This completely revised, up-to-date edition builds on the success of the original--the definitive, one-stop guide to the college selection and payment process, covering everything from basic timelines and tuition costs to predicting your scholarship award from colleges and taking ownership of student debt after graduation.
Updated to reflect the most recent changes in federal processes and timelines and including new chapters for undocumented and homeless students, this revised edition is a must-have for high school students and their parents.
The Financial Aid Handbook features straightforward language, engaging explanations, and hundreds of tips to maximize your financial aid--the scholarship funds that come from colleges themselves. No other book on the market teaches students and parents how to find real, four-year scholarships…and how to land them. It includes:
- The nine biggest myths about paying for college.
- A step-by-step guide to completing the FAFSA and PROFILE.
- The ultimate guide to federal, state, and private student loans.
- How to predict scholarship dollars with the Merit Aid Profile.
- How to negotiate with the Financial Aid office.
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About the Author
Carol Stack is the former director of admissions at Macalester College and Augsburg College, and served as a college counselor at both the International School of Brussels and St. John's International School in Waterloo, Belgium. For the past 20 years, Stack has worked as a principal at Hardwick Day, an enrollment consulting firm that works with the admissions and financial aid offices of colleges and universities. She has consulted on financial aid policy at dozens of colleges and universities from coast to coast. She lives in St. Paul, Minnesota.
Ruth Vedvik has held the position of director of admissions at the University of Illinois Urbana-Champaign, Ball State University, and Agnes Scott College. For the past 14 years, Vedvik has worked as a principal at Hardwick Day and served as interim vice president for enrollment at more than 20 colleges and universities. She lives in Champaign, Illinois.
Read an Excerpt
The 9 Biggest Myths About Paying for College
How do you plan on paying for college?
If you're like most people, you will apply to five to 10 schools that you like, fill out your FAFSA, then cross your fingers and see who gives you the best offer. Then you will beg and plead with your parents, take out loans, and head off for college in the fall after your senior year. You may already have some idea of your family's finances; you're certainly going to apply for financial aid, if you've already picked up this book. Maybe you're planning on taking out some loans; but you'll figure all of it out after you have applied.
Perhaps you've already applied, and the FAFSA deadline is coming up — and you just want to know how to get the most money out of the government. Hand over the tricks, ladies! Give me some charts and instructions and let's be done with it!
Well, kid, we're sorry, but we can't do that. Like anything worth learning in college, you've got to listen to some old person drone on for a while. In your case, that "old person" is the two of us, Carol and Ruth.
If you've already applied to colleges, and you're just trying to use this book to figure out your FAFSA or apply for private scholarships, we have something terrible to tell you: You might not get a significant amount of aid.
The biggest scholarships and financial aid you can get — the kind that really matter — come from colleges themselves, and in order to get them, you've got to apply to the right kind of place. If it's already too late, and you're looking at taking on huge student loans, please turn immediately to Chapter 11. How much is too much to take out in student loans? Well, we consider anything more than $32,000 total, or $8,000 per year, to be unacceptable. (See Chapter 3 for more information about student loans.)
You might be thinking, Why does it matter how much I pay for college? College is an investment; I'll be able to pay it back if I get a good job. And the better the college I go to, the better the job I'll be able to get.
Unfortunately, that's not always true. But it's incredibly difficult to understand why that's not true; you are never given the opportunity to question it. Socrates is a man; all men are mortal; therefore Socrates is mortal. The more you pay for something, the more valuable it is; the more expensive the college, the better the education and the better the opportunities that follow. You've never been asked to question that kind of logic; it seems as natural as Socrates's conclusion that he is mortal. And you are an American teenager — going to college will happen no matter what. It's the new high school diploma. It is a foregone conclusion, an absolute must, a compulsory, mandatory event in your life. Here is your circumstance: You will turn 18, graduate from high school, and head off to college. Going to college does not feel like a choice. But going to college, and where you go to college, is a choice. The reason that it is a choice — and not mandatory — is because college is not free. It must be paid for. And because it must be paid for, you are a consumer, the same as someone selecting a new pair of jeans at the local mall.
When you think about colleges, there is a hierarchy in your brain of what is okay, what is pretty good, what is better, and what is best. There are a couple of assumptions you're going to make about college:
1. The more selective a college is, the better the college.
2. The more expensive the college is, the better the college.
These two things aren't necessarily true. You've got to question both of these assumptions.
We're going to spend the rest of this book explaining to you that much of what you think you know about colleges and universities is, in many ways, untrue. The most basic thing that we need you to understand is: Colleges are a business, and you are their target market.
This doesn't make you helpless. You're a consumer of education; you have the right to choose how you spend your money. The marketing of education, while intoxicating, is nowhere near as potent as tobacco marketing, for example. How many people have you met who are "addicted to learning" (other than scarily enthusiastic, middle-aged teachers with embroidered cat sweaters and "History is Fun!" pins)? Education marketing isn't nearly as potent, but nonetheless, the effect is the same: You and your peers are under the impression that the "better" the college you attend, the "better" the job you get will be.
This is reinforced by successful people with degrees from elite colleges — maybe you know them, or you read about them in the newspaper or in books or whatever. You might think that they're successful because of where they went to school, and that may be partially true. Going to school — any school — is important. A great education is extremely helpful in life, not in the least because it opens up your mind to all the possibilities of the world. But successful people are generally successful for two main reasons: First, they don't give up. Even when they fail, they pick themselves up and try something new. They are dogged and determined and have thick skins. And second, they're good at getting other people to trust them. Whether they are money managers, editors-in-chief, CEOs, or famous authors, they are trustworthy in some way or another.
Those are not qualities that one can purchase; those are personal traits that one earns, you might say, through a lifetime of hurling yourself into experiences and thinking, life is an adventure in the great unknown. No college can teach you that, although many, many colleges — easily 1,000 out of the 4,400 schools in the United States — will give you opportunities and experiences to figure that out on your own.
But again, college isn't free; colleges are businesses that need to charge you for their services. And their services are kind of strange. They're going to sell you a product (a diploma) that also comes with an experience (four years of reading and talking and studying). The idea is that the product (the diploma) will help you get a good, well-paying job, and that the experience (the four years of reading and talking and studying) is the cherry on top; at least, that is the easiest, most saleable idea.
The reality, of course, is that the brand name of the diploma has little to no value without the skills and experiences you have in the classroom. Those four years of reading and writing and talking and studying and failing and succeeding and picking yourself back up again and trying something new are what give you those two qualities of successful people: 1) you learn to persevere; and 2) you learn not to try and sell anything you don't really have (that is, you become trustworthy; you discover the value of integrity). But because that is nearly impossible to sell (and they can't guarantee that you'll come out with either quality), it's difficult to distill into a marketing campaign, into a slogan, or on to a brochure. And so colleges try to sell the diploma instead of the experience — to sell, in short, their brand.
Yes! Colleges have brand identities, just like the Swiffer sweeper, just like Mercedes-Benz, just like Bloomingdale's. They've all got a "brand" and an "identity" and they all spend a lot of money on marketing. All the images you have of "college" and "what college means" are part of the rhetoric, the intentional language, of college marketing. Ivy leaves crawling up brick walls; snowy-bearded professors spouting Keats to dreamy-eyed undergrads in perfectly preppy ensembles. That means sororities and fraternities; fresh notebooks and acceptance letters on linen paper; exclusive clubs and first-class tickets to the next echelon of society. College is the golden stamp of the upwardly mobile, just like cigarettes, once upon a time, were the hallmark of the teenage rebel.
You might think that colleges and tobacco companies are different, because tobacco is "evil" and learning is "good." But at the end of the day, they're not that different: They are selling a product. Just like someone standing in a deli waiting to buy a soda, magazine, or candy, when you shop for colleges you are the target of millions of dollars in marketing campaigns. Those campaigns are validated by rankings lists in the U.S. News & World Report. And it doesn't seem to be the same as soda or magazine or candy marketing because we, as a society, have accepted that learning is "good." And don't get us wrong — learning is good. But at what cost? At what point does paying for education become a bourgeois vice, a trap of socioeconomic vanity, instead of a legitimately useful thing?
When we published the first edition of this book in 2011, one of our favorite stories about the trap of higher education debt was in a New York Times article from May 29, 2010. Six years later, it is still important. In an article entitled "Placing the Blame as Students Are Buried in Debt," the paper profiled a recent graduate of New York University, a 26-year-old woman who took on just under $100,000 in private student loans in order to finance an undergraduate degree in women's and religious studies. Cortney Munna now makes $22 an hour as a photographer's assistant, a position that hardly requires a college degree. Her monthly payments, once she stops deferring them (she's currently taking night school classes for another degree), will be roughly $700 per month.
"I don't want to spend the rest of my life slaving away to pay for an education I got for four years and would happily give back," she said. "It feels wrong to me."
Well, of course she doesn't. But what prevented her from using basic algebra — the kind that a high school sophomore would understand — to determine how much her education was going to cost her?
The answer is simple: She was blinded by her perception of NYU's brand. She and her mother are both quoted in the article as stating that NYU was a "good" school, and because it was a "good" school, it was worth paying for with money they didn't have to spend. Is NYU a good school? It's certainly as good a place as any other well-funded research institution to get a good education. But the logic that is implied with "good" is that NYU's degree would help this young woman get a "good" job, a well-paying job, no matter what her chosen field of study. Does she have one? Absolutely not — at least not one that has anything at all to do with her college education. The job she has might be "good" in that it is intellectually and creatively stimulating, but it's not well-paying and she certainly didn't need a college degree to get it. And now, Ms. Munna will have to figure out how to make a $700-per-month loan payment, on top of her other bills (like rent, food, and transportation — easily $1,500 to 2,000 a month on their own). Forget about travel, about new clothes, about going out; Ms. Munna will have to make a base salary of at least $45,000 a year (if she wants to live on beans and rice) just to make her monthly bills.
Maybe Ms. Munna is a fluke, you might think — NYU is a good school. But how do you know that? If high graduate salaries mean that one school is "better" than another, then NYU fails; according to a recent PayScale.com study, the highest reported salary for NYU graduates is for students who became high school teachers, with an average annual salary of $49,151, making NYU's graduates solidly middle-class. Yet, NYU costs as much as Harvard, whose highest reported salaries for graduates in the same survey are for students who became CEOs and make between $99,159 and $287,152 per year.
That does, in a sense, make Harvard "worth" paying for — but not NYU, even though their cost of attendance is actually higher ($68,400 annually at NYU, versus $64,400 at Harvard).
So what does this tell us? Well, hopefully, you understand that while NYU might be a good place to get a good, or quality, education, it's certainly not a place that can calculate a significant return on investment, like Harvard does; in other words, NYU — and hundreds of other "good" schools just like them — cannot statistically demonstrate that their graduates make more money than graduates of many other schools.
There are about 25 colleges that can prove, year after year, that their graduates make a lot of money. Ever hear the phrase "starving engineer"? Yeah, us neither have we. Unsurprisingly, of the 25 schools that provide a significant return on investment, the majority are engineering schools and the remainder are Ivy Leagues and hyper competitive private schools. So if you're going to major in engineering, math, or one of the hard sciences — and you know you're going to be good at it and stick with it — then everything you already know about college probably does make sense. Go ahead and apply to the best engineering school you can get into; take out crazy loans and work your butt off. Statistically, you will likely be rewarded with a high-paying job. But as for the rest of you? Everyone who doesn't know what their major is going to be, or what they'll be doing in 10 years? Sorry, but you've got to keep reading. We've got 9 major myths about college to break down for you.
Myth #1: You get what you pay for
To be honest, when we started to come up with our myths, we could have gone on for hours. Heck, we could come up with a hundred — and not just about college. We can come up with money-myths for just about anything, but we wanted to keep it simple. So let's start with the simplest myth of all: that you "get what you pay for." You've surely heard that expression, which implies that cost, the actual dollar cost of anything, has a direct correlation to the value you're going to receive.
What does that mean? Well, it means that we live in a capitalist economy, with a system of exchange known as the "free market." The market is known as "free" because anyone, anywhere, can dictate the retail price for their own product. You might be familiar with Etsy, the online marketplace for handmade goods. Let's pretend Ruth has suddenly taken up knitting and decided to sell her chunky yarn scarves on Etsy. She can charge whatever she wants for them; in the free market, the government cannot step in and say, "Hey Ruth! The scarves you're selling on Etsy are too expensive. They should only cost $25." Ruth can go online and set up her page and charge $125 a scarf, if she so desires. She is "free" to set the cost of her goods at any number she likes, and neither the government nor the theoretical buyer of her scarves can do a darn thing about it. The only thing the consumer can do is not buy a scarf. So the consumer can, in essence, exert some kind of price control by not buying any of Ruth's scarves. After a week of no sales, Ruth might think, "Maybe these scarves are too darned expensive." And then, perhaps, she'll lower the price.
So the rules that govern the free market dictate that demand is the control mechanism of price; simply put, the market will not support a cost that is higher than the generally-agreed-upon value for any given thing. For example, this means that it's nigh-impossible to sell a Honda Civic, generally a $25,000 car, for $60,000, unless that Civic has some kind of additional value, like Taylor Swift drove it in a music video. But you'd still have to be willing to shell out another $40,000 for the privilege of driving to work in a "piece of history"; if you didn't care about Swift or music videos, you'd only have to pay $25,000 at any dealership in the country for the same exact car. The accepted value for that Honda Civic is $25,000, and presumably, a car whose basic cost is always $60,000 — like a brand-new Mercedes-Benz — is going to be a "better" or "nicer" car.
And when it comes to college, value is a tricky thing. What do you get out of college, exactly? What is the primary reason to even go to college — other than the simple joy of learning? Is it to discover who you are? Is it to make friends? No. These are important, but they're much, much harder to put a price tag on. The point, to be blunt, is to get a good job. You want to go to college and come out on the other side with a good job, a better (that is, higher paying) job than you could get with just a high school diploma.
College graduates do make more money than people with just a high school diploma. On average, college graduates make $830,000 more throughout the course of their lifetimes, depending on who you ask. But graduates from where? From what college?
If a college education has, on average, an additional lifetime value of $830,000, then it stands to reason that the "best" college educations have a larger lifetime value — more than $800,000 dollars. And what are the "best" colleges? What constitutes a school whose diploma can really, truly increase your earning potential?(Continues…)
Excerpted from "The Financial Aid Handbook"
Copyright © 2017 Carol Stack and Ruth Vedvik.
Excerpted by permission of Red Wheel/Weiser, LLC.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Preface for the Revised Edition 9
Introduction for Parents 11
Chapter 1 The 9 Biggest Myths About Paying for College 21
Chapter 2 The Basics 45
Chapter 3 Let's Talk About Debt 73
Chapter 4 You, Your Parents, and Their Money 97
Chapter 5 For Parents: You, Your Children, and Your Money 115
Chapter 6 Merit Aid and The MAP 141
Chapter 7 The Cost-Based College Search 161
Chapter 8 Everything You Need to Know Before You Hand in Your Paperwork 171
Chapter 9 Merit Aid and the Application 187
Chapter 10 Making the Choice: An Apples-to-Apples Comparison 205
Chapter 11 An Intentional Alternative Plan 219
Chapter 12 What's in a Name? Understanding Ratings and Rankings 225
Chapter 13 What Color Is Your Passport? Advice for International Students 233
Chapter 14 Are You a DREAMer? Advice for Undocumented Students 241
Chapter 15 For Homeless and/or Unaccompanied Students 247