INSIGHT ON: Higher Education – Paying for college 101

Posted on Jun 1, 2014 :: Higher Education , Insight On
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Posted by , Insight on Business Staff Writer

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For high school students deciding on a college, figuring out how to pay for it is almost as big of a decision as picking the school.

That’s something the Willems family of Appleton knows well. With a daughter entering her senior year at the University of Wisconsin-Milwaukee this fall and a son starting there, paying for college is definitely a family affair with parents and children chipping in, along with help from scholarships, grants and loans.

“The school’s financial aid office has been very helpful. It’s been a creative process, funding this college thing,” says Mary Willems, mom to Kim and Paul. “I guess that would be my best advice – be creative and work as a team.”

With the average annual cost of attending college ranging from just over $5,000 at a two-year technical college such as Fox Valley Technical College to more than $24,000 to attend UW-Madison, students – and families – can quickly accumulate debt. The average college student in Wisconsin graduates with $25,000 in debt, according to the One Wisconsin Institute.

“Paying for college has become a whole family affair,” says Jim Rohan, director of financial aid and student employment at UW-Green Bay. “It used to be students could work during the summer and earn enough to cover their costs. That’s not the case anymore.”

While help is available through grants, scholarships and loans, navigating the financial landscape is tricky. High schools and colleges have staff and programs in place to help students, but there’s still a lot to take in. There are also businesses like the College Bound Resource Center in Menasha, which was founded eight years ago by Robert Schoelzel when his oldest child was getting ready to go to college.

“Everything was so different from when I went to school; I realized quickly that families needed help,” Schoelzel says. “I work with students to make sure they pick the right school for the right reason since a poor choice can result in switching colleges and spending more than four years in school.”

Schoelzel works with clients on maximizing financial aid packages and finding the best saving vehicles for the students’ college education. “A lot of people come to me when their kids are already in high school. It would be better if they started when the kids were in kindergarten,” says Schoelzel, who offers programs at area schools.

All students heading off to college – and those already there – are encouraged to fill out the Free Application for Federal Student Aid, or FAFSA, annually. This document is sent to any colleges the students are interested in attending. The FAFSA does not take into account the value of a family’s primary residence, the value of a designated retirement account or the equity a parent may have in a business unless it has more than 100 employees and he or she owns more than 50 percent of it. Schools then put together individual financial aid packages consisting of work study, student loans, family contribution, grants and scholarships, Rohan says.

It’s at this stage – if not before – that the tough conversations start, says Sara Beth Holman, director of financial aid for Lawrence University in Appleton. Some parents may talk about taking out a loan to help a child pay for college, borrow from a retirement plan or take out a second mortgage, she says.

“I have to raise the point that if they take money from their retirement account, what will they do when they retire? You can’t take out a loan for that. I also point out that if they use a home equity loan to pay for college, will they be able to still get a new roof if they need it?” she says.

Starting early

Choosing the right school is the first choice students and families need to make. For some, that may mean a technical college or starting at a two-year UW campus and transferring elsewhere to receive a bachelor’s degree.

At Kimberly High School, Principal Mike Rietveld says guidance counselors meet with juniors to discuss their post-high school plans openly and honestly.

“We talk to them about what they want to do and then bring some reality to the situation,” he says.

For example, if a student has his heart set on an expensive private college, the counselor can figure out what kind of student debt he could be looking at, as well as what the average salary is for a graduate with that type of major he’s considering.

KHS also promotes its Advance Placement (AP) offerings, which allow students to earn college credit for classes taken in high school.

“We start talking about that with students in seventh and eighth grade and how they can use these classes to earn college credit and save them some costs down the road,” Rietveld says.

In the end, parents and students need to realize that a four-year education isn’t for everyone, says Rietveld, who began his own college education at FVTC.

FVTC students can earn credits they can take elsewhere – like Rietveld did – or begin working immediately, says Patti Jorgensen, FVTC’s vice president of student and community development.

“Many of our students can graduate with little or no debt and move right into the workforce with a good-paying job,” she says. “I tell them that in many cases their new employer may even pay for them to go on and receive their bachelor’s degree.”

UW-Fox Valley also has a guaranteed credit transfer program. Dean Martin Rudd says the school is a great starting point for students looking to save money, as well as for students unsure about living away from home or uncertain about a major.

“Many students can also still keep the jobs they may have had during high school and the summer,” says Rudd, adding students can fulfill general education requirements at UW-Fox and then move into their specialized courses at a four-year school.

Wherever students decide to go, figuring out how to pay for it needs to be a part of the discussion, Holman says. “There’s no cut-and-dry answer on how families will pay for college. Each family is different and so is how they’ll do it,” she says. “Proper planning and realizing the realities of college debt are essential.”

Click here to view a chart of Wisconsin college costs for 2013-14.