While high school seniors are suffering serious cases of senioritis on their final sprint to graduation, many of their parents are cracking the books and crunching the numbers.

Hopefully they’ve used the net price calculators on college websites to get estimates of how much their children might receive in grants and scholarships to help offset each school’s “sticker price”—its published rate for tuition and fees and room and board.

The majority of first-time, full-time undergraduate students received financial aid at four-year public institutions (83%) and four-year private institutions (89%) during the 2013-14 school year, the most recent years for data from the National Center for Education Statistics.

Even so, many families find that college sticker prices are, well, too sticky.

Joe Messinger, CFP, a co-founder and the director of college planning at Capstone Wealth Partners, a fee-only RIA firm in Dublin, Ohio, sees a lot of what he calls “families on the bubble.” The parents are in their peak earning years, so they won’t qualify for need-based aid, “but they’re not wealthy enough to write the check for $25,000 to $50,000 a year,” he says. “They’re left behind in the financial aid process and it’s the perfect storm.”

Average published prices for 2016-17 are $20,090 for in-state public schools, $35,370 for out-of-state public schools and $45,370 for nonprofit private schools, according to the College Board. Annual price tags top $65,000 at some of the nation’s most elite schools. Institutions are starting to set their 2017-18 rates.

Published prices at four-year schools, adjusted for inflation, actually grew at a slower average annual rate this past decade than the prior decade, according to the College Board. But net prices are climbing, it says, because financial aid hasn’t kept pace with rising price tags. During the 2015-16 school year, the most recent for College Board aid data, full-time undergrads received an average $14,460 in aid, including $8,390 in grants.

All families should file the Free Application for Federal Student Aid (FAFSA) because each school calculates a personalized expected family contribution (EFC) and determines aid awards differently. Thanks to recent changes, the FAFSA is now based on actual income from two years ago instead of estimated income from last year. And students can file it as early as October 1 for the following school year, three months ahead of the old start date.

Financial aid expert Mark Kantrowitz, publisher and vice president of strategy for the college search and scholarship site Cappex.com, urges students to file the FAFSA as soon as possible. “A dozen states offer state grants on a first-come, first-served basis until the money runs out,” he says, “so students from these states who don’t file in the fall may miss out.”

It doesn’t look like schools are changing their aid packaging philosophies as a result of the earlier availability of FAFSA data, he says, but they are awarding aid sooner.

Students who applied to schools under early admissions plans for fall 2017 enrollment received actual financial aid award letters (instead of estimated awards) with their offers of admission, he says. He expects regular-admissions candidates to receive aid award letters mostly in early March instead of late March or early April—giving them more time to visit schools and speak with financial aid officers before the May 1 decision deadline.

“Families will not feel as rushed and can make a smarter, more informed decision on the financial trade-offs,” says Kantrowitz.

Upon receiving their award letters, they should recalculate their net prices, he says, and use a comparison of net prices to appeal to the less generous colleges for more financial aid. College Navigator, a free tool from the U.S. Department of Education, can be used to see if a college front-loads grants to freshmen or also awards upperclassmen, he says.

Don’t count on receiving fat admissions envelopes from the well-endowed Ivies. Their need-based policies are very generous. But since their acceptance rates are so low, says Kantrowitz, “Often, students treat them as a lottery, where the cost of the ticket is the application fee.” He recommends applying to at least one “financial aid safety school” that a family can afford without aid and where their child’s test scores rank above the 75th percentile for admitted students.

Students should search for scholarships on free websites, he says. (Cappex’s database can be found at www.cappex.com/scholarships.) Families should look to take advantage of education tax benefits, like the American opportunity tax credit and the student loan interest deduction, he says.
Students needing loans should first access federal student loans because they’re cheaper, more available and have better repayment terms, he says.
Families can expect interest rates on student loans to increase over the next several years in this rising interest rate environment, he says. There will be a more immediate impact on private student loans with variable rates. Rates on federal student loans, which reset each July 1 and are based on the last 10-year Treasury auction in May, are fixed for the life of a loan.

“Borrow as much as you need, not as much as you can,” cautions Kantrowitz. “Every dollar you borrow will cost about two dollars by the time you repay the debt.”

Advisor Action Points
“How are we going to actually pay the bill?” is a question Messinger of Capstone Wealth Partners frequently hears from parents of high schoolers. Some are financial planning clients; others attend his workshops or Capstone’s one-on-one coaching service, College Pre-Approval, to learn how to manage the many moving parts of college planning.

“My belief is that college should be preapproved, just like getting a mortgage,” he says, “so that it ensures students can graduate on time, with manageable student loan debt, without robbing mom and dad’s retirement.”

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