Expert Interview with Bob Ugiansky with advice on paying for college

Advice on paying for collegePaying for college is among the biggest challenges facing students pursuing higher education today, says Bob Ugiansky, webmaster for TG Consumer Websites, which manages Adventure in Education.

"The cost of college is increasing faster than the rate of inflation," Bob says. "So each year, it gets harder for people to afford it."

Adventures in Education helps provide students and their families with the tools to navigate their journey to higher education. Here, Bob shares more about the site and offers his insight on making informed choices when it comes to choosing a school and paying for it. Read on:
 

What's the story behind Adventures in Education? When and why was the site started?

Adventures In Education, also known as AIE™, was launched in 1995 to help students and those who support them in pursuit of their higher education goals. It was and is part of TG's mission to provide public benefit. So we share our expertise via AIE and other free resources. Our vision is that people receive trusted guidance to make informed decisions and improve their lives.
 

What news, trends and/or headlines should these students be following right now? Why?

I would suggest keeping an eye on non-traditional alternatives that are emerging such as online schooling (even free ones), zero tuition programs and employer-sponsored programs. There might just be something new that feels like the right fit and may cost a lot less that going the traditional route.

If considering a private, for-profit school, especially in the hopes of the school getting you a job, read up on job placement claims. There has been a lot of news lately about a few schools misrepresenting their placement rates. The Department of Education has even taken action against some of these schools. "Gainful Employment" is the key search term.

Also, watch news from the Department of Education (ED) and the White House. Laws and regulations change and proposals are brought forth all the time regarding schools, student loans and college affordability. Like AIE, ED also creates some really cool tools to help people become more informed. Check out the college scorecard.
 

What do you think are the most common mistakes or oversights students make when it comes to paying for their college education?

It's hard to answer this without sounding like a "dream crusher," but not looking at the value of your chosen field at the school you plan to attend is an oversight. The key term here is "debt-to-income ratio," meaning "how much of my after-college income will go toward paying off the debt I took on while in college?"

How can you figure out a debt-to-income ratio? Look at a school's net price calculator for the average out-of-pocket cost of that school (full price minus aid). The Department of Education has average student debt data. Then check starting salary averages for the chosen field, via a Department of Labor or workforce commission site or salary surveys online, for an idea of potential income. Doing the math on the findings will reveal whether that path is likely to result in a large portion of income going toward loan repayment or not. We created a tool on AIE called Major Choices that does this for Texas schools.

Following one's passion is important, but it helps to be informed of what it might cost. Maybe an alternative learning method is worth considering? Or a different school?
 

What factors typically make a college education cost more for students?

Not all schools are priced the same, so it's worth shopping around. Students shouldn't base their choice of school on where friends are going or who has a better sports team (unless you will be joining that team).

Many schools have higher tuition rates for out-of-state students. Staying in your home state will usually cost less.

Taking time out for fun is a big part of college, but could make overall costs more expensive if it means eating in restaurants a lot and going out to paid events. A frugal lifestyle while in college will keep overall costs down. Challenge yourself to find free or low-cost activities.

Living on or near campus certainly has advantages, but it will also cost a lot more than commuting from home. And, of course, taking longer to complete the degree program will certainly cost more, too.

Regardless of the cost of any specific school, not applying for financial aid could result in paying more out of pocket or via loans. Even if the student's family is well off and has the money, the student should still fill out the FAFSA (Free Application for Federal Student Aid) each year. Schools don't just use this for need-based programs, but also to allocate other gift aid and financial assistance programs.
 

What are some ways students can reduce these costs without sacrificing the quality of their education?

Quality is a subjective term. A passionate learner who is self motivated can get a quality education online or at the library for virtually no cost at all. A hands-on internship can provide a lot of quality education too, possibly even while earning money. Regardless of how we choose to define "quality," I'll continue my response based on a traditional college path.

Starting in high school, look into dual-enrollment programs. That is where the student can take college level classes - usually at a community college and sometimes for as low as the cost of books alone - while earning both college and high school credit for the classes. It's a great head start academically and financially!

Community college is another great way to reduce costs, and it has other advantages. You could possibly still live with parents, tuition is generally lower than at a four-year school, you can earn a certificate in two years, and it's generally easier to get into a four-year school when transferring. If going to a four-year school is the eventual goal, find out which credits will transfer to maximize the benefit of starting with community college.

As I already mentioned but it's worth repeating, everybody should fill out the FAFSA each year. It may result in aid you didn't know you were eligible to receive. If you won't be able to attend without financial aid, make that clear to the financial aid office at the schools being considered.

Another big cost helper is scholarship money. It pays (literally) to do a thorough search and apply for as many scholarships as possible. Don't assume that you have to be a "straight A" student, a top athlete, or in a low-income family. There are thousands of scholarships available for a huge variety of criteria. Some are very obscure. Is your last name "Zolp?" Are you on a bowling team and have a 2.5 GPA? Are you one-quarter Polish and live in Toledo? There are scholarships for those. These are fringe examples, but they demonstrate that almost anyone should be able to find a few scholarships worth applying to (plug: we have a free scholarship search on AIE).
 

What should students consider when researching the cost of a school they're interested in?

Consider tuition, books, housing (room and board), transportation and miscellaneous expenses. One of the best quotes I've heard related to college and spending is, "If you live like a working professional while you're in college, you'll be living like a college student when you're a working professional." Because we know that financial literacy (i.e., smart money habits) are important to everyone, we have an entire section on AIE dedicated to managing money.

Most schools have a net price calculator on their website that gives a good indication of average total cost minus average aid. That's a good place to start. The college scorecard site that I mentioned will also give a good idea of cost and provide a link to a school's net price calculator.
 

Get more financial literacy tips on Mint.com.

 

When it comes to seeking financial aid, are all options created equal? Where should students look first for aid? What types of aid should they avoid?

They are not equal. Financial aid doesn't just include free money (gift aid), but also loans and work-study. Many students combine several types of financial aid to help cover costs.

Gift aid includes scholarships and grants. Scholarships are basically free money to help pay for school. Grants are similar, but some may have to be repaid if you drop out.

Work-study, where offered, allows the student to work part time while in school (and often for the school) to offset the costs. Since you are paying with your time, there is no repayment necessary.

Federal loans are a good option if you need to borrow. They are generally low interest, have very flexible repayment options, and even offer forgiveness options for certain public service occupations.

Private loans should be considered last. We recommend they only be used after all other sources mentioned above are maximized. These loans usually have higher fees, higher interest rates and less flexible terms during school and in repayment after school. Research and read reviews of lenders before considering them, and don't resort to credit cards. Of course, this doesn't include personal private loans. If grandma wants to lend you a few thousand interest free ... go for it. Just be sure to pay her back!
 

What do you think are some underutilized aid options? Why should students consider them?

There are billions of scholarship dollars available each year. It's a lot of work to search through and apply for them, but the payoff could be huge. A common assumption is that it's not worth the effort. If a student were to consider the potential return versus the time it takes to apply, it could easily be worth the effort. I've heard of some students getting enough scholarship money to completely cover their education.

Some schools offer aid "waivers" for out-of-state students that could reduce the tuition to as low as-in-state rates. Students considering a school in another state should check with the school's financial aid office to see if they offer out-of-state tuition waivers.

Many people may not be aware that there are tax benefits to saving and paying for college. It's worth checking the IRS qualifications (search for Publication 970 at irs.gov) to see if education expenses are tax deductible for yourself or dependents. There are state and school sponsored savings plans called 529 Plans that can be used to pay for education without paying taxes on the investment gains. If parents start early, this could really help ease the burden of college costs.

Lastly, students going into public service careers who take out federal loans could have all or some of their loan balance forgiven (i.e. erased). This generally applies to teachers, public safety workers, members of the military, school librarians and some heath care workers. To find out if you might qualify, research the Public Service Loan Forgiveness (PSLF) Program.

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