How to Pay for College
True, that's expensive. But, says Harvard economist Susan Dynarski, it will most likely be more expensive not to go to college. College grads earn about $1 million more, on average, over their lifetimes than those who have never gone to college. Their jobs typically offer better perks, fewer layoffs, and even more fun, says Dynarski. "It's an investment," she explains. "People who go to college have better lives."
SIZING UP THE OFFER
This hypothetical aid offer is based on real examples. Senior Writer Kim Clark has annotated it, noting common traps that snare parents and students when comparing offers.
NAIL DOWN YOUR COSTS
If your offer letter doesn't provide cost information, call the financial aid office and ask for a full cost-of-attendance budget, so that you can compare offers apples to apples.
THOSE PRICEY DIGS
This is the average cost of a bare-bones dorm room and meal plan. But students spend $266 more a year, on average, buying furnishings, and 1 in 5 freshmen shells out more than $1,000 on things like mini-fridges and beanbag chairs.
BEWARE THE LOWBALL
Many schools trim their cost of attendance by giving unrealistically low budgets for books and other extras. Count on spending about $900 a year on textbooks. And the cellphone, Saturday- night pizzas, game tickets, and road trips can easily add up to over $150 a month in personal expenses.
CARS BURN CASH
Transportation costs vary, naturally. But a big budgetbuster is keeping a car on campus. That can add thousands of dollars to your annual costs.
SOPHOMORE SLUMP
Find out what strings are attached to any merit scholarship, and be wary if it requires the student to maintain a high grade-point average. One dirty little secret: The average college freshman's grades drop compared with high school. Ask the school what percentage of sophomores retain their merit awards.
IT'S A LOAN, NOT A FAVOR
If a school includes a PLUS loan in its award package, it raises a red flag. PLUS loans are available to any parent with average credit, and next year's interest rate may top 8 percent. Parents can sometimes do better with a home equity loan.
THE BOTTOM LINE
The only way to fairly compare offers from schools is to subtract only each school's grant offers (in this case, $4,000 in scholarship and grant money) from its total cost of attendance. Then you can calculate your true out-of-pocket costs. In this case, the real bottom line would be $11,884.
DON'T WORK TOO HARD
The discipline of part-time jobs improves students' academic performance. But working over 15 hours a week starts to hurt grades, so challenge any work-study offer higher than $3,000.
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