Can You Afford Two Extra House Payments?

College Search


Financial Aid

MIchelle Kretzschmar

Money representing two extra house payments for college


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Let’s talk about how much to expect to pay for college. It’s time to stop the wishful thinking about full-ride scholarships and encouraging your teen to pursue her ‘dream school.” It’s time to answer a very basic question, can you afford two extra house payments each month? Because that’s how much you’re going to be paying to send junior to your state flagship university. Do we have your attention?

You can pay as much for college as for a house

Two house payments for at least four years. Think about that for a minute. Actually, if you were really buying a house, you would be thinking about it for a lot longer than a minute. You would probably spend a lot more time thinking about the money side of the equation instead of sending your kids off to the latest Parade of Homes to decide where they want to live.
This is the point we’re trying to get across. When we talk about paying for college, we’re talking about numbers on the scale of buying a house. If you plan on sending two kids to your state university, you’re looking at a total cost of attendance of around $200,000 or more depending on your state. The median price of an existing home in the United States is around $220,000. We really aren’t exaggerating.

Buying a home is easy compared to paying for college

But we haven’t even gotten to the scary part yet. Buying a home is ultimately a transparent process that is aided by several professionals and grounded in financial realities of credit reports, income, interest rates, and down payments. Of course, there was the housing bubble that almost took down the economy a couple years ago but that only makes the scary part we’re getting to even more scary.
No such process exists when buying a college education.
You really need to think about this.
Most people use a realtor when buying a house. Even though the realtor is taking a cut and has incentive to sell as expensive of a house as possible, she knows that a bank is going to have to approve the loan. That’s why most people get pre-qualified for a loan before they even start shopping. The realtor isn’t going to waste her time showing us a half million dollar house when she knows we can only afford $200,000.

We don’t start college searches by figuring out how much to expect to pay for college

What do we do when we start looking at colleges? We have our kids talk to a college admission representative from various colleges. Either they show up at the school or maybe they go to a college fair. Do you think the first thing they do is hand them a profile with a breakdown of costs, financial aid, and average graduate debt?
We take our kids on college tours, the equivalent of an open house, without knowing if it’s something we will be able to afford. Open houses usually have a prospective buyers sheet readily available that lists all of the cost information including an estimated monthly mortgage payment. Have you ever picked on up on a college tour?
And this isn’t simply because we’re bad parents (although there are plenty of parents who seem to be reluctant to do the adulting required in the process), but rather because you really don’t know how much a college will cost until you apply for financial aid. The closest you can come to pre-qualification is using a college’s net price calculator. And sadly, most parents don’t even do that before their kids start their college visits.

Colleges don’t help the situation

The problem with paying for college is that colleges do everything possible to delay families from having to face that final reality, at least two house payments a month. At private schools, parents are reassured that over 90% of freshman qualify for financial aid which is true for most private schools. But in most cases, the amount the student receives isn’t going to bring the cost to below what you would pay at your state university.
That means we’re back to the two house payments.
So what can you do about?
Like we said before, you really need to start thinking about it.
Think about how as you start using the various college search websites why the average net price is not displayed prominently in the search results like the price is on realty listings.
Think about why colleges don’t use a standard financial aid award letter to make it easy to compare the actual costs of the various colleges.
Think about what it means when a college claims to meet 100% of need year students with family incomes under $30,000 are still paying over $10,000 a year.
Think about why colleges like Tulane, Harvard, and Cal Tech refuse to allow College Abacus to access their Net Price Calculators which would make it easier to compare results.

You need to give yourself time to figure out how to pay for college

The reality is that even with all of the information the various realty websites offer, the search results don’t include a “buy” button like you see on websites that let you search for the best hotel or airline prices. That’s because they know there is a lot buyers have to do before they can decide to spend that kind of money.
The fact is the you don’t see “buy” buttons next to the US News Best College Rankings either. That should really tell you something. Yet, families still wait until they have actually put a “bid” on a college before they start figuring out if they can afford it. If you really want to pay less for college, you’re going to need to start spending the TIME to think about and evaluate your options. Otherwise, you’re essentially just clicking the “buy” button when you accept whatever financial aid award the college decides to provide.

So, how do you find colleges that are likely to award your student money?

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