Monday, January 30, 2012

The High Cost of Higher Ed – Do We Really Need the Climbing Wall?

Last week I called a business school buddy, my annual homage to his birthday. When I asked about his kids, he shared his relief and joy at writing the final tuition check with the last of his crew graduating from college this spring. I must confess; I was suddenly struck by “final college tuition payment envy.” With twelve semesters of tuition payments left to pay (and counting!), assuming my three daughters stick to the four-year plan, I am singing the middle class college cost blues.

Like so many others looking for a ray of college affordability hope, I was wishful that President Obama would propose something truly revolutionary to help all Americans afford the dream of sending their children to college. I can’t fault our president that his proposal announced last week will barely make a dent for lower income families struggling to afford college and will provide little if any relief for the middle class. The cost of college is so alarmingly out of control that increasing the availability of Perkins loans for lower income families is like trying to protect a gaping wound with one of those pinky-size band aids. The cost of college today has put affordability out of reach for most Americans, including many who are comfortably middle class. Nothing short of a complete and drastic overhaul of the higher education system will adequately address the issue. But for that to happen we need to understand how we’ve enabled this craziness.

Colleges and universities are now on the defensive, having for years fueled an arms race enticing students with state-of-the-art athletic, academic and dining facilities, deluxe dorms, and the best amenities that their spiraling tuition and fees could buy. But before we place all of the blame on colleges for escalating costs, ask yourself if you weren’t wowed by the climbing wall and yes, lazy rivers (!) that are becoming the hallmarks of college athletic facilities across the country. Have we inadvertently sent the message that this is what we value in a college education?

When I meet a family for the first time I ask both parents and the student to prioritize their wish list for college; reputation, cost, academics, dorms, location, school spirit, Greek life, athletics, etc…what is truly important for a college experience? Why aren’t academics always at the top of the list? As the total bill at the most expensive colleges approaches $250,000, shouldn’t we be asking ourselves if our students really need the climbing wall?

No amount of government assistance can even begin to make a dent in this pricey behemoth we know as higher education. President Obama can threaten to cut off federal aid to colleges that do not meet certain cost reduction expectations. However, colleges have already been through several rounds of layoffs. For many colleges, reducing faculty further will have a detrimental impact on the quality of education that they deliver. And let’s not lose sight of the fact that most academicians teach for the love of it, not the money...they are not raking it in. (However, some college presidents’ and coaches’ salaries, in my opinion, should be fair game for the chopping block.) The more practical option for schools is to think more strategically about programs. Are colleges becoming too creative and stretched thin by the panoply of majors that they offer just to keep up with the latest trends led by their academic competition (another arms race)? Why haven’t more schools considered forming consortium with neighboring institutions as a cost effective way to continue offering many academic options, similar to the collaboration established by Wellesley (liberal arts), Babson (business) and Olin (engineering) two years ago?

Colleges will have to be creative in figuring out how to trim down their cost structures burdened with many fixed expenses. We, the consumers, can help by sending a message to the colleges about what we really value. Free laundry, palatial dorms and yes, that ubiquitous climbing wall are all nice-to-have, but not the reason we send our kids to college. The next time you are impressed by the over-the-top athletic facilities on a college campus, especially if your child is not athletic, catch yourself and ask this question instead. How will this enhance the investment return on my child's four year college education? When put in those terms, the climbing wall is no longer so impressive.

Sunday, January 15, 2012

Come February 1st, Filing Your FAFSA May Become Easier

FAFSA and easy are not two words that one generally finds in the same sentence. However, come February 1, families that have filed their tax returns might be able to take advantage of the IRS Data Retrieval tool which should simplify the process and allow them to complete the FAFSA form by accessing data from their 2011 return. This is good news for those who are organized and fortunate enough to receive all of their W-2 and 1099 statements early. The ability to use tax returns when completing financial aid forms is just one of several things families should know as they begin the 2012-2013 financial aid process for their students who will be enrolled in college next fall.

If you are new to the financial aid process, then you may only first be learning all of the buzz words and acronyms such as FAFSA, SAR, EFC, COA and CSS/Profile. Here’s a quick primer for beginners and a review for the financial aid veterans: All colleges require that students complete the Free Application for Federal Student Aid (FAFSA) in order to qualify for federal aid. It is available January 1 each year at Both student and a parent must complete and sign the form and each must apply for a pin ( which serves as the electronic signature. Once the form is submitted, preferably electronically, families will receive a Student Aid Report (SAR) which notifies them of their Expected Family Contribution or EFC, deemed to be the amount they can afford to put towards the Cost of Attendance, or COA. Some private colleges may also require a CSS/Profile form for allocation of their institutional aid. This form is administered by the College Board and can be found on its website: Whether you must complete the FAFSA, CSS/Profile or both, you will be required to present parent and student income (prior year only for the FAFSA, two prior years for the Profile) and assets (as of the date of filing).

When is the right time to complete financial aid forms? If you are hoping to be considered for need-based aid, the time is now! And before you put this off any longer, visit the websites for each college to which your son or daughter is applying and check to see which forms the school requires as well as the submission deadlines. They may be as early as February, so do not delay!

Pressure to simplify the financial aid process has led to the development of the IRS data retrieval feature for the FAFSA. However, before you get too excited, take note of the drawbacks which may preclude you from taking advantage of this easier filing method. Married couples must file jointly, have filed their taxes at least two weeks before the college financial aid deadline (which may mean as early as January), and any subsequent amendments to the return will not be captured. If like mine, your 1099 statements inevitably arrive late in February or even March, you may be out of luck. For those up against tight deadlines, you will need to estimate your income for 2011 and amend your financial aid documents after you file your taxes.

Even if you do not qualify for need-based financial aid, you will still need to file a FAFSA if your child will borrow through the federal Stafford loan program or if you plan to take out a PLUS loan. Though neither of these loans requires that students demonstrate need, they are part of the Federal Direct Loan program (Note that some colleges also require the FAFSA for their institutional merit aid). A college’s posted filing deadline does not apply for non-need based federal aid so timing is less critical. Therefore, I recommend waiting and submitting the FAFSA after filing a tax return to avoid having to estimate income.

I welcome reader questions and specific topics you might want me to address ( Check back here for future posts regarding financial aid changes and updates.