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Cover Story: collegeplanning101: The Search Process Demystified collegeplanning102:Navigating the Financial Maze
A natural inclination in our market-driven society is to assume that the cost to provide a higher education is less than the going rate of tuition, but the facts are quite different. “Even students who do not receive any financial aid still pay less than it actually costs an institution to provide an education,” says Sarah Flanagan, vice president of government relations and policy at the National Association of Independent Colleges and Universities (NAICU). “On average, the published tuition at private not-for-profit colleges and universities, for example, covers only 62 percent of the instructional, technological and other related expenses that make up the true cost of educating a student,” Flanagan says. As Helen Nunn, director of financial aid at Susquehanna University explains, higher education is a service provider. “The ‘market basket' of goods and services that an institution purchases is very different from the ‘market basket' used to compute the consumer price index. The need to recruit and retain excellent faculty, maintain and improve facilities and programs, and the need to stay current with technology all contribute to the expense of a quality institution,” she says. At Susquehanna, as at other colleges, these expenses are supported by a number of non-tuition sources. Endowment income is a crucial funding source which accounted for eight percent of Susquehanna's operating revenues for the 2004-2005 fiscal year. Alumni, parents, and friends who give to the Susquehanna University Fund support university operations in a number of important ways, including library purchases and subscriptions, academic departments, student organizations and activities, athletics, and student life. Even with fundraising efforts by colleges and universities, the costs associated with delivering educational programs, and, consequently, tuition and fees, continue to increase. The good news is there are a lot of alternatives available to help families manage the expense.
“Although public attention is focused on published tuition rates,” Flanagan says, “most undergraduate students do not pay these prices to attend. For example, 82 percent of full-time, full-year undergraduates at private not-for-profit institutions receive grant aid from institutional, federal, state or private sources. For the thousands of students at these institutions who qualify for financial aid, the average net tuition (after all grants are taken into account) is 59 percent of the average published tuition.” According to Judith Rile '78, financial aid officer for the Berks campus of Pennsylvania State University and former director of financial aid at Rosemont College, the important thing is for families to do their research and look at all of the options available to them. “I encourage students to think outside of the box. Sometimes a business or individual will help a student pay for college costs with the understanding that, when the student is on breaks and summer vacations, the student will come and work for that organization, and then when they graduate, will agree to work for the organization for a period of time – paid, of course.” (See Financial Aid Basics for a list of common funding sources.) With the help of financial aid packages, Nunn says, most families are able to work out manageable payment arrangements. “My advice is to put together a list of quality schools in a variety of price ranges, and perhaps a variety of academic profiles; the stronger you look academically compared with the academic profile of an institution, the better your chances for receiving scholarship assistance,” she says. Although cost is an important aspect of the college search process, Rile says families should, first and foremost, focus on the program and the school, and what the ‘best fit' is for the student. “We want to give students the chance to choose what's important in their academic programs and learning environment, rather than something that seems like it is the cheapest option or the best financial choice,” she says. Susquehanna University President L. Jay Lemons' personal experience provides an appropriate illustration. “A cursory analysis of my situation as a prospective college student would have concluded that a private college would be beyond my means. Yet, it was at a national liberal arts college similar to Susquehanna University, that I found the best fit.” Lemons and his family developed a financial strategy to make his enrollment possible: “Along with governmental grants, institutional scholarships and campus employment, loans made my dreams possible,” he says. After taking out additional loans as he pursued graduate degrees in the 1980s and 1990s, Lemons paid off his last loan in 2001. “There is no question those loans were the best investments I could have made,” he says. — Victoria Kidd
Financial Aid Basics There are essentially four categories of aid: Scholarships – usually academic, talent or athletic Grants – outright gifts based on financial need Loans – require repayment, usually at a later date Employment – part-time jobs on campus and full-time employment during non-enrollment periods In addition, families can look to these possibilities: current income, savings, and investments (a number of savings vehicles are available; as an example, Susquehanna is a participating school in the Independent 529 Plan); or borrowing using education loans and/or home equity loans. There are federal programs that provide tax savings to families with tuition expenses. These include: The Hope Credit, The Lifetime Learning Credit, the Student Loan Interest Deduction and the Tuition and Fee Deduction. More information is available at www.irs.gov. Financial Aid Web sites: www.finaid.org, www.collegeboard.com, www.fastweb.com.
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