College Affordability for your Family: What are the significant “levers” that YOU control?

I am not referring to the traditional, albeit laudable, approaches of writing to your state and federal legislators to at least maintain the current levels of government aid in the form of school and student grants and other subsidies. Even if one could affect public policy, it may not directly benefit your family due to, say, income qualifications.

I am referring to those items entirely in your family’s power and control. These items can have an enormous impact on the ultimate cost and debt incurred (if any). They require unwavering, laser like focus and the long term commitment of the parents and child alike on the ultimate prize; namely, the education of your dreams at the lowest possible cost. These items include:

1. Create the proper incentives with your children. Let them know early and often how much money will be available from family resources for their college education. In effect, your children will be placed on notice that they will be responsible for the balance through scholarships, savings or student loans. These conversations should motivate your child to do their very best to earn scholarships and ultimately make prudent, net cost sensitive college selection decisions (see http://bit.ly/ZpXuf).

2. Academic Achievement…Academic Achievement….Academic Achievement! Schools will “buy” improvements to their US NEWS & World Report College Rankings by awarding academic grants to students that will improve or at least maintain their rankings. From the schools perspective, higher rankings generally translate into greater selectivity, greater pricing power (tuition & fees), more research grants and larger endowments over time. Students, take those AP classes and get great grades!

3. State College Honors Programs vs. Highly Selective Private Schools. If your child has the academic credentials and is accepted into the highly regarded honors program at your state college, paying that in-state tuition can represent a 60% savings. From the perspective of potential employers and graduate schools, degrees from State College Honors Programs are frequently deemed equivalent to those from expensive, highly selective private schools.

4. Get accepted to those colleges with the highest endowments. These highly selective colleges (Ivies, Stanford, etc.) generally have the most financial need based aid available which is awarded based upon generous, transparent financial aid formulas. Further, the admissions selection process is (financial) need blind.

5. Attend schools that award three year bachelor degrees. These programs represent a 25% savings and will become more common as a result of the economic downturn.

6. Start off at low cost community college for 2 years. This strategy can represent a 40% savings. It will become more of a norm as a result of this economic crisis. Note: many community colleges are now also awarding four year degrees, another attractive option.

7. Reward your children if they graduate early. By taking that extra course each period (at normally no extra cost), a student is able to graduate early. For instance, a new car is a great incentive for the child and is a net savings to the parents (vs. tuition, room &. board). Conversely, penalize your child if they take more than 4 years to graduate which, unfortunately, has become the norm.

8. Women: consider majoring in engineering. Women represent only 20% of engineering majors. Schools are attempting to attract more qualified women into engineering (and the sciences) with significant scholarship funds. Biomedical and chemical engineering are particularly attractive.

9. Specialize in sports where the NCAA permits more scholarships per starter. For instance, the NCAA only allows 9 scholarships for Division 1 Men’s Soccer or .82 scholarships per starter). With often 30 players on a college team, soccer coaches frequently “stretch” there soccer budgets by awarding partial scholarships to players on the rooster. On the other hand, football offers 88 scholarships (mostly full scholarships) and there are 22 starters, or approximately 4 scholarships per starter.

10. Parents: Do your part! Maximize the funds available to your children by saving early and often on a tax advantaged basis. You need to develop an optimized college investment plan from the thousands of available of investment options from 529 Plans, Education Savings Plans (Coverdell Plans), etc.

If you need professional, independent advice, try www.401kid.com which parents and financial advisors like you use to obtain optimized, unbiased investment and financial aid advice.

Please let us know what you would like to see from 401kid!

Making your education dreams come true,
Bob Lally
401kid, Inc. COO
(father of a current college student + a recent college graduate)

401kid, Inc. provides unbiased, college financial planning advice via www.401kid.com where families and advisors can optimally fund education dreams with superior a) conflict free asset allocation and financial aid advice; b) a comprehensive ’supermarket’ of education savings investment options; c) savings discipline opportunities for building client wealth; and d) value added content integrated with social networking

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