While college continues to be a good choice, tuition and fees have the potential to price a college degree out of range for some students. Student loans can help, but they sometimes only put off trouble until later. But help can come from a little-known corner: Negotiating tuition to lower the amount paid or borrowed is possible.
So why don’t more families try it? Joel Peck, CPA with Joel Peck & Associates and a college funding expert, explains, “The only reason I have found why most parents do not appeal for tuition discounts (grants) is that they are not aware that tuition is negotiable and then do not know how to do it correctly.”
Peck adds students and parents only get one shot at this type of reduction. And although they’re negotiating, he says financial aid directors prefer the term “appeal” as opposed to “negotiate.”
The debt problem
One reason negotiating tuition is important is that student loan debt continues to spiral out of control. Alexis Stephens, chancellor of MacCormac College, says it’s a result of several factors. “It’s not only due to consistent increases in tuition costs, but largely because students don’t realize that loans, like credit cards, are borrowed money and must be paid back.”
Stephens explains that some students spend student loan money on other purchases, ranging from clothes to video games to cars, and she says that some students have even used student loan money to make a down payment on a house. “As a result, students find themselves taking out much more loans than are needed and spending it far too quickly, only to realize that they have a huge burden of debt when the bills start coming in.”
At the time that they’re getting these loans, students don’t realize how this debt could adversely affect other life decisions. “Excessive debt may scare away a romantic partner who would rather not commit or marry someone who is already up to the knees in debt.” And Stephens says some graduates may end up living at home with their parents for years while they’re trying to pay down debt. “Even worse, student loan debt can result in you being passed up for the job of your dreams, or you may lose out on your ideal house, particularly, if you are not making timely payments on the loan.”
How negotiating tuition is different
Peck, the CPA and advocate of negotiating tuition, warns against equating this process with trying to negotiate the price of a car in a dealership or getting a seller to lower the price of a house. “Parents and students have their hearts set on certain colleges,” he says. “Our program teaches them the strengths (in college selection) that they did not realize they have, shows them the websites to get information to help with their appeal, and then lists the appeal points to bring up when meeting with the director of financial aid at each of their top choice colleges.”
So how much could be saved by negotiating? According to Peck, the average tuition savings he’s heard of is between $5,000 and $10,000 a year, for all four years of college. “The appeal made before committing to freshman year usually is good for all four years.”
One big mistake parents make is believing that everything is based solely on family income, so the more they make, the more they will be penalized in terms of lower financial aid. “This is only true for need-based aid, so don’t make the conversation about income – this is where the college makes parents feel guilty for not paying whatever the college chooses to charge for tuition.” Peck’s website, Getting Money for College, explains the financial aid process and shows parents how his program can help them successfully negotiate tuition.
Other ways to reduce college expenses
Students can also turn to more creative ways to reduce the financial burden of higher ed, according to Stephens. “They can spend less of their time hanging out with their classmates or fraternity members, playing sports, sleeping, or dining with friends and instead try their hand at becoming an entrepreneur.” She recommends taking a favorite hobby or even a new interest, and turning it into an avenue for earning money on the side. “Several of the world’s most successful businesses that are still in operation today such as Apple, Microsoft, and Facebook were all started by college entrepreneurs who have since achieved significant wealth and fame from their pursuits, and are, presumably, debt-free.”
There are also other practical steps that students can take to make sure they don’t leave school with astronomical student loan debt loads. David Almonte, CPA, a Rhode Island-based audit manager and co-founder of FountainHead RI, recommends researching all scholarships and grants that may be available, and he says the sooner, the better.
And while students should choose a career that piques their interest, Almonte says they need to be sure that their major will have jobs available after graduation and that it won’t be difficult to be placed in the workforce. “Also, will your major and growth potential allow you to live the lifestyle that you want either now or down the road – without supplementing via a credit card?”