This is a repost from Forbes.
After 25 years of teaching at the University of Notre Dame, the sweet seniors asked for a list of “vital books for new college graduates.” Top choice? Getting to Yes: Negotiating Agreement Without Giving In by: Roger Fisher, William Ury and Bruce Patton. But students should read Getting to Yes BEFORE college, more particularly as college acceptances and financial aid offers start rolling in. Like cars, houses and mattresses, college prices are negotiable. To get the best price you have to know how to prepare for negotiations and how to behave in negotiations. Part 1 is about preparing; tomorrow’s blog is about negotiating.
Four things you need to negotiate a lower cost of college:
1. Parents, know your number, backwards and forwards. That number is what you can afford to pay out of current consumption to pay for college. How much living on cheap noodles is going to pay for college. What you can pay is the amount you can afford without taking money out of your retirement plan or taking out more debt, including taking out a second mortgage. Don’t pay for college by taking out retirement savings -- your child benefits from your financial security. If you need to spend $80,000 a year in retirement, you'll need about $800,000 at age 65. You may need to deploy your detailed budget in negotiations. Prepare it now. Include your retirement savings requirements.
2. Students, know your number! Parents, don’t accept an aid offer stuffed with loans. I cannot emphasize enough how insidious student debt can be, though a modest amount can be helpful. After 37 years of teaching, I can see how it destroys young people’s careers and family life for decades.
You might get an offer that requires just $10,000 in loans per year! But if your student graduates -which is not guaranteed- in four years (again, many take five or six years), then she is expected to borrow $10,000 per year for four years. The total amount owed by graduation day is $43,190 (because interest accumulated). If your student earns $40,000 a year at graduation and can stretch their payments for ten years, they will spend almost 20% of net pay just on loans. Even a few thousand dollars matter. Help your student anchor on the number. You can also try this handy online calculator from Dinkytown.
3. Prestige doesn’t matter. Don’t assume the prestigious, expensive school is adding value to your student’s education. Research in the 1990s has held up – students accepted by Harvard and other prestigious schools and those who went to nonelite schools, like Colorado State, for instance – did just as well as the students who went to Harvard. In other words, the Ivies were good at selecting which students would do well in college. Gregg Easterbrook’s 2004 gem of an essay, Who Needs Harvard is still worth reading! Successful students create relationships with one or two professors, engage in some research, always attend class and copy their notes after class. That’s pretty much it – the recipe for success. Students add the value and the college provides the platform. I have been teaching for 37 years and know that no college is a make or break for your student.
4.Colleges want to make a deal – the number of college-age students is shrinking as a percentage of the population and college enrollment rates have fallen by 1.3 percent between 2015 and 2016. Colleges are competing to fill their seats and dorms – and are willing to make concessions on tuition.