Earlier this week, one of my seniors came in after school with her college’s financial aid letter and the phrase, “I need to talk to you about student loans.”
Obviously I am no financial expert, but we talked a lot about financial aid as part of my AP English college portfolio project, so I felt like I could at least help her understand parts of her letter. Instead my task became talking her down from the panic of the initial “sticker price.” I felt it might be worth a blog post for the rest of my students or college-bound people! Feel free to share you own experience in the comments.
Her letter looked something like this, arrows added:
FIRST, variable expenses — Some of the expense numbers are ESTIMATED and will vary for my student; I’ll call her Rebecca. Rebecca’s books, personal expenses, and travel are all variable – and not due on a certain date to the university.
- There are TONS of ways to reduce book costs: first, wait until after you get the syllabus for a class – there may be books that are not read until much later in the semester, books you can buy used or rent, books you can split with another student in the class, or books you can use in the college library reference section. Granted, those in high-level science classes may need the new book as research adapts so quickly, but for most classes, students can bring down that cost substantially.
- She won’t have a car and will live on campus; her transportation costs will be small as a result, and certainly not $2000 due by move-in date.
- No one saves up all their personal expenses for a four-month period by a certain date; she’ll get a job on campus, and when she wants to buy a new pair of jeans, she’ll save up and pay for them. No need to panic and save $2000 by August.
We cut these numbers out of her estimated expenses since she wouldn’t fund them with loans; this reduced her sticker price to $19,400.
SECOND, room and board — They included the most expensive, 21-meal/week plan. Rebecca plans to sign up for the 14-meal/week plan. I tell my kids to ALWAYS do this; most of them don’t eat breakfast NOW, so what makes them think they will get up, on their own without a mom bugging them, leave their building to go to a dining hall EARLY, and still make it to their 8 AM class on time? Besides, they will have student groups that host meals, dorm mingles, rush week dinners, church pot lucks – plenty of free food in college.
This reduced her cost another $1,100:
Tuition and fees may also vary slightly depending on credit hours and need (for example, some schools automatically charge a student health fee which you might waive if you’re on your parents’ health insurance).
THIRD, grants — Now, if we take away the $4,000 federal grant she was given, she needs $14,100 to pay for her freshman year of college. Obviously this is still a lot of money, but a lot less than the $21,000 Becca thought she needed fifteen minutes earlier when she walked into my room. BUT you generally pay per semester, which can be deceiving with the way the letter is formatted. So we divide her bill of $18,100 – $4000 grants by two, to figure out how much cash she needs saved by move-in in August. Becca will need about $7050 for her fall semester.
FOURTH, work — She told me she worked nearly 60 hours(!) over spring break and made over $1000, most of which she is putting into savings. This brings her August cost down to $6050. If she works this summer, both at a regular gig and a side hustle (she has a nice camera and we brainstormed some photography business ideas) she could probably make another few thousand dollars. She will also get some money for graduation, which may get her most of the way to paying cash for her first fall semester.
She will get a job at school and work to pay for her living expenses and save for the next semester. Her parents currently pay much of her tuition at our private school, so even if they don’t match that, the difference will still probably cover the bulk of second semester. She may not have to take out ANY loans for her freshman year, or if so very, very few. Even if she takes out some at the beginning of the year (since sometimes they only disburse once per year) she can return the extra instead of spending it on spring break (I know students who have done this…).
Takeaway — Don’t take sticker price at face value for college. In my class we researched our local community college for the cost per credit hour as sort of a “cheapest school baseline,” and full-time would run about $2500/semester. It is possible — albeit difficult — to go to college debt free. It is much harder to pay off debt after graduation.