College affordability is a hot topic in today’s world. The good news is that there are a number of things that can be done to make college more affordable for our students. Below are five steps families can take to ensure their students have affordable options available.

1. Start Saving Now

Saving is a critical step in making higher education affordable. Most families, including our most financially needy, find there is a remaining balance after financial aid has been awarded. Middle and upper income families are often shocked to see that their Expected Family Contribution (EFC), is higher than expected. The good news is that saving, especially when started early, can make a big difference and provide families with more options. Savings have no impact on financial aid eligibility for most Maine families, and very little impact even for higher earning families – here’s why. There are many ways to prepare for the expense of higher education.  Learn more about one option, the NextGen 529™ program, with matching grants available to Maine residents.

2. Get Financially Fit

Ideally, families should start preparing to pay for college when their student starts high school by paying down debt and resisting the urge to take on new expenses. Taking these steps will help “free up” money in the family budget and make tuition payment plans an option. These plans allow payments to be spread over a semester or academic year, and unlike loans, don’t charge interest. Paying for college is a piecemeal approach, and having more “pieces” available, including financial aid, savings, tuition payment plans, merit aid, student summer earnings, and scholarships, will make the process more manageable and reduce the need to borrow.

3. Have the Conversation

It's a difficult conversation to have, but an early discussion to clarify expectations around who is paying for college and how much the family can afford will make school selection easier. For example, what if there is a balance remaining after financial aid? How much is each party able to contribute? What are the thoughts around borrowing? How much borrowing is comfortable and who is going to borrow? Having these conversations prior to senior year will help get everyone on the same page before award letters arrive and the final school selection decisions need to be made.

4. Build a List of Affordable Schools

Many factors determine which schools might be a good fit. But too often, affordability isn’t considered until late in the process. Researching affordability earlier can result in a better list of viable options. One key is to focus on net price, not sticker price. Net price is the cost for one year after grants and scholarships, which don’t have to be repaid, but can vary dramatically by school. A Net Price Calculator (NPC) can be found on each school’s website, and gives students an estimate of what that school will cost them. The results are only estimates, but can help students identify schools that appear to be a good financial fit. Students should also make sure their list includes a financial “safety school” that is affordable even if the financial aid award isn’t great.

5. Compare Financial Aid Awards and Consider the Return on Investment

Each financial aid award may look different, and in order to make an informed decision, families should do an “apples to apples” comparison of aid, net cost, and remaining balance. FAME’s Comparing Cost and Financial Aid Award worksheet can help determine and compare the cost across schools. If borrowing is needed, it is important to understand the return on investment. Before committing to a school and borrowing any loans, use FAME’s Student Loan/Salary Calculator. This tool can help students connect the dots between the amount they’re borrowing and their ability to repay after graduation.

Deciding which school to attend can be stressful and there are so many factors to take into consideration. It’s helpful to keep in mind that typically there are multiple academic and training pathways that allow students to achieve their goals. The plan for life after high school is like the first draft of a paper – it is meant to be revised, edited, and occasionally rewritten. The key is to have a variety of good options available, and to make as informed a decision as possible.

For additional helpful information and resources, find  previous issues of 5 on the 5th on our website.

FAME's College Access and Financial Education Team:

Mila Tappan, College Access and Outreach Manager

Jessica Whittier, College Access Counselor 

Nikki Vachon, College Access Counselor

Maria MacDougal, College Access Counselor

Floreka Malual, College Planning Advisor

Mary Dyer, Financial Education Officer

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NextGen is a Section 529 plan administered by the Finance Authority of Maine (FAME). Before you invest in NextGen, request a NextGen Program Description from your Merrill Lynch Financial Advisor or Maine Distribution Agent or call Merrill Edge at (877)-463-9843 and read it carefully. The Program Description contains more complete information, including investment objectives, charges, expenses and risks of investing in NextGen, which you should carefully consider before investing. You also should consider whether your or your designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s 529 plan. Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer, member SIPC, is the program manager and underwriter.

The Finance Authority of Maine (FAME) does not discriminate in the administration of any of its programs or in its employment practices on the basis of race, color, national origin, age, gender, religion, physical or mental disability, political affiliation, marital status or sexual orientation. FAME is an equal opportunity employer, provider and lender.

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