The Economy is in the Toilet; Is my College Education?
Financing College Costs in a Tough Economy
Virtually every family in America, regardless of its economic standing, is concerned about the current state of the U.S. economy. In fact, the economy has displaced the war in Iraq as the single biggest issue in the current Presidential campaign.
Families with teenagers and children in their early 20’s are especially concerned about one economic issue; how to meet college costs.
Even families who began saving for college when their children were infants may come up short, particularly if their college savings are in stocks or real estate. There seem to be two principal categories of families, those who had no college savings plan and those whose savings are worth at least 25% less than they were two months ago.
College and university endowments, because they are heavily invested in the stock market, are also down considerably. That’s important because, for all but the very wealthiest colleges, a decline in endowment value may reduce the financial resources available for college-funded (institutional) scholarships.
These scholarships are a very important part of financial aid packages, especially at private colleges and universities, which tend to be more expensive than state colleges and universities . In fact, currently, private colleges offer students enough institutional-based scholarships to offset approximately 35% of tuition costs. As previously stated, the elite colleges have so much money that their ability to offer institutional aid will not be impacted seriously even if the economic downturn continues.
Other institutions will have no choice but to maintain or even increase their scholarship expenditures, even if it means deep cuts in other areas, in order to meet their enrollment goals. Still others, however, may not be able to afford the level of institutional scholarships awarded in recent years.
It seems reasonable to guess that, until the national economy recovers, there will be changes in the way colleges recruit and select students, and in the ways in which students and families make their college choices. Thus far, the economic downturn has brought a great deal of anxiety and uncertainty to families and colleges.
So, what should you do in the midst of so much economic uncertainty? Here’s where you might start.
1. Do not panic. Your ability to attend college may not be at all affected by our national economic woes. And, if you are affected, it will be a case of which college you attend, not if you can afford to go to college.
2. Meet with your high school counselor and admissions and financial aid counselors at the colleges you are considering to be sure you are aware of all of your financial aid options. Remember, few students have to pay full tuition and fees.
3. See if your high school counseling office has a list of scholarships offered by organizations in or near your community. Remember, competition for these scholarships may be limited, which is good news for you.
4. Use Google or Yahoo to search for “college scholarships”. You’ll find more than 60 free scholarship search sites. Each will “match” you to appropriate scholarships.
5. Avoid at all costs any company which claims it can help you qualify for more scholarships or financial aid than you would otherwise receive. Most such organizations, maybe all, are more interested in taking your money than in getting you money.
6. Look for educational bargains…lower priced colleges of high quality. There more than you think, especially in the South.
7. Consider educational loans. Remember that education is the best investment you can make in your future. But, resist the temptation to borrow more than is absolutely necessary.
Remember the story of Chicken Little. Although no responsible economist is minimizing the depth our current economic problems, there is no reason to believe that they will impact students’ ability to pursue higher education. However, students and their families will be well served by careful college financial planning, increased emphasis on researching their options, and more frequent contact with high school and college counselors who have the expertise to guide them.