3 REASONS TO CHOOSE A COLLEGE BASED ON PRICE By Anna Helhoski
Many prospective students choose a college for its location, its reputation or even its campus vibe. Here are three reasons to choose a college based on price.
You can avoid high debt
If you pick an affordable college, you’re less likely to be burdened with high debt. Borrowing less now will leave you with more money for other things you might want to do eventually, like buy a home, take the vacation of a lifetime or start a family. It also frees up money for you to make smart financial decisions like build an emergency fund or save for retirement.
The sticker price of a school will show you tuition, fees, room and board. But the net price is the best indicator of affordability – it’s how much you’ll pay after factoring in free financial aid.
“In California, if you were looking only at sticker price, I would say, ‘Go to a community college,’” says Jessica Thompson, director of policy and planning at the Institute for College Access and Success. But because of how the state grant aid system works, the net price for attending a four-year University of California school is often less, Thompson says. In general, public colleges and universities are cheaper than private ones. But say you get $35,000 in grant aid and scholarships to attend a private school with a sticker price of $50,000. It would be more affordable than a $20,000-per-year public college that offers you nothing. Before you apply, use the net price calculator available on a prospective college’s site. Then when you get your college acceptances, compare financial aid award letters to see how much free financial aid you qualify for, such as grants, scholarships and work-study, along with federal loans.
You’ll give your parents a break
If your parents plan to help you with college costs, choosing a less expensive school can help them avoid tapping their savings, home equity or retirement.
Along with using income and savings for college costs, parents might take on private loans or federal PLUS loans. Parent PLUS borrowers take an average of $16,100 per year, according to The Brookings Institution, a nonprofit public policy organization. PLUS loans have higher interest rates and fewer repayment plans available compared to federal direct loans, which undergraduates take. That means it’s cheaper for you to borrow than your parents, and you’ll have more time to repay the debt. It also leaves your parents’ savings intact.
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