By Linda Stern
WASHINGTON, March 28 (Reuters) - Over the next week, most colleges will give high school seniors the good news -- who got in where -- and the bad news -- how much it will cost.
Then it will be crunch time for a full month, as parents try to make the numbers work so their kids can give colleges their final answers by May 1.
Parents will check bank balances and sofa cushions for the cash to make it happen. Financial aid officers will steel themselves for the calls they know are coming, as parents appeal for bigger and better awards. "This is the month of negotiating," says Bob Ilukowicz, a financial aid consultant in Smithtown, New York.
There certainly is aid out there. Ilukowicz says he is seeing his clients get fatter offers for the 2012-2013 school year than he saw in recent years. The College Board estimates that the average private nonprofit four-year college charges $38,590 for tuition, fees, room and board in the 2011-2012 school year, but that grants and federal tax breaks (which it now counts as "aid") shave about $15,530 off that.
Almost 80 percent of full-time undergraduates get some kind of aid, according to the U.S. Department of Education, and roughly 64 percent get the good kind -- grants that don't have to be paid back.
But burdensome student loans still make up about half of all financial aid, and with tuition alone over $40,000 at more than 100 pricey schools("obscene," says Ilukowicz), how much aid is ever enough? And how can you get it? Here are a few strategies for "haggle month," and beyond.
-- Ask for more. Roughly two-thirds of parents who appeal their Amherst College aid awards get more money, admits Joe Paul Case, the school's financial aid administrator. And Amherst is a school that doesn't offer merit aid or meet competitive offers just to win over a student; Case runs a strictly needs-based aid office. At schools that have discretionary funds to offer merit aid and meet competition, the rewards for asking for an upgraded offer are even better.
-- Cry and share. Amherst and other need-based schools will take family issues that don't appear on financial aid forms into consideration. "If you are spending money to help grandma in the nursing home, tell us more about it," says Case. Other situations that can get you more aid include non-custodial parents who won't help pay for college, parents who have good jobs now but still haven't recovered from a year or two of recent unemployment and costly health problems.
-- Flaunt your popularity. If you've got a better aid offer from a competitive school, do send it to the school you really want to attend, but be gracious about it. Note that you really want to go to School A, but money is really tight, and the generous offer from School B is making it hard. Threats about going elsewhere are likely to be met with "good luck there." And even those schools that will try to match competitive aid offers won't do that if the school isn't a comparable kind of school.
-- Think long and hard about your choices. The biggest change in college finance in recent years is in the attitudes of parents and students, suggests Mark Kantrowitz of FastWeb, a scholarship search website that surveys its users every year. "A greater percentage of students don't attend their first choice school because of money than because they don't get in," he says. Last year, one in four students who originally intended to go to a private college went to a state school instead, and one in 10 students went the other way, primarily because of affordability. Kantrowitz says he's seeing increased sensitivity to the bottom line cost of college and to the return on investment -- what will the student be able to earn after graduation?
So, be judicious. If your child wants to major in theater and can't go to Pricey Private without accumulating $50,000 or more in loans, maybe Good Old State U is the better bet. There is a lot of research showing that great students do well wherever they go, both in college and afterwards. And if your child is headed towards a career that requires graduate school, it's good to not blow your whole nest egg on the undergraduate years.
-- Think creatively about other solutions. It's not uncommon for students now to start their college career (or supplement it in summers) with community college courses that cost less. Taking pre-requisites this way can shave a costly semester or more off school. A high school senior who takes a gap year to work and save before heading off to college can offset some college costs with those savings. And if that deferral strategy puts him in college at the same time as a younger sibling, that can double the amount of aid the parents might receive down the road.
-- Fill all the gaps. Once you've received the best aid package you're going to get and have settled on a school, you still have to come up with the cash to pay the bill, probably in a couple of months. Home equity lines of credit now have lower rates than many college loans; refinancing a home mortgage is another way to make it work. Many schools that won't negotiate too much on their price will let you pay tuition monthly instead of in one budget-busting check a semester. That can help cash flow a little. And you'll need all the help you can get.