GUEST POST | College Doesn’t Have to Be a Debt Trap: 5 Tips for Reducing College Costs

College Doesn’t Have to Be a Debt Trap: 5 Tips for Reducing College Costs

Nine in ten parents believe that college is a worthwhile investment. While this statistic from Sallie Mae’s How America Saves for College 2015 report shows that the value placed on higher education is nearly universal, a staggering 84% of parents are also willing to stretch themselves financially in order to make college possible for their children. “Better we have the debt than [our children] have the debt,” Democratic presidential candidate Martin O’Malley was quoted as saying in a recent Washington Post article on student loans and parent borrowers.

The increasing costs of higher education are a part of our current reality, but breaking the bank doesn’t have to be. Making smart financial decisions from the start, and turning good savings behaviors into long-lasting habits can be the ticket to a fruitful and (hopefully) debt free future – for students and parents alike.

Understanding College Financial Aid Awards

by Judy Dahl

Helping your son or daughter choose a college is a complex process. Your student likely applied to several schools and completed the Free Application for Federal Student Aid (FAFSA) to see, based on your family's income and expenses, what you're expected to pay out of pocket for his or her first year of college. That amount is called the expected family contribution (EFC).

Each college that accepts your student sends a financial aid award letter that specifies what federal and institutional grants, institutional scholarships, federal loans, and work study funds your son or daughter would receive for attending that school freshman year. Be aware that financial aid offers might expect your family to pay more out of pocket than your EFC specifies. (See sidebar for definitions).

You compare the letters to determine which school is offering the best award package so you can make an informed decision about which college to attend. Sounds simple, right? Well, not really.