March, 2025 archive
Making Your Final Decision 0
Countdown to National Deposit Day!
At this time of year high school seniors have heard from the colleges to which they applied. The most competitive colleges and universities are finished reviewing applications from all of the country and the world. April 1 is the date that all colleges will have sent out letters to anxiously awaiting seniors.
There will be just one month from then until “National Deposit Day”. May 1 is the day by which all college bound seniors must decide where to enroll in the fall of 2025. Some colleges extended that date last year to May 15 because of the delay in the processing of the newly designed Federal financial aid form, the FAFSA. Making the final decision may not be easy unless students have done certain things in the year or two prior to the spring of the senior year. Most students are usually presented with at least two positive alternatives from which to choose. The pandemic has made it much harder for students to do their best work over the years from 2020 through 2023. Unfortunately, there is still confusion and questions surrounding the science. (Read December 2024 post for updated information.) In addition, colleges have had a much more difficult time during the application reading and selection process. Trying to measure college readiness or candidates without standardized test scores in many cases and differing grading systems instituted in the junior year when distant leaning was in full effect.
So how does one go about making an effective decision ~ a decision that allows the entire family to win? The following steps are what we advise our students. Think about these even if you will not be facing such a decision for a few years.
The overall goal, I believe, is to integrate the academic decision with financial considerations. That is particularly important when there is more than one college bound child in the household.
First ~ Think about the academic reasons those colleges were on your list in the first place. Review the departmental majors and using the second “A” of the AAA process learn more about student outcomes with that major at that college. Read my essay “What is College For” and follow the links.
Second ~ Make an objective evaluation of each financial aid award. Determine how much aid the college is awarding in the form of grants, scholarships, and loans. Most colleges do not include adequate amounts in the cost of attendance (COA.) to include personal expenses. These are books, supplies, personal sundries, and transportation. If you have done a money saving Dry Run with us prior to your students application you will see that we often add $4,500 to the direct expenses. The direct expenses are the fixed billable costs, tuition, fees and room and board. You should too.
Keep in mind that college work-study is not a direct credit toward billable costs. Do not include that in your calculations. If there is a loan offer in the award (other than a Stafford), do not include that either. Subtract all the other awards from your COA and you will close to knowing what the real out of pocket cost is for that college. Do this for each college and make an objective comparison.
Why is College So Expensive? 0
The cost of private four-year colleges and universities has steadily increased far beyond the means of all but a small % of American households. Here are the first reasons as to why college is so expensive.
The Higher Education Act of 1965 marked the beginning with NO end!
President Johnson signed the Higher Education Act in 1965. The act aimed to strengthen the educational resources of our non-profit colleges and universities in the US and provide financial assistance to students in postsecondary and higher education. What first appeared to be a positive thing has become something entirely different.
There are four primary reasons for that. Read the linked history!
- In 1971, President Nixon broke the 1944 Bretton Woods Agreement and removed the dollar from the gold standard. The Federal Reserve was printing dollars like there was no tomorrow during what is now known as the “Guns and Butter” decade of the sixties. Nixon’s move was the catalyst for inflation as the dollar lost value.
- One year later, Nixon signed Title IX of the Civil Rights Act into law. Many of the most expensive private colleges were beginning to admit women. Title IX prohibits gender-based discrimination in any college or other education program that receives funding from the federal government, aka American taxpayer dollars.
- In the fall of 1979, President Carter raised the Department of Education (DOE) to a cabinet-level position. All colleges agreed with the principles of Title IX. However, a few questioned the long-term impact the law would have on academic freedom and the cost of college. One of those was a highly regarded regional liberal arts college in Pennsylvania…Grove City College. It did not agree to sign the Title IX agreement because it had already followed the ideals of Title IX since the co-ed colleges’ founding in 1876.
- Upon close examination, the college’s Board of Directors decided Title IX would increase families’ college costs.
Grove City College was 100% correct!
But they had to go all the way to the Supreme Court to maintain their independence. Watch the video on their website. www.GCC.edu. (Type ‘Supreme Court Case’ in the search box.) That is proof enough to show how Title IX has been the key factor in why college is so expensive today!
The entire cost of attendance (COA) for a most competitive four-year private college in 1962 averaged $2300 to $3200/year. 2025, those same colleges will cost $75,000 to $85,300/year. State universities now cost up to $39,000/year. (Out of state, $51,000.) Financial aid has not made the colleges affordable. In fact, in most cases, it has made them more expensive and put more students and their parents into debt. The formulas used to determine “need” penalize families that save for college. The Asset Protection Allowance (APA) in 1990 has been steadily reduced to Zero in 2024! Read what follows carefully.
The Higher Education Act of 1965 included Stafford loans to students at an increased annual amount over five years. However, by 1980, colleges began to increase their yearly costs as the DOE expanded the grant and loan amounts to students with need. All kinds of adjustments to benefit colleges more than students began to appear by astute observers. None of which could be forgiven in bankruptcy.
As families became alarmed at higher costs, the paid college lobbyists went to work and influenced the lawmakers in Congress to make adjustments to “help” families afford college. The DOE made it even less affordable. In 1980, the Parent Loan to Undergraduate Students (PLUS) was introduced as a “generous” funding source for parents. Only one parent needed to sign, and no serious credit check was required. The borrowing limit was $4000/year. However, as colleges increased their costs, their lobbyists went to work.
In 1993, the $4000 annual cap was removed, allowing parents to borrow up to the full cost of attendance, less any other financial aid received by the student. That soon put parents in more debt than the students with their Stafford loans.
It gets worse. Now, Congress does not even believe a family of four, for example, with the oldest parent, age 48, needs an emergency fund of about $49,000! Such budget planning was once sacrosanct and basic to sound family financial planning. It does not say much about either Congress or non-profit tax-exempt colleges’ understanding of basic economics. Now, three to six months of household expenses are considered an asset to pay for college. Not to mention any tax-deferred retirement that was invested during the previous year.
Plus, Congress continues to bend under the pressure of paid college lobbyists NOT to increase the financial need when a family simultaneously has more than one student in college! In other words, if the Student Aid Index (SAI), formerly the misnamed Expected Family Contribution (EFC), were $40,000 with one in college, it would be the same for each student in college, not $20,000/per student.
The Department of Education’s Federal Student Aid Office changes will affect seniors, rising 11th graders, and younger. Therefore, parents should be aware of what is coming for planning purposes. If a family with more than one child is not debt free by the time the first applies to college, the family income is less than $400,000, and the family is living below its means, there will be some challenges ahead.
The good news is that practical solutions can be implemented to lessen stress and lead to positive outcomes. It is a simple three-step process.
Call Programs for Education @ (978) 820-1295 or email help@SmartCollegePlanning.org to learn about the money-saving Dry Run that very likely will save you thousands each year in college costs, not to mention time.