Paying for college

It’s the time of year that often sparks anxiety among parents of teenagers. In some cases, moms and dads are preparing to launch a son or daughter into their first college experience, meaning that tearful farewells may lie ahead.

But in families where those poignant moments are still a year or more away, the stress could be even higher as parents struggle to figure out how they will pay for the college where their kids will ultimately enroll.

The cost of higher education has continued its steady upward march at rates easily exceeding inflation. According to figures from the College Board, total average costs for tuition, room and board at four-year public universities jumped 2.7 percent last year, while the tab for private institutions rose 3.4 percent.

The total average bill at a public university reached $20,090, as private-school bills hit $45,370.

Obviously, the average cost does not come close to the actual tab at the most elite institutions. Kids whose sights are set on Harvard University could owe an eye-popping $63,000 a year. And if their long-term goal is to practice law or medicine, they can expect to add another $100,000 a year in order to earn an Ivy League law or medical degree.

For parents and grandparents who are searching for a smidgeon of good news in this pricey discussion, here it is: Very few students pay the full tab at most U.S.  colleges and universities.

Despite a widespread belief that financial aid for college students is a vanishing asset, total federal, state, institutional and private assistance for higher education remains substantial. Total aid has, indeed, declined about 9 percent since hitting a peak in 2010-11, but assistance over the past decade has grown by more than 50 percent, with much of the growth coming in federal loans and grants.

Only a small portion of students  – as few as 10 percent, by some estimates – pay the list price for their college education. That’s because, generally, the only kids who fail to qualify for financial aid are those in families whose household income exceeds $200,000 a year. Promising students in middle-class families will find that a highly selective college could, in fact, be within their reach.

It is important that families planning ahead for college understand this fact so that bright kids with potential to become tomorrow’s leaders will not be discouraged from setting their sights high. For anyone who doubts the value of pursuing an educational dream, a College Board publication entitled “Education Pays 2016, The Benefits of Higher Education for Individuals and Society,” offers these findings:

• Individuals with higher levels of education earn more, pay more taxes, and are more likely than others to be employed.

• Median earnings increase with level of education, but there is considerable variation in earnings at each level of educational attainment.

• College education increases the chance that adults will move up the socioeconomic ladder and reduces the chance that adults will rely on public assistance.

• College education is associated with healthier lifestyles, reducing health care costs. Adults with higher levels of education are more active citizens than others and are more involved in their children’s activities.

All that being said, the cost of access to a college education is still significant and poses a challenge to many families, which is why it is important that they get familiar with financial aid resources.

For students who plan to enroll in a Louisiana university, the Louisiana Office of Student Financial Assistance – www.osfa.la.gov/index.jsp – has details of all state-sponsored aid, including:

TOPS – a program of state scholarships for Louisiana residents to attend public institutions and schools that are part of the state’s community and technical education system.

START Saving Program – an innovative way for families to save toward college via a tax-exempt, managed investment fund, and receive a partial match of funds from the state

LA GO Grant – need-based support for nontraditional and low- to moderate-income students who need additional aid to afford college.

Students eyeing out-of-state institutions should make early contact with their chosen institution to get an idea of what may be available both from the school and various federal sources. A good initial step would be to review the Free Application for Federal Student Aid – available at fafsa.ed.gov – and become familiar with the details it requires. This form is used by most colleges, states and the federal government to determine need and eligibility for a wide range of education grants and work-study programs.

A site called NextGenVest – nextgenvest.com – offers a free online mentor who can help suggest scholarship sources and other aspects of financial aid.

Students who need to borrow money for college should turn first to the federal government, as federal loans generally are less costly and carry more protections than those available from private lenders.

And here’s an encouraging word for parents: Remember that after you fork over a bundle to help secure little Johnny’s future, the federal government offers an American Opportunity Tax Credit of $2,500 a year, per child, against costs for college tuition, fees, books, room and board.  

[Ed. note: Last month's column should have read "many restaurants" listed on Harrison have opened in the last 10 years; several we listed have been open for much longer, with a history of business on Harrison.]