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Should Affordability Be the First Question for College-Bound Students?

The whole college search process is backwards, according to high school counselor Frank Palmasani. Most students start by visiting colleges first to figure out the best academic and social fit. But with the cost of college soaring and more families plunging into debt to pay for it, the first step should be figuring out what they can afford.

The "financial fit method" is laid out his new book released in January, Right College Right Price (Sourcebook). Over 30 years of working in college admissions and high school counseling, Palmasani, of Darien, Ill., has watched the college search process get more complicated and expensive. He used to just help families fill out financial aid forms and trust the college would meet the student's demonstrated need, But with less aid and higher costs families are borrowing excessively — in many cases, beyond what they should.

"It's a huge problem, impacting the lives of future generations with kids not understanding what the obligation will be," says Palmasani.

Families should begin by assessing how much they can spend annually on college expenses. Then students should investigate need-based and merit scholarships. To get a ballpark figure of how much money schools typically offer in grants and aid, go to the college website's net price calculator. This tool, required as of 2011, has made the whole idea of finding a "financial fit" early possible, says Palmasani. Here, families get a clear picture of the bottom line before students decide to apply, rather than waiting for April award letters.

By only applying to schools that student have determined are affordable means the acceptance decision in the spring can focus on the school itself, says Palmasani. The model places schools in general cost categories based on historical aid data. While the sticker price can discourage some student from applying to some private schools, Palsmasani acknowledges that many elite colleges offer substantial need-based tuition, so students should not rule out some selective schools based solely on the published price.

Most students don't pay full price because of government and institutional aid. In 2011-12, full-time undergraduate students received an average of $13,218 in student financial aid, including $6,932 in grant aid from all sources, and $5,056 in federal loans, according to the College Board.

While parents may get it, students need to better understand the economics of their college choices, says Palmasani. He encourages high schools to provide a class that covers the basics of student loans and budgeting, "We want students to know they have a stake in this. 'Here is what your monthly debt will be. When you borrow more, here's what happens to you,' " he says.

The financial piece of the college decision has been ignored on the front end because families think the financial aid system is the "panacea," says Palmasani. While students can't lower the cost of college, the hope is if families begin to rule out the colleges they can't afford that the marketplace will have to adapt. "I think we can solve the debt crisis through education," says Palmasani.

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