3 Biggest Mistakes Families Make in the College Planning Process (Part 2 of 3)
The college planning process is hard enough. We hope this week’s highlighted mistake will help you avoid one of its most common financial pitfalls.
Mistake #2: Upon acceptance, sending a “nonrefundable deposit to reserve your student’s room.”
Before we jump into the reasons why you should not send this check, I’d like to first explain more about this process and how it’s actually a trap set by the colleges. The trap I’ll explain below purposely makes paying for your student’s college education more difficult, pushing you or your student to take out high-interest loans.
First, let’s lay out a basic timeline of the application and enrollment processes.
September – December: Application process.
December – January: Most students receive their acceptance letters. Yay! But
keep in mind that this is when the colleges want you to send this non-refundable check.
January – April: Students/families receive the award letters for each college the student was accepted into. Some schools send these out early in January, but most commonly they arrive in March or April. This is the first time you see your bill and how much the colleges expect your family to pay.
May 1st: Decision deadline. This is the date that students must make their decision and let the college they have chosen know they will be attending.
So now that we can see the whole process laid out in front of us, let me ask you a couple of questions:
Why would the colleges want the family to send in a nonrefundable check to reserve the student’s room in December/January if the family has not yet received their bill (which will likely come later in March/April?
Why would the family send in a nonrefundable check to the college while they have NO IDEA how much they will need to pay each year for the student to attend that school?
Repeat after me: College is BIG BUSINESS.
The colleges know very well what they are doing here. It is a structured business model that, unfortunately, works. This check is a golden handcuff.
Below are the three reasons why you should absolutely not, under no circumstances, send that check.
Reason #1: Once you send that check, you’ve handed over all your power to negotiate/appeal for more aid.
Remember last week’s biggest mistake? In the hypothetical example I used, which is based on a real-life example, the family saved $3,000 per year by using two different colleges’ award letters, using them as leverage, and appealing to the financial aid office for more aid.
If this family had sent in the non-refundable check to reserve the student’s room, do you think the financial aid office would still have been willing to negotiate?
You’ve already sent them your money. Your student has already posted all over social media the good news! The college is banking on it. They know your family is mentally and emotionally committed. Therefore, this check is a symbol for financial commitment, too. This means they don’t need to negotiate with you. That’s the business model.
Reason #2: Who wants to break a kid’s heart?
Who is going to break it to your student that s/he cannot attend because the college did not award the student/family enough aid? Most often the answer is no one.
When the award letter (the bill) comes and you finally see how much the school expects you to pay, there is a very good chance that it will be more than you are willing or able to. If you sent the check, then there is no room for negotiation.
That leaves two options:
Tell the student that s/he cannot attend (after the student has been excited and telling everyone s/he knows that it’s official because the non-refundable check has been sent which would, in turn, break the student’s heart)
Send the student to that school regardless of the financial issues and just hope/pray everything works out (even though statistics tell us that it often does not).
These are both terrible options.
Try this instead: DON’T SEND THE CHECK. Keep your options open. Keep negotiation on the table.
Reason #3: Your student will have a room.
In the past 20 years of being in the college planning business, we have never had a student arrive on campus and not have a room because the family did not send this check.
The reality of the situation is that there are more rooms available than students in need of rooms. This is simply a scare tactic, used to create urgency for students and parents.
The truth of the matter is that 22% of students accepted into a college that shows up to orientation will never show up for the school year. Why? Because they realized they couldn’t afford it or they got a better deal from another college.
The result: plenty of room.
Biggest Takeaway Tip: DO NOT SEND THAT CHECK. Period.
If you’d like to read more about the pitfalls and myths of the college planning process, follow this link to a 20-year study done by the Bill & Melinda Gates Foundation titled “With Their Whole Lives Ahead of Them: Myths and Realities About Why So Many Students Fail to Finish College.”
Check back next week for mistake #3 that families make during the college planning process!