Latest / Marci talks money (and life) / Paying for College: What Families Need to Know About Financial Aid, Loans, and Costs with Lessa Scherrer
Transcript
- Marci (00:15) Hello, I am MoneyMarci. Welcome. I am thrilled to welcome today's guest, Lessa Scherrer. Over the last 12 years, Lessa has worked with many populations of students, including students with learning differences, students looking at non-U.S. colleges, Gap Year students, and the gifted. She is the former chair of the Gifted Youth Committee of American Mensa and also spent seven years teaching ACT test prep. Lessa is a graduate of the University of Michigan and holds a certificate in college admissions counseling from UCLA. A former homeschooler, Lessa and her husband enjoy traveling and visiting their three adult sons. Welcome, Lessa! Lessa Scherrer (01:00) Thank you so much, Marci. I'm happy to be here. Marci (01:03) Well, I'm happy to have you here. Fair disclosure, I've known Lessa for a while, so this might get a little wonky at times. Lessa Scherrer (01:09) Yes. Try not to be silly. Marci (01:15) Yeah, well... So how did you get here working as a college admissions counselor? Lessa Scherrer (01:24) Well, you mentioned that I had been doing test prep and as I was teaching, it was ACT, I would talk to the kids about their college process and they didn't know anything. They weren't getting any guidance. So I was going through the process with my son and I started folding in some of the things that I was learning. After a while I realized I liked the college part of it more than I liked the ACT prep part of it. So I got my certificate from UCLA and started my own business and then later joined College Inside Track. Marci (02:05) Okay. Well it's good when you find your passion and you just evolve what you already know to go there. Lessa Scherrer (02:10) Absolutely. Marci (02:12) So do your conversations with families and students deal with the financial realities that they just don't know about. Lessa Scherrer (02:19) Absolutely. not all college consultants do handle financial aid, but we at College Inside Track do. I help with FAFSA, I help with college financial planning. I am not a financial planner, but just being able to forecast what kind of merit a student might get, we have some tools that do that. You know, we talk about the FAFSA and the CSS profile where appropriate. Marci (02:50) Are students coming in, are parents coming in really uninformed as to what to expect? Are you finding that most of them really don't know? Lessa Scherrer (02:59) I am finding that, yeah. And there's a whole lot of anxiety about around it. The media says, it's so expensive, nobody can afford college, which is true. And so there's anxiety about that, but also I heard the FAFSA takes hours to do and it's very complicated and there have been revisions to the FAFSA ~ under the last two administrations and it's a lot easier to actually complete now. I used to participate in FAFSA completion events and it would take us half an hour to forty five minutes to do the task and now it's down to about twenty. It connects directly to the IRS so it pulls all the numbers in for you. You don't have to have your taxes in front of you. Marci (03:52) Okay. What are we talking about when we talk about the cost of college these days? Lessa Scherrer (03:58) Well, I like to focus on the total cost of attendance. So some families look at tuition and say, well, you know, it's only thirty thousand dollars, I think I can handle that. And then they don't realize that if the student is living on campus, that could be another ten, fifteen thousand dollars and that money is fixed by the college. And then maybe another five thousand dollars on top of that for food. So half of what you're paying could be that room and board fee. Some students do live at home to help save money, but most students want to live on campus. They want to go out on their own and meet new people and have a fully independent experience. And that's expensive. Marci (04:53) yeah. And if you go to college farther away, you've got to factor in travel expenses to come home for holidays or events or whatever and people don't think about that. Lessa Scherrer (05:06) Right, right, and books and supplies. When the colleges give you a financial aid award, they do take into account, at least the American colleges, they do take into account cost of attendance, so including room and board and allowances for books and supplies and sometimes travel and other expenses. The UK schools, the international schools only tell you about tuition. Marci (05:36) So you get a nice surprise when you're leaving the country. Lessa Scherrer (05:39) Yes, yes. And they, it's because they don't provide housing. You get into a student accommodation just the same way you would find an apartment somewhere else, some of the universities will help you connect you to a student accommodation, but you're paying that by the week or by the month. Obviously your travel expenses are higher. The benefit is that the tuition costs in the UK and Europe are considerably less than what we're seeing here. Marci (06:12) Do you deal with graduate students as well? Lessa Scherrer (06:15) I do not do graduate students. I don't feel confident in that area. I also find that many students looking at graduate school are getting better advising from the chair of their department, for example. So if your professor knows somebody in a graduate program that thinks that there would be a big fit there, they can connect you to that program with a letter of recommendation or a phone call. Marci (06:52) Okay. What is out there for financial aid? My kid is let's say what, they come to you when their kid is fifteen, sixteen, are they coming earlier, later? Lessa Scherrer (07:01) Some earlier. I have taken in kids as young as the summer before ninth grade, but most of them are not thinking about college until junior year. So the beginning of junior year or end of sophomore year is kind of when that panic hits. So most of the college savings, if there is any college savings, have been done by then. And that gives us a budget that we can work with. And I do suggest colleges based on the college budget for the families. We have a meeting called the College Cost Conversation when that's all we talk about is what's your budget? How do we figure that out? What kind of colleges are we talking about there? Marci (07:51) Is there a lot of financial aid, need based, merit based aid still out there? Lessa Scherrer (07:57) Depends on the school. So there are some super selective schools, and I think you know the ones I mean. They're the ones you read about in the paper. They're charging $90,000 a year. However, they meet a hundred percent of need. So if the FAFSA shows that you have need, then they will cover everything up to the amount that FAFSA says that the family can cover, which by the way, is always way more than the family thinks that they can cover. Those schools that meet 100% of need often do not give merit aid. So families who do not fit, their FAFSA says they can afford $95,000 a year. I don't know anybody who can afford $95,000 a year, but FAFSA seems to think that those people exist in greater quantities. And so they're not getting any aid at all at a really expensive school. The state flagship schools often don't give aid either to out of state students. So a school like the University of Michigan, which is charging like, what is it, $80,000 a year out of state, which is ridiculous, they're not giving much aid, if any, to merit based aid to their students. They're giving some need. I don't think they meet a hundred percent of need. Schools that meet need are often looking at like sixty to seventy seven percent of need. So there's still a gap between what FAFSA says you can afford and what the college says you can afford. Marci (10:47) So if you're not gonna get much money, why are you filling out the FAFSA form? Lessa Scherrer (10:53) That's a really good question. There are some colleges out there that base their merit money on the fact that you've filled out a FAFSA. They do not tell us which colleges those are. So colleges don't come out and say, hey, you need to do a FAFSA in order to get merit money, even if you don't qualify. So we recommend that every family do a FAFSA. Like I said, it takes 15, 20 minutes, not a big deal. And that goes to the colleges, and then they go, you've got too much money, but we'll give you X amount of merit aid because we really want your student to come. And that's what the colleges use merit money for is we really want your student to come, so here's a discount. Some people talk about it as a coupon. But I think that that's why those highly selective schools, the Ivies and near Ivies, don't give merit because they assume that everybody who gets in will want to come. So they don't need to entice them. It's mostly at the smaller private universities that you're gonna get a lot of merit money. Marci (12:09) Right, and the private universities have money that's designated for that in the way that the state flagships don't. They don't have the same type of donor support. They've got a lot of donor support for other things, but not necessarily for that. Lessa Scherrer (12:24) Yes. Marci (12:26) What about loans? Lessa Scherrer (12:28) Oh, loans. Okay. Marci (12:29) Ha ha. Lessa Scherrer (12:31) That's the other reason to apply for FAFSA. FAFSA is the application for the federal student loans, sometimes called federal direct loans. These amounts have been set by Congress. They have not been increased since the 90s. So your first year you get fifty five hundred dollars from the federal government, sixty five hundred in the second year, seventy five hundred in each of years three and four. Currently there's about three thousand dollars for a year five if you are in a teaching program or an engineering program, those majors tend to take four and a half to five years. So it's about it's less than thirty thousand dollars a year you're gonna get from the federal government. This is the only amount that your child can take out in their own name without a cosigner. That's all there is. Marci (13:36) So when people say they graduate college with a ton of debt, it sounds like that should be limited to well, what was it, seventy five hundred, seventy five hundred, six thousand and fifty five hundred? So that's Lessa Scherrer (13:48) Yeah. Right. And but that's all that they owe the federal government. And there used to be, the Trump administration has changed this. There used to be no cap on parent plus loans. So those are loans taken out in the parent's name. Student is not related to this. and they would give you however much you needed in order to pay whatever exorbitant price the college wanted to give you. So that's where those huge amounts of money were coming from: parent plus loans or private loans that the parent co-signed with the student. So there are a number of private companies that will give student loans. Some of them at a reasonable rate and some of them at an unreasonable rate. So that's where those huge balances are coming from. The federal government current administration has limited the amount of parent plus loans. The number of the loans and the amount of how much you can of afford, how much you can borrow. And that is numbers now escaping me, but there is a lifetime limit for undergrad and a lifetime limit for graduate school. And their talking point was that they're trying to keep people from being in so much debt. What they're doing is they're pushing people into the private market. Marci (15:28) Right. Right. Or into other schools. Start at a community college before you go to a more expensive school. Lessa Scherrer (15:36) Mm-hmm. Marci (15:37) More and more early college programs that leave you graduating high school a year later, but with your associate's degree and a significant amount of credits going into college after you finish these programs, which are part of your high school experience, so before you spend a dime. Something to know about these private loans that you co sign on or on Parent Plus Loans, parents those are your loans and your responsibilities. So that is your debt, not your student's debt, whether you're a co-signer or it's a Parent Plus. If the student doesn't pay it, they don't get a job, they don't whatever, there isn't any relief on those loans. You owe that money and that is your debt to deal with. And it's something I don't care how much they say, they talk about it, that a lot of parents end up being surprised by that, later on when they have this debt now associated with them. Lessa Scherrer (16:38) And student loans are not dischargeable in bankruptcy by law. Marci (16:42) I talked to someone recently who said that there are some situations, this is relatively new law that there are some situations where they may be dischargeable. So I don't want to say that they're not. I do want to say that's something you should look into and you know, as we know, laws and rules change continually. So what might have been true last week might no longer be true this week. Lessa Scherrer (17:09) Correct. Yeah. Marci (17:10) Anytime you want to go and look at the loans that combine all of your student loans into one, be aware, read the small print, talk to an independent financial advisor who can make sure you understand what you are signing before you sign it. Lessa Scherrer (17:30) Yeah, that's really good advice. And I would say, I tell a little story here. I was in Pittsburgh on a college tour and got into an Uber and the Uber driver was telling us that he had attended the Arts Institute of Pittsburgh for a degree in culinary. He had racked up seventy thousand dollars worth of debt. His parents had paid off the debt and he now owed $70,000 to his parents. Then the, I believe it was Obama administration, closed down these private colleges like the Art Institute, that were essentially not teaching their students anything that they couldn't have learned just by going getting a job at these huge amounts. And they forgave a lot of the loans that students had taken out for these art institute and other universities. But he did not get his loans forgiven because they'd already been paid off by his father, by his parents. And I just I felt so bad for him because he thought he was doing the right thing. He thought he was doing the right thing by going to college. He thought he was doing the right thing by having his parents pay off his loans. And he ended up in a really bad position and having to drive Uber and have two jobs in order to pay his parents back. Marci (19:06) Ouch. Yeah, Lessa Scherrer (19:06) Yeah. Marci (19:07) And I knew people that when there are various repayment programs and whatever else, if they have merged their loans, they no longer qualify for any Lessa Scherrer (19:16) Yes. Marci (19:16) of those. So you think you're doing the right thing, you're lowering your overall interest rates, and then you no longer qualify for certain types of forgiveness or payback limitation programs and it's hard when you try to do the right thing and it doesn't work that way. Lessa Scherrer (19:36) It's heartbreaking. Nobody has this kind of money. Marci (19:42) Yeah. So at College Inside Track, what kind of services do you offer to students to help them get on the right path to college? Lessa Scherrer (19:56) Well, in addition to financial aid help, there and you know, helping to establish a budget, we do college lists, so when I get a new student, first thing we do is have a suggested college list, we go through the process with them, we help with essays, personal statements and the supplemental essays. Right now it's August and we are filling out applications together, making sure that the activities list is showing you off to your best advantage. The supplemental essays are showing you off to your best advantage. Picking topics for that Common App personal statement, which goes to all of their, I think it's 1200 now member schools that take the Common App. That's an important way to introduce yourself to the colleges, and many people take advantage of that personal statement to rehash the resume when the resume is in other parts of the application. So that's something that we can avoid and help pick a better better topic. Marci (21:14) Okay, and in terms of picking schools, how do you help kids determine which are the right schools, the best fit for them? Because it's expensive when you start at one school, realize that's not the right school, not everything transfers, and now you've spent a lot of time and money that gets you nowhere. Lessa Scherrer (21:36) Yes. before this interview I was working on a college list for a tour in Southern California for a Minnesota student who wanted a small to medium college pre-med placement. and she was looking for some particular clubs and activities. So taking all of those things into consideration, I was able to suggest four colleges for her to go visit when she has a long weekend in October. But we look at all of those things to create the list. Some of them I have in my head from visiting, because I go see half a dozen to a dozen colleges in a but it's a matter of keeping notes, it's a matter of information management because my fellow consultants are also touring and also sharing their notes so that I can put together a good college list. That's the nice thing about having a multi-consultant practice is that you're not just getting my expertise, but the expertise of the other 12 consultants at College Inside Track. So if I have a question I can't answer, I have other people to ask. Marci (23:06) What do you do when you have the student come in that's sure they want to go Ivy League and you look at their information and you know they're just throwing money and they're going to be a statistic that didn't get in that makes that school look more competitive Lessa Scherrer (23:20) Yes. Marci (23:20) because eight billion people who couldn't get in applied to it. Lessa Scherrer (23:24) Yes, and that is the hardest part of my job. So obviously we want to not crush their dreams, but focus on a balanced list. So yeah, if you want to apply to Emery or you want to apply to USC, sure I will support that application. But let's also get some schools on the list that have those same criteria, that are less expensive, easier to get into. So safety schools, target schools, and I differentiate between reach schools and the unpredictable schools, which are schools that are accepting fewer than 20% of their applicants. Because, in my opinion, their admissions process is so driven by institutional priorities which are unknowable to us until after the fact, that I can't predict who is going to be admitted and who isn't. That's where the surprises come in. So I try to limit the number of schools. The problem is those kids who are achieving at such a high level that a school like Harvard, like Barnard, like Columbia would be they're within the middle 50% in terms of grades and test scores and extracurriculars, but I still can't guarantee that they would get in like I could if they were matching themselves with a state flagship school or a regional small liberal arts college. So we try not to be dream killers. Marci (25:15) It's important to have that balance, but I mean, if only people who had a chance of qualifying applied to some of those Ivy schools, their acceptance rate percentages would change drastically. Lessa Scherrer (25:28) And that has happened. They went many of the Ivies went back to requiring testing last year, and it affected their acceptance rates only by one or two percent. But those kids that are like, well, it's test optional, I'm just gonna throw an application in there anyway, even if I tell them that they're essentially donating a hundred dollars to Harvard. They just want to try, you know what, maybe it'll work. And that's up to them. It's the kids' process, right? So I'm here as an advisor, parents are here as advisors, but it's the kids' process. And if they really want to apply to Harvard, go ahead. But those schools went back to requesting test scores. Dartmouth was very clear about this. Because they were getting a hundred thousand applications in early decision and they needed to limit the number of applications that were coming in. Marci (26:38) That makes sense. That definitely makes sense. And I know you work with students that have learning differences. I assume different colleges and universities offer different levels of support. Lessa Scherrer (26:50) Mm-hmm. Marci (26:51) And that becomes more of a personal process. Those are schools you really need to, I assume, go to and talk to them and share a lot more information so that you can get the supports you need to be successful. Lessa Scherrer (27:05) Absolutely. I often have families ask me if they should disclose ADHD in the application. It's a medical diagnosis, you are under no obligation to disclose if you have a learning difference. However, my feeling is if you disclose and it's a red flag for a particular college's admissions committee, that is not the right school for you. Right? So even if there's a school, I mean, there are schools like University of Denver and University of Arizona that have standalone support for kids with learning differences. Great, great programs, cost extra, but great programs. But even a small liberal arts college could be a good fit, even if they don't have a specific...they all have a disability services office that will help you get accommodations in class, but they don't have to have a specific standalone program. For example, Cornell College in Iowa, Colorado College in Colorado Springs are block plan schools, so you take one class at a time for 18 days. And some of my kids with ADHD, that's a really good fit for them. They can hyperfocus on one class. They don't have to be doing everything all at once. And they're still taking the same number of credits. They still take eight classes over the course of the year. So there's fit issues out there, but we address them. Marci (28:51) That's awesome. Well, we've talked about money and affording college and my question I'm asking this year to my guests is what do you think wealth is? So if you've got something to share. Lessa Scherrer (29:05) And I appreciate you giving me this in advance so I could think about it because I changed my mind. I originally was going to say wealth is having everything you need and some of what you want, which sounds beautiful. But what I really think wealth is, is being able to afford emergency expenses without worrying about them. Right? So if you've got the savings, and it's important to have savings, then you can be wealthy without being a millionaire. So that's my answer. Marci (29:45) Well that's good wisdom. I like that. Lessa, do you have anything else you'd like to mention that maybe we haven't covered? Lessa Scherrer (29:56) I think that the college process is daunting. What I would like parents to know is that your anxiety is real. and the process has changed so much even from when my kids went to college in the 2010s. But there's help out there. There are paid people like me that will hold your hand through the process. There are community-based organizations like Project Greenlight that will help low-income students go through the process. Questbridge is a great opportunity for high-ability low-income students. There is help out there. Don't listen to AI to get your advice. But there are, you know, all of the consultants, that I'm part of the Higher Education Consultants Association and my fellow HECA members, we all have websites, we all are sharing blogs. Those are the kinds of places you should go to look for real information, not AI and not the college gossip sites like Reddit and College Confidential because they don't you know, they only know their one experience. They're not professional college consultants. Marci (31:27) Okay, I appreciate that. Lessa, thank you so much for being my guest today. We appreciate you taking the time to join us here. Lessa Scherrer (31:35) Yeah, thank you very much. I appreciate you inviting me and I really enjoyed it. Marci (31:41) And to my listeners, I will be sharing a link to Lessa's information and College Inside Track on the show notes. And please check that out. She shares a lot of interesting information. And don't forget to subscribe, leave us a review, and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this.