Financing College in a Down Economy; A Few Simple Rules
Almost every family in America, regardless of its economic status, is concerned about the current state of the U.S. economy.
And, families with children in college or children due to begin college in the next 4-5 years are especially concerned about one aspect of the economy; how to meet rising college costs in these difficult economic times.
Even those who have planned ahead and spent years saving for college may come up short, particularly if their savings/investments have been in real estate or stocks. Not only are most investors sitting on portfolios worth at least 25% less than their value a few months ago, but many own a considerable number of individual stocks or funds that have declined in value by an even higher percentage.
College endowments, because they too are heavily invested in the stock market, are also down considerably. And, for all but the very wealthiest colleges, a decline in endowment value may well mean a decline of comparative scope in the institutional scholarship funds they are able to make available to students.
Institutional scholarships are a very important component of financial aid packages, especially at private colleges and universities. In fact, in normal times, private colleges offer students enough institutional-based scholarships to offset approximately 35% of tuition costs. Of course some of the elite colleges have so much money that their ability to provide institutional aid to students will not be impacted even if the economic downturn continues.
Others will have no choice except to maintain or even increase their scholarship expenditures in order to meet their enrollment goals. Some others, however, may be forced by lower endowments to reduce the number and/or size of institutional scholarships awarded.
It seems probable that our sagging economy will bring important changes to the way prospective students and colleges approach the admissions and selections processes. Thus far, it has brought a great deal of uncertainty to students, families, and college administrators.
So, what should a student do in the face of so much uncertainty? Here are a few things to think about.
1. Know that despite the economy, billions of scholarship and financial aid dollars are available to students. Panic is neither necessary or productive.
2. If possible, meet with a financial aid counselor and/or scholarship counselor (in person or on the telephone) to be sure you understand the awards for which you may qualify. Then, apply for all of them.
3. See if your high school counseling office has a list of scholarships offered by organizations in or near your community.
4. Conduct Internet searches for free scholarship search sites. They’ll help “match” you to scholarships for which you might qualify.
5. Beware of any organization which claims it can help you qualify for additional scholarships or financial aid. Most such organizations are not legitimate.
6. Look for colleges with low tuition and fees. You will be surprised how many you can find.
7. Do not be reluctant to apply for student or parent loans. If you understand the value of education, you understand that loans are a very worthwhile investment in your future. Just be sure to borrow prudently.
There is no question that we are in difficult economic times. And, the economy is unlikely to bounce back quickly. But, the national economy should not prevent students from getting the education they require.
Students who do not give in to panic, explore their college financing options, and seek out affordable colleges and universities need not worry. What they do need to do is become as well informed as possible.
