In the midst of this economic turmoil, I have met over 150 families with kids heading to college soon. With so much anxiety in the air, I thought that I would write about my opinions about what colleges will have to do in the coming year and beyond.
Here's an article that supports this assertion:
When I present information on "finding and funding the best colleges for our kids", I describe the various sources savings in college expenses. Some are bigger than others, but taken together, they can add up to substantial savings. The largest is often financial aid, but it is a convoluted process and outcomes vary by schools and family.
Most families focus on the "need-based" financial aid, which is usually more straight-forward but is often small, in the form of federal loans, small grants like the Pell or SEOG grant.
But the main source of financial aid that is "free money" (you don't have to work or pay it back) is from the colleges themselves - particularly the private colleges. The amount of this institutional or grant aid is over $22 million (2006, collegeboard.com), and in my opinion, it will have to surge this year and beyond.
The reason that I believe this to be true is that, with the sudden shrinkage of the value of our equities in stocks, mutual funds, 529 plans, retirement funds, and real estate, families simply cannot afford the list prices of colleges today. The schools will compensate for this by offering considerably more merit-based financial aid. This money is the tool they will use to fill their seats, a process know as enrollment management.
Families that understand how this enrollment management game is played by the colleges can benefit significantly this year and beyond.