Distinctive

By Victoria Tillson Evans, Ph.D.

When it comes to financing a college education, many individuals and groups play a role. In the best-case scenario, a student wins a full ride to the school of his or her dreams and the job is done. In most cases, however, parents, grandparents, the state and federal governments, the university, philanthropic organizations, and banks contribute to varying degrees the finances required to earn a degree. Although the funds come from numerous sources, perhaps no one is more inherently responsible for paying for a college education than the student.

If we think about education in capitalistic terms, students are the final consumer of the desired good, namely an educational experience. As such, they ultimately bear the responsibility for obtaining funding to finance their purchase. In fact, this is exactly how several institutions of higher education view the students’ role. When determining the Estimated Family Contribution (E.F.C.), i.e., what families can expect to pay out-of-pocket for a year of college, the Institutional Methodology of financial aid actually evaluates students’ savings and assets at a higher rate than those of their parents!

So beyond the most obvious forms of financial aid, namely scholarships and loans, what other lesser-known, but high-return resources exist?

One option for college-bound students is to research what on-campus opportunities exist to help defray costs. Does becoming a Resident Advisor in a dormitory mean that your child gets free room and board? If so, he or she may wish to look into that. Do the colleges to where your student is applying offer research grants or paid project opportunities to collaborate with local industries or even a professor? If so, your child can advance his or her academic and professional interests while receiving substantial financial support in college. Along those same lines, for families that qualify for need-based aid, many universities offer work-study programs that allow students to hold flexible, part-time positions. Students should take advantage of these opportunities, not only to earn money, but also to gain valuable job experience that oftentimes allows them to study while they work.

Another interesting initiative that may be worth exploring is private investors. Recently, two programs have emerged that connect enterprising college students with outside financial support. Known as Pave and Upstart, they introduce students, or “prospects” who need an education, to financiers, or “backers” who will provide financial support in exchange for a percentage of future earnings accrued over a ten-year period. The idea, as described in the Time Magazine article, “Selling Their futures: College Grads Promise a Slice of Their Future Income for Cash Now,” is to:

“… encourage students to go their own way…. Beginning in the spring of their junior year, college students or recent grads—anyone from a poet who wants to start a literary magazine to a business major looking to build a boutique hotel in Brazil —can apply to be an ‘upstart’. The applicant is screened to make sure they are who they say they are and the company predicts how much money they will make over the next decade. That information becomes their funding rate, which helps determine how much they can borrow and how much they will need to repay. On average, for every $6,000 a student wants to borrow, they must pay back 1% of their income.”

The long-term efficacy of this method of finance, perhaps, still needs to be tested, but it may provide a fascinating new option for enterprising students!

However a student pays for college, the best thing he or she can do is get informed, explore every option, and communicate with his or her college’s financial aid office. There is no reason anyone should ever leave any money on the table.