Myths and tips on getting a good, affordable education

If you missed MPR's Bright Ideas forum last night on how to get a good, affordable education - or my tweets on it -- I've got a few highlights for you.

The host, Stephen Smith of American RadioWorks, the documentary arm of MPR's parent company, chatted with Carol Stack, a former Macalester and Augsburg admissions director who now works at the education consulting firm Hardwick-Day.

She's the author of The Financial Aid Handbook: Getting the Education You Want for the Price You Can Afford by Career Press, which she said she wrote because she found no other book that gave students information in a conversational manner. Most were like "instructions for the 1040 Tax Form," she told Smith.

Here are my rough notes. Quotations are not verbatim.

(You can listen to the broadcast Oct. 24

The two got down to business quickly with seven myths that  Stack discussed:

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  1. You get what you pay for. No, higher price doesn't equal better. Each college has own mission and sets its own price for that.

  2. Go to your "reach school." It may seem like the most prestigious, and the best for you. But it may also be a reach financially, and so may not be worth it.

  3. Get into the school, then think about how to deal with it. Families need to talk about money issues first. Stack said parents find it hard to admit that money is an issue, and aren't talking to their kids about it. That's tough, because students have few aids to help them through that.

  4. If my parents don't pay, I'll get more financial aid. Not true. And if parents don't fill out the Free Application for Federal Student Aid (FAFSA), kids can't get aid at all.

  5. Only the poor get financial aid. Because the news media focus so much on the Pell Grant, which is aimed at lower-income families, many people believe financial aid is only for the poor. But aid is out there for all kinds of students, Stack said. Only a few colleges (such as the Ivies) give mostly need-based aid. Most give a mix of merit- and need-based aid.

  6. I should pay someone to obtain hard-to-find scholarships for me. No, you can find everything they find.

  7. The state university is best for me. Sure, they get a lot of news coverage. But students have a lot of choice. Look at the financial aid and course offerings of other schools.

Other topics included:

Privatization. Stack agreed with Smith that a lot of public schools are operating more and more like private schools in their admissions/recruitment process and adoption of a high-tuition-high-aid model. Stack said, though, that state schools are also facing budget cuts, and that many are offering fewer classes, which could mean students take longer to get the classes they need to graduate.

Two-year vs. four-year schools. Should those who want a bachelor's degree consider spending the first two years at a community college? Stack said it's a good option, and that students should consider factors such as financial aid, location, housing, choices of programs and transfer possibilities when deciding. Community colleges have a commitment to the lowest student-faculty ratios (15/20:1). It's about teaching there, not research. Students who do well can indeed transfer to excellent four-year institutions, she said. But they must plan far ahead -- and not just show up at the university's doorstep at the last minute.

Value. College costs can top $50,000 a year. When is such an education worth it? It depends on the Return on Investment. Stack said families need to factor in what they can afford. It's not worth it, for example, when parents feel they must cash in their retirement fund. Families also need to consider what their young graduate will earn -- especially the first year out. Will the salary be high enough to justify a ritzy college? "Calculate what a reasonable investment would be," she said. A good rule of thumb: Take out no more debt than you'd earn the first year on the job. For many, that's about $8,000 a year, or $24,000 total. Grads pay that off over 10 years on average, and payments shouldn't keep them from getting a house or starting a family. But other payment options are possible.

Talk. Smith said some parents feel awkward talking to their children about family finances. Stack suggested taking any approach that makes them feel more comfortable, but said discussing the FAFSA is a good start. She also suggested using a FAFSA college-costs forecasting site to crunch the numbers early on.

Cost. So why is college so expensive? Stack said that for years, the standard explanation was the cost of technology, new buildings and maintenance. But a recent book says costs in higher education rise just like those in other highly skilled industries such as law and medicine.

Saving. Stack said it's a myth that the government penalizes parents who have a mountain of savings by college time while giving more financial aid to those who never saved. Assets such as retirement savings and a home are not considered by the government, she said, and added: "No one ever regrets saving."

For-profit colleges. Most are geared toward working adults, many of whom are professionals looking for graduate degrees. Tread very carefully with for-profits, Stack said. Although the teaching can be great, they focus on the needs of shareholders, and thus may have aims that differ from those of a non-profit college.

Net-price calculators. They'll be standard on every college Web site by the end of this month. But initial federal regulations are vague about what they must offer, so the calculators will vary in value. (They do show averages of what students in various income bands may get in aid, but are no guarantee.) Still, transparency in college pricing is increasing. And the calculators offer a decent ball-park estimate. (Remember that the higher the class standing of a student, the more aid he or she will likely get.) Keep a spreadsheet on costs -- including indirect ones such as transportation, entertainment and sports. Those are ones students can control.

High school and tests. Stack said she prefers a strong high school transcript to good ACT and SAT scores, because it's a better indicator of college success. Take higher-level courses to build knowledge, and better ACT/SAT scores should follow. Be careful about taking high school classes that give college credit, though. Some colleges, she said, won't allow students to claim both high school credit and college credit for the same classes.

Essays. Huge universities might use machines to do the first round of grading of admissions essays, Stack said, but Minnesota schools still rely on people.

College consultants. Stack some some very good private college-consultants are on the market, but said families should not go into debt for their services. Some cost $500, but others may charge as much as $40,000 for the complete package of services.

Divorce. The parent with custody files the FAFSA, Stack said, so it might pay for the student to move in with the parent with less money. Still, some colleges require financial papers from both.

Tuition increases. Private colleges should hold their increases to 1-5% over the next few years. The biggest increases will be at public institutions. California, for example, just saw an increase of about 18 percent.

Prestige: A more selective college might give greater career opportunities, but it might not be worth taking on tens of thousands of dollars in debt. Some jobs might pay well enough to make that debt worthwhile, but Stack said students should remember that at some point, many recruiters "never ask graduates where they went to college."