College IS Expensive, but are we being dismayed by inflated prices no one pays?

Paying for college is undoubtedly one of the more stressful aspects of applying for college. The idea that you can get everything right:

• Construct the perfect essay. 
• Wow them in the interview.
• Maintain a great GPA.

But then you do your research, look at the college websites and see huge numbers. Numbers that you can't afford to be seeing; instantly you're feeling pessimistic. 

But there is hope, ask anyone who's ever gotten advice for buying a car:

"You NEVER pay sticker price!!"

What is Sticker Price?

I'm using the analogy of a car, because it is also a big expense for most people, and definitely something that people worry over.

'Sticker Price' is the price tag that appears on the car. The big flashy "$20,000" sticker you see in lots or in movies. It is what they advertise the car at, and it is the number that the sales team are trying to convince you to pay!

But here is the kicker - Colleges don't have sales teams who are trying to trick you into taking their extended warranty. Better than that, almost every college website that I have been on has a calculator that will tell you how much you are actually likely to pay just by answering a few questions - this is what we call the 'NET PRICE'.

What is this magical Net Price?

Net price is the price you pay once they deduct any and all discounts that you are eligible to receive. These are normally based on your individual characteristics, so it is impossible to tell people how much they will be eligible to get in financial aid; But it is a good indicator. 

And here's the best bit, the net price is always so much lower than the sticker price!

Now this doesn't mean that college will magically become free or completely affordable, but it will at least reduce some anxiety about how to pay for it.

Here is an example of a generic student trying to pay for college in Florida, using the average household income as a guide. 

Here I used basic demographics for Florida. You can do this on almost any college website to find out how much you would likely have to pay. 

So the median household income in Florida is $61,777 

This is what it told me was now the NET PRICE. You are seeing a difference of $16,755. I used average statistics to support this. So potentially, the average person could reduce their bill to less than 30% of the Sticker Price. That is obviously incredible. Now this is for an in-state student, which makes a difference. However, that is an option for many students in their own home state. 

"The average person could reduce their bill to less than 30% of the Sticker Price"

What is Financial Aid?

This comes from different sources: 

• It can be Federal Aid, which comes directly from the government and is generally widely given. 
• There is also State Aid, which naturally comes from individual states to help their specific citizens attend college. 
• Institutional Aid comes directly from the college or organization that you are applying for, to help fill specific courses or appeal to different demographics. 

Typically, these are grants that do not have to be paid back!

Why do they do this?

This could be that they are looking to help specific demographics enter a workforce; Or they are trying to encourage more people to enter a specific discipline to address a labor shortage. Whatever the reason, we are happy that it is available. 

What about Student Loans?

Student loans are in the news a lot. I am constantly hearing about student debt rising, which is then countered with loan forgiveness programs. I am not a financial advisor, and if you are considering taking out a student loan, I just suggest that you do everything you can to keep it as a last resort. I do understand that sometimes it is the only options available, but make sure you have consulted all avenues before you go down that route. 

I know people who took out student loans for college, have made payments every month for 8 years, and the balance is actually higher than it started. That isn't right. You want to avoid that hanging over your head at all costs. 

Are There Any Other Incentives?

So even if all of that isn't enough, and you want to try and save more, there are a few helpful hints that it is worth holding on to!

Tax Incentives allow people to claim back a percentage of their educational spending each year on their taxes. This can really add up, and although you have to pay it upfront, you can hopefully get some of it back in your tax rebate.

Work Study Opportunities from places like McDonalds gives students more than $5,000 to help pay for college if you meet specific requirements in your hours worked. 

Scholarships are another obvious one, but they can be very competitive so I prefer not to rely on these. However, there are very specific scholarships to help specific demographics that you may be able to apply for. 

There are a number of great opportunities for people out there to benefit from beyond the standard FAFSA application and it is important that you do your homework!

Thoughts on Big Sticker Prices

I think that, just like with cars, you should get something that is a good fit for you. If a school has a great program that you are interested in, fantastic post - graduation positive destination rates (They get jobs when they graduate), and it is your dream - I would never stop you. I would however, encourage everyone to look at those key metrics and work from there. You might find that there are schools out there that might be a better fit for you, and that's the most important thing. 

So now that your financial worries are (hopefully) somewhat quelled, if you are looking at finding more ways to boost your chances of success at college, book a free consultation now and find out how ScotReach can help you with your goals!