Tuition isn’t the only rapidly rising college expense. So is the money many families are shelling out to try to give their children a leg up in the admissions race.
Test-prep for college entrance exams can eat up hundreds to thousands of dollars. Parents are also paying for private college counselors and precollege summer programs that let teenagers load up on college credits, gain internship experience and do community service in underdeveloped countries, among other things.
More students are taking a blitzkrieg approach to applying to colleges as families fret about sinking admissions rates at many schools.
According to the most recent “State of College Admission” report from the National Association For College Admission Counseling (NACAC), 32% of fall 2013 freshmen submitted seven or more applications, compared with only 9% in 1990. It’s not unusual for students at affluent, competitive high schools to apply to a dozen or more schools.
Application fees—$41.51 on average, reports NACAC—can add up quickly. Nearly 40 schools charge $75 or more, according to data from U.S. News & World Report.
Annual sticker prices (tuition and fees plus room and board) are nearing $65,000 at the U.S.’s most expensive schools. During the 2014-15 school year, the most recent for College Board data, published rates averaged $18,943 for in-state public schools, $32,762 for out-of-state public schools and $42,419 for private schools.
Families that can’t afford the bells and whistles, and even those that can, should know there are more cost-effective ways to prepare for, apply to and attend college—and get the same results. But it requires homework, say experts.
Perry De Fontaine, a CPA, registered investment advisor and president and founder of College Insights, an independent college advisory firm based in Princeton, N.J., encourages families to be open to public and private schools. “Don’t just focus on sticker price,” he says. “Focus on true cost.”
Although families with tighter budgets often look exclusively at public schools, they could wind up costing more, he says, because they are less likely to award aid and may have lower retention and graduation rates. But a private school may not be worth its premium, he says, if it isn’t stronger in a student’s field of interest or doesn’t offer greater internship and job placement opportunities.
De Fontaine suggests looking at compilations of “best value” schools from U.S. News and other sources. Families then need to dig deeper to find the right match for a student’s needs and interests and their pocketbook, he says.
Don’t be fooled by college information sessions, which are often “dog and pony shows,” he says. A school may boast that its average financial aid package is $30,000, but parents need to ask about its financial aid policy—how it awards this money.
It could be “a need or bust school,” he says, meaning it meets 100% of demonstrated need but offers no other aid. Another school down the street may be generous with merit-based aid, essentially a tuition discount for high-achieving students.
As a rule of thumb, he thinks only the top 5% of freshman applicants at public schools can expect to receive some sort of merit-based aid. Private schools often award it to a broader range of applicants. “It’s not a cliff, it’s a slope,” he says. He suggests contacting admissions departments for information.
Return On Investment
Families should look at college as an investment and ensure they are getting the proper return, says Jordan Goldman, founder of Unigo.com, a website that has helped millions of high school students find, get into and pay for college. “For a while, it’s been a right of passage that you’re going to send your kids to college, but increasingly it’s becoming something you really need to study,” says Goldman, who created a series of college guidebooks 15 years ago as a college freshman.
Unigo was acquired last year by Portland, Ore.-based Aequitas Capital, which since 2012 has acquired several college-matching platforms that aim to optimize a student’s return on education. Aequitas has rebranded these platforms under the name Unigo Group.
Goldman, vice president of business development for this group, says high school students should start researching colleges during their sophomore or junior years. Unigo.com, which provides all content for free to families except one-on-one video chats with admissions or financial aid counselors, offers quantitative and qualitative info. Data on a school’s majors and departments, such as class size, graduation rates and average salaries, can be good indicators of return on investment, he says.
Users of Unigo.com can filter college reviews created by more than 600,000 students. The portal also provides financial aid information and can match students to 3.6 million scholarships and 90,000 internships, he says.
Students should only use free databases to obtain scholarship information, says Mark Kantrowitz, a 20-year industry veteran and publisher of Edvisors.com, a website focused on planning and paying for college. Although many families wait until the spring of their child’s senior year in high school to look for financial aid, he says, some scholarships are open to children under age 13. A list can be found at Edvisors.com/age13.
He encourages students to treat the scholarship search like a part-time job and apply to every one they are eligible for. Material can often be recycled for multiple scholarships and admissions essays, he says.
As for shrinking admissions rates, the impetus isn’t a flood of more talented candidates, says Kantrowitz, who notes that academic performance has remained largely unchanged for decades. Instead, he attributes it to the surge in applications. “Schools are encouraging it,” he says, “and people are treating it like a lottery.”
A more reasonable approach, he says, is for students to compare their grade point averages and test scores to admissions statistics posted on colleges’ websites. He suggests applying to two “safety” schools (where they rank above the 75th percentile of admitted students), two or three “match” schools (in the 25th to 75th range) and two “reach” schools (below the 25th percentile). One safety should be a financial aid safety school that a family can afford even if they don’t receive aid, he says.
“Parents have the tendency to overestimate a child’s eligibility for merit-based aid and underestimate eligibility for needs-based aid,” he says. Students are more likely to be offered a merit scholarship at second- and third-tier schools if their academic profile is above the 75% percentile, he says.
Long-Term Thinking
Getting into school is one challenge; staying there is another. Nearly one-third of students transfer, and finances are the top reason, says Fred Amrein, founding principal of Wynnewood, Pa.-based Amrein Financial, a fee-only financial planning firm (he also founded College Affordability LLC, a college funding information website). But transferring can be costly because of the lost credits, notes Amrein, a featured speaker at NAPFA’s Midwest Region’s College Planning Symposium in June.
To help families find a good match from the get-go, he helps them calculate their four-year cash flows, understand costs and financing options and compare details of college award letters received.
Schools integrate 20 to 60 personal, family and academic factors into their sophisticated models to make award decisions. “Due to the lack of transparency in the process,” he says, “people waste hundreds, if not more, applying to colleges, hoping.”
That’s not their only misstep. Parents and teens expressed limited concern about college debt when recently surveyed by Private College 529 Plan, a prepaid tuition plan sponsored by more than 275 private colleges and universities. And just 46% of parents surveyed said their teen was involved in the college planning and saving, although 70% of teens said they were involved in the planning process.
“When students and parents aren’t both involved in planning for college, the results can be unfortunate: students borrowing more or parents raiding their retirement money to pay for college,” said Nancy Farmer, president of the Private College 529 Plan, in a statement.
For his part, Amrein suggests stopping by career centers during campus visits to ask how they help students select majors and land internships, co-op programs and jobs. Parents should also help their kids understand the costs of college and the education requirements and salaries of different jobs. Amrein did this with his three daughters, who all graduated on time.
He recently began rolling out his financial software EFC Plus to high schools and advisors. He has used it for years to help clients make college decisions.
Families can also use net price calculators on colleges’ websites. Calculators that ask more questions tend to give more accurate results, says Kantrowitz.
For those who are wondering, 529 college savings plans can’t pay for college-related expenses incurred before enrollment. But there are ways to reduce these costs.
To help prepare for admissions tests, Kantrowitz encourages students to solve the College Board’s online “Question of the Day” and regularly read a newspaper to build vocabulary. De Fontaine says students should see if customized, web-based options meet their needs before investing in more-expensive courses or tutors.
De Fontaine recommends families visit local schools before planning longer trips so kids can rule out the types of schools they hate—those that are either too big or small, too urban or too rural. As for precollege programs, “Colleges are smart enough to know that not everyone can afford them, and they won’t really boost admission,” he says. A good alternative, he says, is to create a meaningful, affordable summer experience.
One summer, his son started a music camp for disadvantaged youth that was held at his high school. The campers received lessons on school instruments they selected and put on a show for their parents. “The high school kids just contributed their time and love of music,” says De Fontaine, “and they gave back to the community.”
Families seeking consultants to assist in the college process can ask a high school guidance counselor for recommendations or interview members of NACAC (College Insights is a member) and the Independent Educational Consultants Association, De Fontaine says. Members don’t necessarily charge more than nonmembers, he says.
Most important, don’t get caught up in school rankings and prestigious names, says Goldman of Unigo Group. “At the end of the day, what it’s really about is which school is the best fit for you,” he says, “based on your background, based on what you’re looking to study and based on where you want to go in life.”