When choosing colleges, calculate the money factor
This spring, millions of high school seniors are contemplating their college choices for next fall. Near the beach? Closer to big-city life at campuses in Seattle, San Francisco or NYC? Tucked into a smaller, more intimate college setting?
In addition to where, another equally critical calculation in deciding which college to attend is how much. With college costs at budget-breaking levels, it can be a confusing, daunting, discouraging part of the college-acceptance experience.
Parents like Mark and Julie Bradford face a double whammy. Their twins, Emma and Justin, have been accepted to a host of public and private universities, from the University of California-Santa Barbara to New York University. With two freshmen heading off to campus this fall, the Bradfords could easily be staring at $113,000 a year for both kids.
"It's shocking," said Julie Bradford, speaking by phone recently, during a break between tours in Southern California.
She and her husband have filled out the FAFSA financial aid forms, visited campus aid offices and pored over campus tuition pages. Until their twins determine exactly which schools they'll attend, the complete picture of exactly what the Bradford family will have to fork out in double-duty college costs isn't clear.
"It's hard to figure it all out," said Julie Bradford, noting that her husband, an environmental consultant, had compiled an Excel spreadsheet to compare tuition and room/board costs for each of their 18-year-olds.
College and financial experts feel their pain. In recent years, there's been a push to make the college-cost comparisons easier for families.
For too many families, the how-to-pay-for-college equation has been "complex and confusing," said Rohit Chopra, student loan ombudsman for the federal Consumer Financial Protection Bureau, created by Congress to help consumers better navigate the complex world of financial products.
Under its "Know Before You Owe" project, the CFPB wants to arm students and parents "with clear information and a clear set of facts" before they take out costly student loans. For too long, Chopra said, "many borrowers didn't really understand much of the financial aid information they got, because it was laden with jargon and lots of fine print."
To strip away the confusion, the CFPB's first effort in 2012 was the Financial Aid Shopping Sheet, which is a streamlined, easy-to-read template that colleges can use to send out financial aid information to their prospective students. It includes details on the school's graduation rates, loan defaults and other data.
As of this month, more than 2,000 public and private schools nationwide have adopted the "shopping sheet" format, ranging from tiny beauty schools to major universities like Stanford.
On its website, the CFPB's "Paying for College" section lets students plug in numbers from schools, three at a time, to make comparisons of first-year college costs. It also shows your potential student loan debt at graduation.
"Even if they haven't received their financial aid offer from their school, they can use it to make estimates," said Chopra. For example, if a student decides to live in cheaper, off-campus housing, that choice can affect how much they might need to borrow.
The motivation behind such tools is trying to ensure that college students don't blithely rack up tens of thousands of dollars in student loan debt, which can drag down their post-college financial life and even have an impact on their future career choices. In 2012, the average amount of U.S. student loan debt for graduating college seniors was $29,400, according to the nonprofit Institute for College Access & Success, a research and advocacy group.
Elena Larson, assistant director in the student financial services office at California State University, Sacramento, often sees the results of college kids who borrowed too much. In some cases, she said, they either didn't consider the financial burden of paying back loans or thought a degree from an expensive, prestigious university would automatically yield a high-paying job. As the recession proved, that's not always the case. The financial burden of huge monthly student loan payments can affect their choices on getting married, buying a first house or having a child.
When choosing a college, "Don't make a choice solely on money," Larson said, "but if you can get by with less debt, you'll never regret that."
With two kids in college this fall, the Bradfords figure they'll be looking at possible student loans, either public or private.
And they fully expect their kids to help foot the bill, at least for campus incidentals.
Aside from searching for scholarships, which the Bradford twins have already begun to do, their mom says: "We're definitely telling our kids they'll be working this summer."