CAN YOU TELL US A BIT ABOUT YOUR HISTORY AND PERSONAL EXPERIENCE HELPING STUDENTS PLAN THEIR FINANCIAL PATH TOWARDS COLLEGE?
In 2008, after seeing the ways the economic recession was affecting the Chicago communities around our University of Chicago campus, a group of friends and I decided to form a student organization that would work to improve the economic health of these areas through near-peer mentorship and financial education. Moneythink started out as a volunteer initiative that placed college mentors in local high school classrooms to teach students basic financial literacy and soon evolved into a national movement with chapters at over two dozen campuses across the U.S. By 2010, we were an established 501(c)3 nonprofit with a full-time staff.
Since then, Moneythink has been continuously learning from our experiences in the classroom, and has begun focusing our curriculum and programming on how to prepare and educate students for the financial challenges inherent to the college matriculation process. Through our College Financial Coaching program, we provide personalized college and financial decision-making support to students via text-message. We are able to bring financial information directly to a student's fingertips and support them when they need us most -- outside of the classroom, when they are making the most important financial decisions that can impact the rest of their lives.
WHY DOES THE COST OF ATTENDING COLLEGE FUNCTION AS SUCH A DETERRENT FOR STUDENTS?
Students who are responsible for funding their own college tuitions or those from under-resourced backgrounds are often deterred by the high costs of attending college because of the large financial burden it will put, not only on them, but also on their families. The fear of taking on such a large amount of debt to receive an education can often outweigh the desire to apply for a more selective college or even to earn a degree at all. Additionally, many schools provide inaccurate estimates to incoming students about how much it will cost to attend college and pay for living expenses, often underestimating to the order of thousands of dollars per semester. When a student arrives on campus and receives their first few bills, they are often surprised to find that the costs are much higher than they originally anticipated. This unexpected shock can derail a student's college trajectory and make them, and their loved ones, think college is the wrong decision for them.
WHAT ARE SOME OF THE COMMON MISCONCEPTIONS ABOUT PAYING FOR COLLEGE?
Students do not realize the true cost of attending college as many schools are not upfront about what the full costs of attendance are. Therefore, students are left only looking at tuition and room/board; they aren't adding things like fees or health insurance that are required by the school, or everyday expenses like books and transportation. Many schools also only share the minimum or average costs for room and board. Schools can offer housing and meal plans with widely varying costs, but some students may not have the option to choose those cheaper plans (e.g. the cheapest plan is for a dorm reserved for athletes or upperclassmen). Furthermore, some students and their families don't have the context to properly assess what “affordable" is.
We have encountered students who say a school is too expensive because they'll need to take $1K / year out in loans, and others who say that $10K+ / year isn't a lot. Additionally, when students do receive financial aid, they assume it will cover 100% of their costs and are surprised when they are left with a “gap”, even after getting grants, loans, or other scholarships. They do not realize that they are responsible for covering the gap on their own and that their school may not be in a position to help.
Lastly, some students don't know how to literally pay for college. For example, many don't know that they will need to start paying for school immediately. They assume that they will be billed all at once, or at the end of the school year or even after graduation. They are taken off-guard when they receive their first tuition bill at the start of their first semester, or sometimes even that summer. Financial aid itself can also be confusing as students don't know how to accept or apply their financial aid to their bills. They assume a statement telling them their tuition and fees costs is actually a bill and that they have to pay for more out-of-pocket than needed, or they get a refund check from their aid and spend it before realizing that it needs to be applied towards a bill that hasn't been sent yet.
WHAT CHOICES ARE YOU SEEING STUDENTS AND FAMILIES HAVE TO MAKE BASED ON THE COSTS OF HIGHER EDUCATION? HOW DOES THIS AFFECT LOW-INCOME FAMILIES? MIDDLE-CLASS FAMILIES?
Many students are choosing schools solely based on cost, and some families are hesitant to send their children to school at all. We've talked to parents who are reluctant to send a second child to an expensive school after seeing the costs from their first college-bound child. These factors are leading students to under-match or pass up their ideal school because they don't think they can afford something better; this includes many going to community college first to avoid paying for a 4-year school. Many plan to eventually transfer to a four-year college, but the reality is that many stop after receiving their associate degree, and even more drop out altogether.
Additionally, students are working more and more in order to pay for school. This includes both direct (tuition, etc.) and indirect (transportation, clothes, etc.) costs. Some students are stretched thin trying to balance work and classes, even when they are working within the recommended range of 20 hours/week. However, a lot of students end up working significantly more hours, sometimes at multiple jobs. Not only that, but students' families are having to work more or cut back spending in order to help pay for the child's cost of schooling, which can cause incredible financial stress. These high costs can also take students off-guard once they've started school, leading them to have to take on more debt via loans, transfer to a cheaper school, or drop out altogether. And for students who take out loans, they are graduating with higher levels of debt, thus beginning their professional careers at a deficit. This in turn can affect the locations and types of jobs that a student pursues.
WHAT IS ONE THING YOU WISH ALL STUDENTS AND PARENTS/ GUARDIANS KNEW ABOUT FINANCING AN EDUCATION?
It's okay to ask for help in assessing options; you don't have to be alone in the journey. Reach out to your student's high school, reach out to your city's education department and ask to speak with experts who can advise you on your student's college options. You can even look for help online. Services like Moneythink, uAspire, Edquity, and others exist to make it easier for students and parents to understand where students can really get the best deal and where they are most likely to succeed.
WHAT ADVICE WOULD YOU GIVE TO STUDENTS THINKING ABOUT APPLYING TO COLLEGE, BUT AREN'T SURE THEY CAN AFFORD TO ATTEND?
Attending college and affording it is absolutely possible, but it takes deliberate effort to do the research and get financial aid. Start by filing your FAFSA early and accurately -- there is more aid available to you than you might think! Take the time to do your research on scholarships and other forms of aid that may be out there. And when you do arrive on campus, be smart about your budget and know your limitations.
WHY IS IT IMPORTANT FOR ORGANIZATIONS LIKE YOURS TO PROVIDE RESOURCES FOR STUDENTS TO HELP THEM NAVIGATE THE COST OF COLLEGE?
For most of the students we work with, there is no reliable source of guidance or support in their life to turn to when navigating the costs of college. Often times these students are the first in their families to go to college and their parents may lack up-to-date knowledge about the intricacies of grants, loans, scholarships, or the bureaucratic procedures of student aid. High school counselors are overwhelmed by the number of student caseloads they must manage, lacking the time or resources to provide adequate guidance and attention to address individual student situations. Lastly, universities themselves cannot always be trusted to provide accurate and unbiased information to students about costs. Thus, it is incredibly important for resources like Moneythink to exist to help fill in the gaps students encounter and keep them on their college-going path.
WHAT DO YOU THINK THE ROLE OF A UNIVERSITY IS IN SUPPORTING STUDENTS STRUGGLING TO PAY FOR COLLEGE?
Universities have both a strategic and a moral imperative to support students struggling to pay for college. It's in the interest of any university holding itself to a high standard to keep its students enrolled and on-track; it's also perhaps not as hard or expensive as some less progressive universities might think. Universities like Georgia State have seen huge returns on relatively small interventions and offerings. One example is for universities to offer emergency aid in the form of small grants or loans to students; most of the financial difficulties that lead students to drop out each year are due to issues of less than $1,500, and are very resolvable.
WHERE DO YOU RECOMMEND STUDENTS, AND THEIR SUPPORT SYSTEMS, TURN FOR RESOURCES AND GUIDANCE AS THEY BEGIN TO PLAN HOW TO FUND THEIR EDUCATION?
When first looking to fund an education, it's important to look at the college websites themselves, as well as scholarship search websites and applications. Oftentimes schools will provide information about local scholarship opportunities such as ones that are merit or subject-based, or school-specific. Check in with a school's financial aid office, too, as sometimes there are grants or scholarships that schools can offer that aren't well advertised.
The financial aid office can also help you understand the process and timeline for tuition billing (e.g. how to enroll in payment plans, when each bill is due, etc.). Many communities offer local scholarships or programs via a student's high school or community center and contacting local community based organizations can help students identify them. Additionally, making sure to complete one's FAFSA application early and accurately can increase the amount of aid you receive. The FAFSA is a complex process, but it enables a student to be eligible for an abundance of scholarship and grant opportunities. And of course, you can always turn to organizations like Moneythink or websites like www.imfirst.org to find support and guidance throughout your college exploration!
ANY FINAL THOUGHTS FOR US?
Students and their families should always remember to advocate for themselves! Funding a college education can be complicated and confusing, but each person's college journey is unique. You may encounter multiple hurdles, but by speaking up for yourself and ensuring that your voice and situation is heard and recognized, you can overcome those obstacles and you can afford and attain a college education.
Ted GonderCEO and Co-Founder at Moneythink
Ted Gonder is co-founder and current CEO of Moneythink. In 2014, he was appointed by former President Obama to advise the U.S. Treasury and Department of Education on youth financial education issues. Prior to Moneythink, Ted served as Entrepreneur-in-Residence at the U.S. Department of Homeland Security, advising the Obama Administration on immigration policy for foreign entrepreneurs. Ted got his start in social entrepreneurship leading a number of climate-change-related student initiatives, most notably serving as student adviser to The Climate Project, an organization founded by Al Gore. Ted has also played an active role as a community builder, founding the World Economic Forum's Chicago Global Shapers Hub, as well as the University of Chicago Entrepreneurship Society. His work has been featured on MTV and in the Wall Street Journal and Crain's; he has spoken at the White House, U.S. Senate, NYSE, TEDx, and at companies such as PwC, IDEO, Dell, and Allstate.