John O'Brien, NHCC President
Sun Newspapers, Guest Columnist
December 14, 2011
Many years ago, when my son and I went to our first financial information night (sometimes called "fright nights") at his high school, I came away with pages and pages of notes - but a disappointingly incomplete picture of options.
Even though the session was an hour and a half long and the local community college was less than a mile away, no mention was made of two-year colleges the entire evening. As a result, the parents who attended the session left convinced that the lowest tuition available was more than twice what it actually was.
This is not an isolated experience. There has been a flurry of national attention on college affordability recently, and many Minnesotans are understandably concerned that the cost of higher education is limiting opportunity for students in our state.
Filling out financial aid forms and scholarship applications can be time consuming and confusing. Knowing all the options and discerning the difference between them can be daunting. But the key to minimizing the "fright" of college costs is to become informed.
To make it easier for students to get a clear sense of the total cost of a college education, prospective students and parents will find a new "net price calculator" on college and university web sites. This new federal requirement stemmed from a 2008 law and impacts all colleges and universities across the country. The online calculators will provide a realistic snapshot of estimated costs as students consider their college options.
Every year a large percentage of students - 25 percent at North Hennepin Community College - don't complete the free financial aid application (FAFSA) and, as a result, leave grants and subsidized loans for which they are eligible unclaimed. Early planning and initial estimates of costs should prompt students and those helping them to explore their options with more information in hand.
After students more fully understand the costs of colleges and the differences between different institutions, they need to shift focus to financing - which is another area of complexity. Grants are straightforward, but there are many different kinds of loans for students to sort through.
Repayment terms vary, and interest rate variances that initially seem inconsequential can make a significant difference over the term of a loan. Some students are able to finance their education without loans, but graduates in our state walk off the commencement stage with an average of $29,000 in loans to pay back - the fourth highest average in the country.
Another federal change in the news is President Obama's plan to lower the loan amount students will be forced to repay from 15 percent to 10 percent of their discretionary income over a period of twenty years.
Students often don't know that student loans are not like car loans that can be discharged in a bankruptcy. When students take on more debt than they can comfortably repay after finishing college, the result can be catastrophic for family budgets.
The addition of the net price calculator on college websites and the national conversation about student loans are good for students, who deserve to see the whole picture.
|