In the quest to further the education of their children, parents first need to educate themselves. College costs are at an all-time high and continue to rise each year. There are myriad options for financing higher education (as well as alternative paths to a four-year college or university). Every year potentially millions of dollars are left on the table simply because parents and students fail to fill out the proper forms, or don’t apply for grants and scholarships. So while their children are working hard on their grades and SAT scores, parents need to bone up on the latest tools to get their children to the next level without bankrupting the household.
“College costs are rising at a higher rate than inflation, so planning is crucial. Obviously, the earlier families start planning, the more options are available,” said Evan Leary, a financial planner at Family Financial Strategies in Lebanon. “It doesn’t matter what stage of the process you’re in when paying for college, the first and most important step families need to take is putting their financial house in order.”
Aside from knowing where they stand financially, Leary advises families to talk philosophically about what’s important to them; prioritizing the lifestyle balance they want to achieve, and analyzing the opportunity costs if they start saving for college versus saving for retirement.
“Once the goals are prioritized, then the financial data needs to be analyzed to determine how the numbers will fit in with the goals,” Leary said.
There are four basic sources of funding for higher education: cash, scholarships, grants and loans. With the exception of cash, each category has numerous options. The first step is to fill out the Free Application for Federal Student Aid (better known as the FAFSA). The Office of Student Aid (part of the U.S. Department of Education) offers over $150 billion a year in federal grants, loans and work-study funds to more than 13 million students paying for college or career schools. The FAFSA is the federal form used to determine eligibility and takes about 30 minutes to complete.
The student first needs to get an FSA ID, which consists of a user-created username and password. It allows users to electronically access personal information on federal student aid websites as well as to electronically sign a FAFSA.
“If you don’t fill out the FAFSA you don’t get aid; it should be your first stop,” advised Sabina Haskell, director of public affairs at Vermont Student Assistance Corp. (VSAC) a public, nonprofit agency established by the state in 1965.
In the past, the FAFSA couldn’t be filed until Jan. 1. Because the most recent tax year information is a requirement, families would either hold off filing the form or have to rely on an estimate of their taxes, both of which could cause much stress. Beginning this year, the form can be filed as of Oct. 1 (using the previous year’s taxes). The IRS Data Retrieval Tool allows information from tax filings to be downloaded onto the FASFA with the click of a button.
“The feds have tried really hard to simplify the process,” Haskell said, noting that filling out the form can be intimidating, but that it’s very straightforward.
The FAFSA looks at family income. In the case of divorced parents, if a parent has sole custody of the child or children and is not re-married, the non-custodial spouse’s income is not considered, according to Leary. However, child support and alimony are considered income.
Once the FAFSA (which includes a list of colleges the student is considering) is completed and processed, families will have a clear picture of how much aid (which can be scholarships, loans or both) they qualify for, and how much they are expected to contribute to the student’s education. Schools also use the FAFSA when awarding aid, and some private colleges require a CSS (another financial form, known as the PROFILE) to award non-federal financial aid.
It’s worth noting that there is a huge disparity in state money available in the Twin States. Vermont gives $19.2 million in need-based grants, which do not need to be repaid, to residents — whether studying in-state or out — per year. Additionally, VSAC administers 164 scholarships, and last year awarded $5.9 million to roughly 3,200 students.
The New Hampshire Higher Education Assistance Foundation (NHHEAF) is a private, non-profit organization that aims to help families in the Granite State navigate the college admissions and financial aid processes. Working with over 20,000 residents each year, it receives no money from the state and no federal grant funding.
“New Hampshire is the only state in the country that does not provide any direct aid to the neediest of financially needy students. We work with families to help them make informed choices about what schools may be good fits academically and financially, and to understand how to pay for college,” said Tori Berube, vice president of NHHEAF Network Organizations’ Center for College Planning & Community Engagement.
The Organizations’ EDvestinU program offers private student loans to any student attending college in New Hampshire, and any Granite State resident attending college, regardless of where he or she attends. As a nonprofit agency, EDvestinU offers interest rates that are typically lower than those offered by commercial institutions such as banks. EDvestinU also provides 36 $1,000 scholarships for college annually.
Edward MacKay, director of the Higher Education Division at the N.H. Division of Higher Education, explained that in 2011 the Legislature eliminated all general state financial aid programs. However, he added, “there are efforts now to encourage, one way or another, support by the state to efforts that would lead to a higher proportion of those graduating from high school going to post-secondary education.”
The process of applying to college and for financial aid requires juggling a lot of balls in the air simultaneously, but there are many resources to help make the process more manageable. High school
guidance counselors are a great place to start. Many high schools offer college information nights, which include one-on-one assistance.
“I think of the process as a road trip,” said Mark Pichette, director of counseling at Thetford Academy. “The student is driving the car, the parents are in the passenger seat and I’m in the back with the map.”
Pichette said that, while families have to look at what they can afford financially, there is also an ethical question of getting kids into debt. Many families have to take out student loans, which are often co-signed by parents, but the student is ultimately responsible for repayment once their schooling is complete.
“It’s up to us to educate them in what debt looks like. Budget it out, this is how much you’ll make; this is what the payment will be. Now look at what else you want in your life. It’s quite an eye-opener,” Pichette said.
There are good alternatives to four-year colleges (see page 10) but if a student is determined to go the traditional route, there are ways to lower the costs while still in high school.
“In Vermont, we have dual enrollment where students can take two college classes, typically one in junior and one in senior year, and only pay the cost of their books,” VSAC’s Haskell said. “Another option is early college, which allows high school seniors to do one full year of college while completing their high school degree, and the state covers the tuition.”
New Hampshire has the Running Start program, in which high school students can take Community Colleges of New Hampshire courses at their high school during the school day or online. The cost of a three-credit course is $150 (plus books and supplies), and the credits are transferable to colleges and universities (depending on the course and the institution). With Running Start, students can do up to one full semester of college courses while still in high school.
Catch the Wave is another New Hampshire program that allows high school juniors and seniors to earn college credit at a reduced price. Courses are taken at one of River Valley Community College’s three on-site centers, in Claremont, Keene and Lebanon. Again, credits are typically transferable.
One organization helping to fill the gap in New Hampshire is the New Hampshire Charitable Foundation, the largest provider of publicly available aid in the state, helping over 1,500 students per year.
“We’re looking to support lower-cost models for education, and pathways to the workforce,” said Katie Merrow, vice president of community impact at the foundation. “We provide $5 million annually in scholarships to the most promising students with the greatest financial need. We’re also looking at pathways to good jobs in high-demand fields. Both models directly affect how students and families think about their higher education and career paths,” Merrow said.
When confronting the challenge of choosing the right course beyond high school — and financing that option — the best advice is to start early, utilize the resources available and get educated.
“When you think about the amount of effort people put into buying a car, that doesn’t always translate when they’re spending $200,000 on a four-year college,” Pichette said. “Be smart consumers. Before you sign anything, know exactly what you’re getting yourself into; what kind of debt, what kind of responsibility, and your long-range goals.”
Like anything else in life, you get out what you put into it. The next time your kids are studying, join them. If you get stuck, call an expert. There are a lot of individuals and organizations in our area eager to help students achieve their goals.
Hanover native Jaimie Seaton has been a journalist for over 20 years. Her work has appeared in numerous publications, including Newsweek, Glamour, the Guardian and the Washington Post. Follow her on Twitter @JaimieSeaton.