(NECN: Peter Howe, Boston) - For thousands of high school seniors around New England, now is when college acceptance letters are starting to roll in. And for thousands of families around New England, even after years of saving, now is when they are realizing: They are far from having the cost of a four-year education covered.
It’s something Martha Savery and her colleagues at the Massachusetts Education Financing Authority see every year at this time – and it’s why they gear up a round of "after the acceptance" seminars all over the state, running this year through at least April 17, to help students and parents plan strategy.
Savery says it’s important not to forget: It’s exciting and something to celebrate when students get accepted to college. "We have to celebrate that a little bit," Savery said. "We do know that that's kind of short-lived, and all of a sudden families are going to say for themselves: 'OK? Now how how do I pay for it?'"
It’s far from too late, and one place Savery and many experts say is a good place to start: Never underestimate just how many scholarships are out there -- hometown, Rotary clubs, unions, fraternal groups, and many more – totaling according to many authorities the equivalent of hundreds of thousands, searchable online through numerous sites including the College Board.
"It's hard sometimes to get seniors to think about filling out another application, perhaps writing another essay," Savery said. But thinking about the potential payoff in the equivalent of how many dollars per hour of work would be involved and comparing that to a summer job – can be huge. "If it’s $200, $500, or $1,000, any amount of that money can really help families offset that gap."
"You never want to leave money on the table," agrees Mike Wasserman, executive director of Bottom Line in Boston’s Jamaica Plain section, an organization that works with low-income families and specializes in helping students who would be the first members of their family to attend college in the U.S.
One of Wasserman’s key messages: Be discerning about debt. "We always focus on financing your education entirely with federal loans. The difference in interest rates and flexibility between a federal and a private loan is significant, so families should really do everything they can to keep their loans federal, and that's both Stafford loans that students are eligible for but also Parent PLUS loans, which is a loan that a parent or family can take out to help support a student." Wasserman says there is essentially no downside, and lots of upside, to trying to get a Parent PLUS loan. "If a family is denied for a Parent PLUS loan, it does mean a student is automatically eligible for an extra $2,000 a year on their Stafford loans," Wasserman said.
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Savery said now is a good time also to look into what kind of payment plans that colleges students have been accepted to offer. Many will allow for 10 monthly payments for a year's tuition, with no interest charge, just a handling charge that may add $75 or $100 over the course of a year. The advantage there is that it can shave how much debt you have to take on, and if you have accumulated savings in a 529 plan, slow the drain of principal from that, allowing the 529 balances to – hopefully – keep compounding for the student’s sophomore, junior, and senior years.
With reducing the cost of debt, every little bit counts in maximizing how much parents can pay from present income if they don’t have the full cost of college covered. "If they can make a monthly contribution out of their present income, it's a great way for them to help offset some of those costs," Savery said. "It’s an installment plan, and I used that for both of my children when they went to college, and it was a great way for us to manage our monthly cash flow … It’s a really great way for families to get the ability to spread out that payment."
Finally, Bottom Line’s Wasserman said with today’s job picture and crushing $1 trillion-plus load of student debt that many of a generation of students are struggling to pay, if you’ve got multiple acceptances from comparably prestigious and rigorous schools: Yes, let the price tag affect what college you ultimately choose. Given what jobs graduating seniors are or aren’t getting, and how much debt they or their families are often carrying, borrowing to cover the cost of a more prestigious-sounding diploma very well may not make sense the way it did 10 or 20 years ago.
"When you look at the value you're getting for a school, families should feel comfortable using finances as a factor and should feel comfortable going for a school that fits within a family's price range," Wasserman said. "It doesn't benefit a student or a family long-term to take out more debt than they can manage."
With videographer John E. Stuart and video editor Lauren Kleciak
