December 17, 2009

(++++) MAKING COLLEGE (ALMOST) AFFORDABLE

Paying for College without Going Broke, 2010 Edition. By Kalman A. Chany with Geoff Martz. Princeton Review/Random House. $20.

      College costs outpace inflation, year after year, and this year have risen substantially even though consumer prices have actually declined. College costs frequently outpace gains in families’ income, and this year many families have no income gains at all. With the recession’s effects still being felt by so many people – including the unemployed – the ever-higher cost of higher education is a bigger burden now than ever. To the rescue (more or less) comes the new edition of Paying for College without Going Broke, the commonsense guide to maximizing aid and minimizing (to the extent possible) the financial stress of sending a child to college – or financing your education yourself, if that is what you need to do.

      It would be na├»ve in the extreme to say that Kalman Chany’s plainspoken book will actually make college costs bearable for everyone. Not so – which is why it is only “more or less” a rescue. But it would be unfair, not to mention unrealistic, to expect Chany to come up with financing approaches that will work for everyone. In truth, the only guaranteed way to afford college is to start saving a considerable amount of money when a baby is born, factor in the annual inflation in college costs for every year of the child’s life, and continue socking money away until he or she graduates from high school. This is doable in some cases, but not in the vast majority – there simply isn’t that much money available for education-targeted saving in most families’ budgets.

      Essentially, what Chany – an independent counselor on college financial aid since 1982 – does is approach college financing as a kind of chess game. It is not enough to follow the rules – you have to follow them with enough creativity to maximize your chance of obtaining the financing you need. Some aspects of Chany’s recommendations have to do with pre-college education. For example, students should take as many AP courses as possible, prepare carefully for AP exams, and apply to colleges that award course credits for success on those tests. This puts students ahead in terms of requirements for graduation – lowering the cost of getting there. An alternative approach is to attend a community college for two years – at comparatively low cost – and then transfer to a four-year school and graduate from it. This keeps the high-cost element of college to two years instead of four.

      Furthermore, Chany recommends that students apply to colleges whose admissions criteria they exceed. Colleges are more willing to spend money to attract students who will raise the perceived academic value of the school. This means finding out the average SAT or ACT score for each college and applying to ones where the average is well below yours.

      Another element of Chany’s approach is to be realistic about a student’s post-college earnings power in terms of debt taken on during school. That simply means not to load down a student with loans that are likely to be a severe long-term burden because of the pay scale of the career that he or she is likely to choose.

      In addition to these strategic thoughts, Chany offers considerable detail about the process of applying for aid – which is anything but straightforward. Aid is not necessarily limited by current income – and even high-income people should apply in case of a job loss or other economic reversal. Pricey schools are not off-limits for students who have solid academic credentials – in fact, many of them are allocating extra funds precisely because they want to admit more high-achieving students from lower socioeconomic backgrounds. And then there are the nuts-and-bolts recommendations, such as knowing deadlines for forms, which vary not only by form but also by college; following forms’ instructions carefully so you do not (for example) leave a line blank or omit a signature; doing a draft of your income tax early so you can meet application deadlines – and being prepared to send in your actual return when it is finished, so the college can compare it with your estimate; applying for aid as early as possible, and definitely before being accepted – by acceptance time, all the aid may have been allocated; planning to maximize education-related tax benefits in addition to obtaining aid; and a great deal more.

      Paying for College without Going Broke is not easy reading, despite its straightforward style – there is just so much territory to cover that it is easy to feel overwhelmed by the complexity of the process. And it is complex, without a doubt. But college is one of the biggest expenses of a student’s or family’s life, and it is worth investing some time in the financing issues in order to keep the cost as manageable as possible. The $20 that Paying for College without Going Broke costs is repaid many times over by the help and information offered throughout the book.

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