How to pass the college affordability test (CAT)

http://www.savingforcollege.com/articles/how-to-pass-the-college-affordability-test-cat-752

Founder of POCSmom.com, Guest Contributor.

Many students and parents invest time and money preparing for the SAT and ACT but don’t give much forethought to passing their own college affordability test (CAT). This is risky business when 31 million students started college but failed to graduate and student loan debt has gone beyond the $1 trillion mark. The earlier families include the CAT in college preparation, the better the chance their student has for success in college and beyond.

A degree is the return on investment (ROI) of higher education. Studies continue to show it leads to better jobs and higher pay than those with only a high school diploma. In fact, the total lifetime wages of those with bachelor’s degrees were shown to exceed $800,000. Degree earners even beat out those with some college credits.

Meanwhile, those dropping out with student loan debt still have to pay it back. No degree, higher debt and lower pay. What a miserable ROI for college plans that went awry.

Families can begin prepping for their own CAT by getting on the same page with the concept of affordability. The value of money has different connotations based on perspective and experience. A gap rivaling the size of the Grand Canyon can lie between financial expectations of parents and their progeny. Making hard college choices is less emotional when everyone understands the result of bearing a huge expense.

Once there is agreement about college affordability, parents and students are ready to join together as a team to accomplish the goal of student success. Although most of the work will be done by the college-bound, parents can help in many ways. Brainstorming ideas, organizing, researching, and keeping track of deadlines are at the top of the list. Less common but just as vital is making sure there is enough student downtime to avoid burnout and reduce stress.

Lifestyle issues are rarely thought of as college prep activities but they develop useful life skills. Getting adequate sleep helps with clear thinking and decision-making. Relaxing with friends hones interpersonal relationships and teamwork abilities. Spending time with family strengthens family bonds and communication.

Future lifestyle in terms of material acquisitions is something the parent-student team can also address. Homes, vacations, cars, dining out, gym memberships, clothing, spas, electronics, and boutique coffee all cost money. Colleges vary in costs and jobs differ in salaries. Forming realistic expectations of the lifestyle students can afford is a critical component of college affordability. So is gaining financial literacy, differentiating between wants and needs, and budgeting and banking know how.

Family members next are ready to have the college cost talk. There are lots of tools to help calculate projected tuition, fees, room, board, books and supplies, transportation and personal expenses. Colleges are required to have a Net Price Calculator (NPC) on their website that shows the projected cost of attendance minus grant and scholarship aid students may qualify for. To calculate federal financial aid that flows from the FAFSA (Free Application for Federal Student Aid), the FAFSA4caster can be used to find eligibility and Expected Family Contribution (EFC) to college costs. The federal College Scorecard has information colleges must report like loan default rates and links to a college’s own website for its NPC.

The last part of the family CAT is to figure out how to pay for college. There are many options. First, determine how much parents and students are willing and able to contribute. Include savings and a realistic percentage of income from jobs. Consider federal student loans in relation to future affordable lifestyle for payback. The federal Repayment Estimator can be used to estimate the loan payments under various repayment plans. For those mulling over parent federal PLUS loans, remember there is no loan for retirement.

The sooner families take their CAT, the more options they have. Outside private scholarship searches and applications take time but students have the potential to win money for college. Time also is on the side of savers who have more of it to invest in different vehicles. Don’t wait until college acceptances and financial aid award letters arrive. Take the CAT ASAP!

Wendy David-Gaines, aka POCSmom, provides information and insights about the parent role in the college process to make it less stressful and more fun for the college-bound and their families. She is founder of POCSmom.com, author of Parents Of College Students survival stories, and Long Island mother of two children who have graduated from college with self-supporting jobs. Wendy is the Long Island College Prep Examiner offering timely college prep tips and must-know info for families.