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If Your Student Has Good Grades, Out-of-State College Could Still Be Affordable

By Motley Fool Staff – Apr 18, 2018 at 10:51AM

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In-state college is not the only option for families who don’t qualify for financial aid.

In this segment from the episode of Motley Fool Answers, Robert Brokamp and Alison Southwick interview Brock Jolly and Tim McFillin from about how students can attend out-of-state colleges without breaking the bank. Many colleges have official or unofficial quotas regarding geographic diversity they want to fill. Additionally, tuition reciprocity programs can lower the cost of out-of-state colleges.

A full transcript follows the video.

This video was recorded on April 10, 2018.

Robert Brokamp: Myth No. 4. "In-state colleges are the only affordable option for families that cannot qualify for aid."

Tim McFillin: Well, I just gave you an example of my own family. Now, not every kid is going to have the type of grades that she had and get accepted to Ivy League schools and turn them down to get a full ride. That's kind of a best-case scenario. But for a lot of other kids, there are big state schools, particularly in the middle of this country, that are not getting flooded with applications from kids from the East and the West Coasts.

Just as an example, when we get questionnaires back from families, they'll say where their kids are looking at colleges. How often do you think they say University of Arkansas? Alabama?

Brokamp: From Northern Virginia, probably not that many.

McFillin: Exactly. I know we've got a national podcast, here, and there's plenty of applicants that are getting in those states, but those schools want diversity among people from all over the country because all it does is help with average GPA. All it does is help with the whole environment of the school. Schools like Alabama, Ole Miss, Kentucky are going out of their way. University of Vermont is another good one.

They offer very generous out-of-state packages if you've got the grades. If you've got over a 1350 SAT and you've got over a 3.5, at Alabama they're going to give you a significant discount to the point where you could go to the University of Alabama and pay $18,000 a year all-in, vs. going to James Madison and paying $25,000 or Virginia Tech and paying $26,000 a year. Multiply that by four years, and you're talking about a significant amount of savings for another very good school.

If you're top of your class at any major state school, it's all about you. You're the one that makes it work. I've seen that a lot. Parents are getting even a better deal than they may get going in-state, because especially in certain states like Virginia or California, they're getting so many applications that they can essentially decline a lot and not have to offer as many generous aid packages, if that makes sense.

Brock Jolly: And a lot of these schools [whether official or unofficial] have quotas. In other words, they want to be able to say we've got kids from all 50 states and 47 foreign countries, so some of the states that Tim just named want that child from Virginia. And the same is true for the Virginia schools of kids from Wisconsin and North Dakota and Idaho.

As an out-of-state student who went to the University of Virginia, I'm willing to admit that maybe I was that quota. They needed the kid from Indiana. The point is...

McFillin: Just one, though.

Jolly: Play the cards you're dealt, right?

Brokamp: Right.

McFillin: The other thing I would throw in there is parents that have kids with good grades above a 3.0 will start getting letters in the mail -- 11th and 12th grade -- from schools they probably haven't heard of before. A lot of private schools that on paper cost $50,000 a year but, like Brock said, a lot of these colleges, especially private ones, are run like a business. They have seats to fill -- they've got dorm rooms to fill -- and the marginal cost of adding a student does not cost them $50,000. It may only cost them $10,000-15,000.

If they can charge your student $25,000 they're still making a net profit that's beneficial to them, so there are a lot of private schools where even if your kid doesn't have a 4.0 and a 1400 SAT, there are still a lot of good options out there where private schools will bring the price tag way down to match closer to what you would get in-state.

Jolly: Another good thing to know -- a little tidbit here -- is if your children are considering out-of-state public schools, look at tuition reciprocity programs. As an example, here on the East Coast there's a program called the "academic common market." There's 15 states basically from Delaware down to Florida, across to Oklahoma and Texas. In the Midwest there's a program. There's the Western Undergraduate Exchange. There's a New England program.

 If your child goes to school in one of those states and majors in a major that is not available in your home state [that's generally the requirement], they may be eligible for in-state tuition at that out-of-state school. So, don't think your child is a total derelict simply because they're talking about out-of-state schools, but look at those tuition reciprocity programs.

McFillin: Just one more example of why the college planning process has gotten more and more complicated. I know the last thing high school seniors want to do is 10 applications, but you can really negotiate with these schools. If one school is offering a $10,000 package, and they really want your student, and you tell them that the University of Vermont is offering this [I use that as an example because I had a family I worked with do this], all of a sudden the University of Vermont will take out $5,000 if they really want your student enough.

So, having multiple offers on the table where you can negotiate is valuable and I think a lot of parents don't realize that you can do that. They just think the offer that you get is what you get, but these admissions offices are very flexible, especially if your kid is in good standing, has good grades, and they want them enough.

Jolly: I think the sooner that families realize it's a sales process -- the schools are selling to them and they're selling to the schools, and it's big business -- the sooner that they can approach it with that mindset, the more successful they'll be.

McFillin: One of the advisors at our office went to Bucknell and he worked with a family that goes to Bucknell. Bucknell is a very expensive school. The first year they just took the offer that was given to them, which was like $8,000 less than the full price. The student wrote a letter during the spring semester and said, "My family is really struggling to make this. They're scared they're going to have to downsize their house and not be able to retire when they want."

He had done that three years since. He graduated last year. He got a $10,000 discount at Bucknell the following three years, just because they didn't want to lose him. They thought he was going to have to transfer and they did what was in their best interest, because they wanted to retain a good student. If you spend time and go out of your way to contact admissions offices, it can be well worth your time, especially with a school that has some money and that has a high sticker cost.

Just a quick example to wrap up on this one. At the University of Southern California -- I looked this up for one of the families I worked with -- only about 3% of people pay the full tuition, and room and board costs, at USC. That means 97% of the people are getting work study, FAFSA loans. They're getting some sort of merit aid or financial aid. Just remember that. Now, unfortunately 2-3% of those people live in this area, but you can really negotiate with these schools if they want your student enough.

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