Cappex VP and Publisher discusses financial aid, student debt and scholarship strategy

Mark Kantrowitz, Vice President of Strategy and Publisher at Cappex, discusses student debt, and provides practical tips for students looking to apply to more scholarship opportunities.

“Financial aid is like speaking another language,” he said. “We boil it down to what you really need to know.”

He recommends students to understand the different between the sticker price, net cost and net price.

The sticker price is the total cost of attendance including room and board, textbooks and transportation. This number can be intimidating especially when some universities charge in excess of $60,000 annually in tuition and fees.

In contrast, the net cost subtracts the financial aid costs, but Kantrowitz explains that this number doesn’t always provide the most accurate picture because net cost generally includes student loans. 

“Loans don’t cut college cost, they spread out over time, and they increase costs because they have interest,” Kantrowitz said. “I prefer net price.”

He explains this number is the total gift aid - grants, scholarships or other types of aid that do not require repayment - subtracted from the total cost of attendance. This number could be considered a discount. That net price is what needs to be paid by accessing savings, contribution of current income and contribution of future income. 

“If the net price exceeds the available resources, you are going to struggle to pay for that college,” he said.

The total outstanding student loan debt passed $1 trillion in 2012, and continues to grow. In fact, it is growing at a very steady rate, and Kantrowitz said estimates show that debt will reach $2 trillion in 2022.

Kantrowitz defines reasonable student loan debt as not exceeding the expected total of your first year annual salary. Following that rule of thumb means students should be able to pay back loans within ten years after graduation.

Excessive debt could exasperate the problem for the next generation because parents have limited ability to save.

For parents, they should not exceed their annual income across all children, and they total should be adjusted based on how close they are to retirement.

Generally, students should try to limit their debt to federal student loans, which will limit the borrowing to $27,000.

He lists several tools to determine future earning power.

PayScale.com – offers information on starting salaries and a Return on Investment report to show lifetime earning capability.

BLS.gov – They break down income into percentiles.

Salary.com – Reports salaries for different occupations. 

CEW.georgtown.edu – Links the academic major to income after graduation.

Ultimately, students can look for scholarships to limit debt for free at cappex.com. Kantrowitz explains that the tool helps students efficiently find scholarships. The site also regularly publishes content to help students strategically apply.

The Strategic Scholar Tip:

Kantrowitz tells Strategic Scholars to write your scholarship by first recording what you will say. This will make your essay more persuasive and compelling. After transcribing and editing, he recommends reading your essay out loud and making an “x” after stumbling over any word or sentence. This will help spot common errors and problems with grammar.