Do I need to know what my parents earn before I create my college list?
How much money your parents earn and how much assets they have will have a substantial impact on how much financial aid you receive, and will ultimately impact which of the highly selective colleges are affordable for you to attend.
For every college you put on your college list, you need to know how much financial aid that college can offer you, and how much your family must pay out of pocket for you to attend that college.
We have discussed how to figure out the amount of financial aid you will receive both in the form of grants and scholarships that you do not need to repay, and in the form of loans that you and your family must repay after you graduate.
What your parents must pay out of pocket
You must have a good estimate of what your parents must pay out-of-pocket before you even submit your application. The amount of financial aid you receive varies a lot by college, so what one college offers you is not a good benchmark for what the other colleges on your college list will offer you in financial aid. You must figure out the financial aid amount college by college.
Unless your parents are very high income earners or wealthy, you have to be sensitive to the out of pocket amount your parents have to pay for your college attendance.
Both you and your parents should pay close attention to this out of pocket number, it may be much more than your parents can realistically afford, or it may be an amount that your parents can only afford after a lot of sacrifice.
Remember that the out-of-pocket amount for one year must be multiplied by 4 years to reach the total amount that must be paid by you and your parents to cover your costs of college attendance.
Can you borrow the out-of-pocket amount?
In almost all cases, the out-of-pocket amount can be financed with federal loans or private education loans. However, you must be confident that either you and/or your parents will be able to repay the loan(s) without triggering financial stress.
Imagine a scenario where your all-in costs of annual attendance is $67,000, and the college offers you grants of $25,000 and a combination of Direct Subsidized and Unsubsidized Loans of $10,000 giving you a total financial aid amount of $35,000 . You and your parents will have to meet the balance of attendance costs of $32,000 out-of-pocket.
Assume your parents can afford to pay $12,000 of those costs out-of-pocket, and the balance of the $20,000 has to be financed with a combination of PLUS loans and private education loans. Over 4 years, the total debt incurred for your college attendance adds up to a whopping $80,000.
While you could take on part time work while in college, and work in the summer as well, to pay off some of the attendance costs, you would be doing so at a price to yourself. Your academics could be impacted even as you take on stress and lose out on campus life.
Can you manage the debt repayment?
You and your parents will have some tough questions to ask and some tough decisions to make.
Is this amount of debt worth taking on for the education you will receive?
How long will it take you to repay the debt if you alone had to pay it off?
Are you likely to land a high paying job ($80,000 a year or more) straight out of college?
Will your parents’ earnings potential remain the same or improve so they could help you pay off the debt sooner?
Find the colleges that your parents can afford
The 61 highly selective colleges possess quite disparate financial resources, with some being very generous with financial aid and others not so much. Finding the right match will take some extra homework on your part upfront.
Public colleges offer subsidized in-state tuition to residents that amount to about 25% of the costs of private colleges. For students who live in states with a highly selective public college, then the choice to save costs, if costs are an issue, should be an automatic one and the public college should be added to your college list.
These public colleges also offer tuition rates to out-of-state students that are about 20% lower compared to the private colleges. However, the financial aid packages may not be as generous for out-of-state students.
There is also the option of adding less selective colleges who offer generous scholarships to academically high performing students to your college list. There will be a trade-off in this decision, but it is one that you can also consider to make college more affordable and avoid incurring high amounts of debt.
Admitted students possess the qualities top colleges value!
Find out with real examples what these qualities are to get you admitted to the Ivy League and top colleges.
Get the FREE Guide Now
