While the rising cost is certainly a factor, it is often the decisions that families themselves make that cause them to unnecessarily pay more for college than they should (and potentially increase student debt).
As hard as it might be, there are instances where a family needs to recognize a college-related decision will cost them more than they can reasonably afford. Here are 4 common mistakes families make that increase the cost of college:
1. "If you get in, we'll find a way to pay for it"
Although getting into a highly competitive school is a wonderful accomplishment, it does not guarantee an affordable financial aid package, nor does it guarantee a future job or earnings. Your child may want a fancy sports car, but there is a limit to what you can afford, and college is no different.
Parents simply must have the college "money talk" with their child.
2. Don't submit the FAFSA
You must complete the FAFSA to qualify for need-based financial aid, or aid based on your income. If a family has need, this is the only way they will qualify for the free grants and scholarships available to them.
A persistent myth is that a family can make too much money to qualify for any financial aid, leading many wealthier and even middle class families to not bother filling out the FAFSA because they don't think they will get money anyway. Big mistake!
Some colleges award merit aid just for actually completing the FAFSA, and others require the FAFSA be completed to be awarded any merit aid such as academic scholarships. And the FAFSA is also required for families to receive federal student loans and their more favorable repayment terms.
3. Don't match your student with schools likely to give him or her the most money
There are plenty of excellent colleges around the country, some you've heard of and some you haven't. And a couple of them can equally be good fits, except that one costs half as much as the other.
Certain schools give certain students more money than others, and it is important to understand this matchmaking component. Some colleges award aid only based on a family's financial need and do not provide scholarships for good grades, while others give generous scholarships for strong academics. Some private colleges give potentially significant discounts simply for coming from a different state.
Consider the assets your child brings to the table and apply to schools that will reward you for them.
4. Take out PLUS Loans
The PLUS loan program can be used as a supplement after a family maximizes federal Stafford loans and anything they have saved, but it should not be used to cover all or a significant portion of college expenses. The program allows allows parents to borrow the entire gap between the child’s education expenses and whatever aid he or she has received—for every year and every child in school. This also means parents can dig themselves a very deep hole that includes far less favorable interest rates and repayment terms.
If you can’t afford a college without a PLUS loan, you probably can’t afford the college.