Saratoga Springs, N.Y.
Families flummoxed about what college will cost them have more information at their disposal than ever before. The Internet offers tuition data, advice on saving and borrowing, and explanations of financial aid. New online calculators let families estimate their bottom-line price at any college. But not all the information out there is easy to make sense of, and some of it's no good. A big push from the federal government to provide better consumer information has not created better-informed consumers.
Take Geoffrey Loiacono. Part of his job as a guidance counselor here at Saratoga Springs High School is to help students choose colleges. And he's already thinking about putting his young daughter through college. But when it comes to financial aid, even he still has some basic questions. One crops up a lot: Will a student get a less generous award if his family has college savings? Straight answers about paying for college can be surprisingly elusive.
Of course, making well-informed financial choices isn't a particular strength of the U.S. population. We run up credit-card debt, put too little into retirement accounts, and assume that tomorrow will be a brighter day. But planning for college is even trickier: Financial-aid programs and rules change all the time, and colleges follow different strategies in awarding their own money.
No matter how informed families are, if they depend at all on need-based aid—as many will—they won't find out exactly what each college will cost them until quite soon before they have to pick one. That's because need-based-aid calculations are based on each family's finances from the previous year. Starting in January, the forms can be filed, and colleges start calculating.
At a time of public debate over the value of college, families can spend four years preparing and have four weeks to decide with all the information in front of them.
That leaves a lot of time for speculation. Myths pass from neighbor to neighbor. Even if a parent can pay for advice, the expertise of many financial advisers doesn't extend to college planning.
Meanwhile, the stakes seem higher than ever. As the economic recovery sputters along, a college degree offers protection, but it can be costly: College price tags continue to rise while family income stagnates. Stories of unemployed new graduates buried in debt signal the risks. Many parents must strike a balance between catapulting their children into adulthood and protecting their own retirement. And they're often flying blind.
Vincent Pelliccia is in the thick of that uncertainty right now. His daughter Victoria is a senior at Saratoga Springs with dreams of going away to college and becoming a veterinarian. Mr. Pelliccia, a retired special-education teacher, has done a lot of research on what he might have to pay at various colleges. But he doesn't know. "It's very frustrating," he says. "I still don't have a clear answer."
Cutting Through Confusion
Up and down the income spectrum, families are trying to get a better sense of what to expect—and how to manage the financial burden. That's what drew dozens of parents to the Saratoga Springs High School auditorium on a Tuesday night this winter: two experts trying to cut through the confusion.
Beth Post-Lundquist, financial-aid director at Skidmore College, and her husband, Dan Lundquist, vice president for marketing and enrollment management at the Sage Colleges, travel around the area to talk with parents. Here they explained how to apply for financial aid, how colleges calculate eligibility, what types of aid are out there, and how to decipher award letters.
Parents chimed in with questions, clearly having heard tips and wondering if they were true.
One dad wanted to know if it made sense to pay off a chunk of his mortgage, since home equity is not counted as an asset in the federal calculation of family contribution, which most colleges use. In short, yes, Mr. Lundquist said: Both home equity and qualified retirement savings are good places to protect money from being factored into aid eligibility.
But it's not so simple. Normally, Ms. Post-Lundquist said, "the first $40,000 of your assets don't impact your family contribution whatsoever." And some colleges, she said, do consider home equity. Even answers don't clarify what to do.
After the presentation, many parents made a beeline for the door. Maybe they'd had their fill of technicalities, or just had to get home. But several stuck around for clarification or to ask questions more privately.
The night before, the Lundquists had been at Schuylerville High School, in a rural area not far away. Despite the schools' different profiles—a smaller share of Schuylerville graduates go on to four-year colleges—the questions there revealed similar states of confusion. Parents wondered, for instance, if colleges' net-price calculators assume eligibility for parent loans.
Financial-aid nights happen around the country each winter, but not everywhere, and not all well attended. Still, they're a good supplement to school counselors, who are careful when talking about money, says Duane T. Brown, head of guidance at Saratoga Springs. A family's financial situation, he says, is "kind of their business."
When families do ask, Mr. Brown says, he can usually reassure them that there's an option that won't "break the bank." But they must think practically about what can be a very emotional decision.
Strategies for Sale
For the Pelliccias, sending their daughters to college was always a given. "That's the mantra of the middle class," Mr. Pelliccia says. It was equally clear that money would matter; the family just wasn't sure how.
Mr. Pelliccia and his wife, a teacher, have been saving, but they don't expect what they've set aside to be enough. He has encouraged Victoria to start out at a community college while living at home, and then to transfer.
But Victoria wants to go straight to a four-year college. With that in mind, she tried to pick places with sticker prices under $40,000 and has been "applying for scholarships like crazy," she says.
When Mr. Pelliccia sought advice from the guidance staff at Schuylerville, where he used to teach, they sent him to Bob Shorb.
Mr. Shorb, a former financial-aid director at Skidmore, has counseled families part time for years. For $75 an hour, he'll give them a sense of how they would fare financially at various colleges.
Victoria is unlikely to qualify for any need-based aid, he told Mr. Pelliccia, but the family shouldn't rule out private colleges, where she could qualify for a merit scholarship.
One place that's captured Victoria's imagination is Wells College, a liberal-arts institution a few hours from home. She got in, with about $17,000 in scholarships. But Wells charges more than $45,000 for tuition, fees, and room and board, and Mr. Pelliccia doesn't know if the family can make it work.
Since the fall of 2011, colleges have been required by law to post net-price calculators on their Web sites. But Mr. Pelliccia has not found the tools to be very reliable. Some results include need-based grants that he knows Victoria won't qualify for, which makes him wonder about the information that colleges provide. The government may be pushing for transparency, he says, but "I've got to believe the schools have a vested interest in not" being as open as that.
Mr. Pelliccia learned from the Lundquists that financial-aid offers can have wiggle room, so he may end up going back to Victoria's top choice if its initial offer isn't enough.
"What matters," he says, "is where the bottom line is." And that, of course, is something he still doesn't know.
An Entrenched System
How should families think about college affordability, given that they must wait until the process is almost over before they learn the actual price? The worst thing they can do, private-college officials would say, is to rule out a child's top choice because of how much they think it'll cost. At many colleges, almost no one pays the sticker price. That's a message that may keep students from ruling out good options—and can only help high-cost, high-aid private colleges with recruitment.
But aid won't make every high-cost college affordable for every family. All students can do is apply and hope for the best.
Net-price calculators offer only estimates: Colleges won't make actual aid offers till they've combed through families' most recent financial information. The common practice of discounting tuition with merit aid can add to the mystery.
With the deck stacked against them, Todd E. Fothergill thinks families should begin by thinking about affordability. That's the advice he gives at Strategies for College Inc., an advisory service, where he is managing director.
Many of Mr. Fothergill's clients are upper-middle-class families, he says, but that doesn't mean they can comfortably pay for college. He advises them to focus on places where the applicant would fall into the top quartile: high enough for a good shot at a sizable merit scholarship, but not so high as to be the lone standout. Colleges have embraced tuition leveraging to nudge strong students to enroll, he explains, and savvy families can work the system.
Lots of families, though, fixate on a top-choice college, and some will do whatever it takes to pay. If they get good advice early, they can at least understand what they're in for, and better position themselves.
But if the biggest hurdle for families is the late-breaking actual prices, it's hard to see an easy fix. Pushing up the timing would require changing the admissions cycle, how aid eligibility is determined, or both. Each process is complex and entrenched.
In the current system, Lew Scialdone is doing the best he can. He applied for aid in January for his son Michael, and they'll see what happens.
The father's own college years—when he supported himself through work and loans—offer no model for Michael, a senior at Saratoga Springs. "It's a completely different world," Mr. Scialdone says.
Michael skipped a grade growing up, his father says, and tests have shown that he's gifted. At his first-choice college, the University of Vermont, he qualified for a presidential scholarship worth $12,000 a year. But it's unclear if that's all the support he'll get, or just the beginning.
The way Mr. Scialdone sees it, families scramble to send information to colleges during the application process. Now, with only months left before Michael leaves for college and no clear idea of what it will cost, he wishes colleges would do the same for them.