By Lynnette Khalfani-Cox, The Money Coach
This is the final installment of a two part series on slashing college costs and Blueprint would like to thank Lynnette for writing to the pre-college program community! (To read part one, click here.)
Tip #3: Plan to Live on Campus
I know this sounds counter-intuitive, but most students will probably fare better living on campus rather than living at home or with relatives, in order to save money at college.
How is this possible?
Simply put: studies show that students who live on campus have far better graduation rates than those who live at home or with family members.
Researchers think those who live in campus get the added boost of camaraderie with their peers, more group study activity and increased access to campus resources – all of which helps students remain persistent, engaged in college life, and more likely to stay in school that first critical year as a freshman, and then later as well.
Even though most people perceive of college as a four-year endeavor, the truth is that the majority of college students simply aren’t getting their studies done in that mythical four-year time period.
In reality, only 40% of students nationwide are able to graduate from college in four years. About 60% of students graduate in six years. What this means is that you should pay attention to graduation rates at any college you consider – and also take into account what forces help, or hinder, students from successfully completing their studies.
So it may cost $10,000 a school year for a student to live in an on-campus dormitory or apartment. But that $10,000 will be well spent if it means he or she will truly graduate in four years – rather than five or six. That fifth year could mean another $20,000 or more spent on tuition and other costs.
So in reality, the on-campus option can often become the cheaper route.
Tip #4: Get Familiar With Key Financial Aid Tools
Unfortunately, many financial aid offers are confusing to parents and students alike – especially because different schools package and present award letters in different ways, making an apples-to-apples comparison difficult.
The good news is that, as part of the Know Before You Owe Project on student loans from the Consumer Financial Protection Bureau, the agency worked with the Department of Education to create a Financial Aid Shopping Sheet. This document is a simple form that makes comparing financial aid offers easy.
The Financial Aid Shopping sheet specifies what aid is a loan that must be repaid and what is a scholarship or grant (i.e. free money); it spells out the total cost of attendance including tuition, fees, and other expenses; and it offers students a preview of what their student loan payments might be after graduation.
According to Education Secretary Arne Duncan, more than 500 colleges and universities agreed to adopt the Financial Aid Shopping Sheet as part of their financial aid awards in the 2013-2014 school year.
Additionally, the CFPB launched in 2013 an online cost-comparison tool that complements the shopping sheet to help students make comparisons tailored to their individual circumstances.
It’s supported by data from thousands of schools that have provided information about the costs of a college education.
So once you receive financial aid offers, you can use this tool to understand how all those numbers impact your payments down the road. But there’s no reason you can’t get a jump on the process.
Don’t wait until college deadlines are upon you to familiarize yourself with key online tools you’ll need to work through the financial aid process.
Instead, peruse those online resources and web-based tools now.
But getting through college shouldn’t drive students into debt. Nor should parents have to sign for unnecessary student loans, run up big credit card bills or sacrifice their retirement in order to finance their children’s educations.
By following the four tips outlined above, students and their families can emerge from the college years economically in tact and without financial regrets.
Lynnette Khalfani-Cox is a personal finance expert, New York Times best-selling author, and co-founder of the free financial advice site, AskTheMoneyCoach.com. Lynnette’s forthcoming book is College Secrets: An Insider’s Guide to Getting Into Any College and Paying for It Without Going Broke. Follow Lynnette on Twitter @themoneycoach.