FIGURING OUT WHAT IS AFFORDABLE, AND WHAT ISN’T
Besides their own experience in the field and as parents, Hupalo cites the feedback he and his co-author have gotten through promoting their book and company as having informed their evolving views of college planning and finance. Both born and raised in the Northeast, they’ve been exposed to different ways of thinking about the issue as they’ve traveled and spoken to people around the country.
“The issues that come up really sort of change your thinking,” Hupalo says. “And as we were putting the book together and talking to different folks, that brought different elements to the fore. For instance, just the strength of state schools in areas of the country, or the fact that there are populations where English is not the first language, and interacting with high school students in Spanish is absolutely critical — those kinds of eye-opening experiences really helped us as we thought about not only writing the book but building our business.”
The overriding truth of all they learned and have tried to pass on: It pays to plan ahead, both financially and academically.
“It’s never too early to start thinking about how you’re going to finance a college education,” Hupalo says. “One of the issues of the past is that families look and say, ‘I have this amount of savings,’ or ‘I’m depending on this amount of financial aid,’ and what we’re saying to families is, when you want to understand whether a school or a college is affordable, look to see how much you’ve saved, maybe a little, maybe a lot, how much financial aid you may be eligible for — and there are ways now to determine that in advance, at least within a ballpark — how much of your current income you may be able to contribute, and also whether the student may be able to contribute, perhaps with a part-time job when they’re in school. When you look at those components and you look at the cost of the school, if the first components are equal to or greater than the cost of the school, then that’s an affordable school.”
HOW TO BORROW
But if it turns out that a young scholar needs to take out loans, Hupalo and Mazareas have advice there, too. “One, don’t borrow more than you really need,” Hupalo says. “And how do we know what that means? One of the rules of thumb that’s very helpful is, over the course of borrowing for college the total cost of borrowing should not exceed the first-year salary that the student might expect.”
A second tip: Think about how the loan will be repaid. Try, Hupalo says, to repay the interest while the student is still in school. “Most times, it turns out that unless you have a subsidized loan from the federal government, none of that accrued interest will pile up while the student is going to school and you just need to repay that plus additional interest after school,” Hupalo says. “So pay the interest while you’re in school if you can.”
He has one final tip for prospective borrowers: When it’s time to repay, don’t miss a payment. Those who pay on time turn a burden into a benefit.
“Make sure that you’re making the payments on time because when you do that, you can have the student loan be a real benefit because you begin to establish your credit track record,” Hupalo says. “And continual repayment over time means an improving FICO score, which allows and affords you opportunities to get some credit to get a car loan or a mortgage or even an apartment for recent grads.”
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