Strategies for the Ages
Sticker-shock survival: the right moves for families to make
The headlines are dismaying for every parent and child. Even as a college education becomes increasingly necessary to a youngster's career and financial success, college costs are soaring out of reach. Tuition prices are rising so much faster than inflation that a baby born this year could well face college bills approaching a quarter of a million bucks.
Dig below the headlines, however, and the news is at least a little less dire. It turns out that only a small percentage of students actually pay the high sticker prices of private colleges. The vast majority of students pay less than half that because they will attend public universities or receive financial aid, or both.
And even for families that can't imagine scraping together the more likely cost of $50,000 to $100,000, there are glimmers of hope. As going to college gets tougher, parents and kids are themselves toughening up: figuring out new means to generate more savings, negotiating harder-to-win extra aid from colleges, and coming up with clever ways to further reduce education costs. When then high school junior Lucie Noriscat began scouting out colleges in 2002, "I started seeing the prices and I'm like, 'Whoa!' . . . and my mom said, 'It is too expensive.' " But Noriscat buckled down at school and took prep classes for the SAT. And her father learned to negotiate with college aid officers. "You have to stay focused . . . and work hard," she says. But it paid off. Noriscat is starting her third year of a full ride at the College of the Holy Cross in Worcester, Mass.
As millions of families like Noriscat's have discovered, paying for college is doable. But there is no point in sugarcoating: It isn't easy now, and it is only going to get harder. One reason: Tuition prices continue to skyrocket. The average public university hiked its tuition for the 2005-06 academic year by more than 7 percent, more than twice the rate of inflation or wage increases. And administrators expect the price of a degree will keep soaring to help pay for faculty raises and meet student demands for ever nicer dorms and gyms.
True, more than 70 percent of private-college students now get institutional and government grants that reduce their costs by at least $6,900 a year on average. And about half of all public-college students receive grants worth about $4,000 a year. Add in tax breaks for parents and students who pay their own bills, and most students pay only about 60 percent of their school's sticker price, the College Board calculates.
But that silver lining contains a cloud. Financial aid isn't keeping up with educational inflation. And a smaller and smaller share of what aid is being handed out these days is going to students who have a proven financial need for it. Elite schools with big endowments don't have to compete for applicants and can still afford the luxury of focusing their aid on needy students. But cash-strapped public schools and second-tier private schools are increasingly deciding they can no longer afford to give low-income students all the money they need to afford tuition. Rather, many are handing out more merit scholarships to attract the high-scoring students (who are, on average, wealthier) who will help raise the schools' rankings and reputation. The rules for winning aid have become so arbitrary and unpredictable that independent financial aid counselor Bryan Ward in Austin now tells families that even if they have low incomes or their kids are valedictorians, "I can't guarantee you'll get a dime."
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