Helping Families Find Their Financial Fit

Choosing where to attend college is one of life’s big decisions. When making this choice, it is important for families to consider various perspectives on the idea of “fit”social, emotional, academic, and financial—that allow a student to assess which campus is ultimately right for them. Financial fit plays a major role in ultimately deciding which college to attend, since college is an incredibly expensive investment. Being an educated consumer is crucial to making the right financial decision from the start, one that is sustainable in the long term. Making the wrong decision can cost a student and family thousands of dollars and ultimately derail or delay a student’s progress toward earning a degree.

Having early conversations as a family is extremely important in the college application process, but the work does not stop when completing and submitting college applications. In fact, that is just when the work begins. After completing college applications, families should continue having conversations about finances and how this factor will impact their ultimate college decision. Yes, “their college decision” is correct—the decision needs to be made as a family. Although the cost of college should not be the only factor to consider, it is definitely one of the most important. With the average cost of college at over $35K per year in the United States, understanding what a family can pay out of pocket for college and how much debt the family can take on are imperative to the college decision conversation.

Today we will explore “financial fit” in unprecedented times. So many uncertainties lie ahead, and many families find themselves grappling with new questions around how to proceed with the college decision process, especially families who are financially impacted by the pandemic.

We are excited to welcome Joshua Lachs, CEO of Moneythink, in a conversation with guest host Ivette Chavez, CAP’s Director of Financial Services. Joshua’s team has spent the last year developing and launching DecidED, a publicly accessible, no-cost online tool to help students and families navigate the college decision process with affordability in mind. One of several platforms available to help students and families determine financial fit (see the list of resources below), DecidED helps students understand their financial aid award letters, compare various institutions and their cost, consider critical financial fit factors, and prepare students and their families to understand what college will cost and ensure they are ready to pay for it.


How do you define financial fit for students? Why do you think financial fit is so important for low-income students?

Moneythink considers “financial fit” along the lines of “affordability” while we prioritize the needs of Pell-eligible students. We analyze financial aid awards to determine the college bill and the related affordability of a college without including loans and work-study. Our affordability labels are calculated based on how much aid and scholarships a student receives plus the amount they will need to source to cover all the direct and indirect costs of attending that college. This gives students and their families the leftover amount, or gap, that they will be responsible for the first year (and also assumes a yearly increase). Only then do we determine if the college is in fact affordable, somewhat affordable, or not affordable for a particular family. Affordability labels may look different for students who are not Pelleligible, since they may have access to financial support from family and savings to help cover the cost of college.

Financial fit is critical for all students, but especially for students from lowerincome households. These students often do not receive accurate guidance about their college-going financial options, which can compromise their future opportunity. We find that there is a critical gap in financial aid award simplification, financial literacy, career planning, and long-term financial wellness behaviors. Compounding the problem is that college costs are not transparent, and families can only know what a college will cost after receiving an aid award.

Sadly, without real price transparency, the results are drastic: we see that many low-income and/or first-generation students often “undermatch” or enroll in unnecessarily expensive (and unsupportive) colleges, where high or unexpected life costs significantly increase the chance of dropout and high levels of debt. This short, stress-filled moment has farreaching, life-long implications. My team and I think the system should be designed to empower students and their families with true ownership of their options and decisions.

While advising students about the best financial fit, what are the top three things you hope they take away from that conversation?

First, students need to know the bill for each school where they have been accepted and are considering. It is essential that students and families know what the bottom-line cost is, what free money they have been awarded (like aid and scholarships), and what they will have to come up with to cover the difference.

Second, we guide them to compare their options and make a strong, informed decision. Regardless of whether students are considering several schools, one school, or not attending college right now, it is imperative that they are able to compare their options relative to their academic goals and financial circumstances. We emphasize that finances and affordability play a central role in decision making. At the same time, students also need to account for related fit and quality factors—including institutional graduation rates, career tracks, institutional diversity, proximity to home, and projected salary earningsas they weigh their options and make decisions. Comparing all of these factors allows students and their families to have informed conversations about the trade-offs of each of those choices and decision points.

Third, we guide students to make a financial plan once they have landed on a decision. We know that enrolling in college with a financial plan gives students the best opportunity for academic success and beyond. Creating a data-driven financial plan to responsibly pay for their college yearsaccounting for personal expenses like transportation, housing, food, spending, and emergency savingsempowers students with ownership of their finances, demystifies money, builds strong financial wellness that lasts beyond school, and allows them to mitigate against surprises both immediate and long term.


How has COVID-19 impacted college affordability for families?

Sadly, COVID-19 has impacted students and families, and in many cases, exacerbated existing inequities related to college access, opportunity, and retention. There are a myriad of consequences and just looking at the tip of the iceberg, here are a few that stand out.

We see the early data indicating that more students aren’t enrolling in college. Early applications among first-generation and lowerincome students are down 16%. It is troubling to say the least because we are also seeing a significant decline in the number of FAFSA submissions from these students. From a cost-value perspective, our strong hunch is that many students and families simply don’t value virtual college education in the same way they value the in-person campus experience. So the idea of paying a lot of money and racking up a lot of debt within an unstable economy with few job prospects for a perceived mediocre educational experience (and no extracurricular activities) is top of mind for many. I definitely get that point of view. We also see many lower income college students pausing out due to a variety of financial-based reasons. With more students simply opting out, it raises, for me, larger concerns about future education accessibility and job prospects.

Work and work-study are also impacted by COVID-19, as students who relied on work-study and off-campus jobs to help supplement their college costs are now struggling to pay their bills and stay in school. Many of those jobs were on or near campuses that have gone completely or mostly online during the pandemic, and colleges and universities have not been able to adapt these jobs to our new reality. So, for example, we see a compounding problem where work-study conditions must be met in order to receive that funding source, and yet there is no work to be had. This is throwing students’ financesand their already slim living marginscompletely off kilter.

For students who are choosing to enroll or continue with their studies, results from a recent national survey indicate that almost 30% reported an increased desire to be closer to home, either at the local four-year or community college. This is not only for financial reasons, but also because almost a quarter of post-secondary students reported that they have increased family care responsibilities due to COVID-19.

All that said, there are several affordable post-secondary options out there, and it is our collective responsibility to bring this information to the students and families who most need it, yet usually have the least access to it.

DecidED is a tool you and your team at Moneythink created and designed to support families with comparing college costs. Why is it imperative for students and families to shop around for the best financial fit?

When was the last time you took a job without weighing the total package: salary, benefits, culture, growth potential, team fit, purpose, opportunity for success and retention, among other critical factors? Or imagine having the chance to buy a new car or a home? People making those decisions are usually able to shop around for the best value and fit based on their needs and circumstances—and using the full information at hand. There are several factors that go into those decisions, but we assume that the financial aspect is fairly straightforwardand college finances should be no different.

Paying for college is the biggest financial decision students and their families will make at this point, but colleges primarily leave it up to students to figure out how much their degree will cost and how they’re going to pay for it. The system, unfortunately, is set up as some sort of puzzle where students and familiesespecially first-generation and lower-income students who may be working with fewer resources—need to piece together complicated, nuanced bits of information, all without being able to reference the picture on the puzzle box. And that’s just for the first year. Students need to repeat the financial aid process each year they are in school, but we see that many students and their families aren’t provided the necessary information about their annual FAFSA renewal. It can be easy to focus on just making it through your first year, so we have to remember that students and their families will be faced with this challenge every single year.

One of the big data points that has motivated usand that was underscored by our direct experience coaching studentsis that 70% of students drop or pause out of college due to financial stressors. This is unacceptable. Students should be able to know their bill and make a sound plan to pay so they can show up on campus (virtual or otherwise) ready to focus on their education and not stress about their finances, since we know financial stress can abruptly derail academic and career aspirations. It is critical that students and families have this information up front, be more confident and emboldened, and take more ownership of their immediate decisions that have lifelong impact.


We are facing unprecedented times where many institutions have made a shift to online/virtual learning. Many families considered a gap year or postponing college until COVID-19 has subsided and campuses re-open full time. What are your thoughts on this?

It is a really tricky situation, unfortunately. We know that many students and families from lower-income households face different challenges in the face of COVID-19. This is especially true when many students’ parents and guardians are front-line workers or face the very real predicament of unemployment. Students are considering a range of issues such as how far from home they can or want to realistically go, if they need to work sooner than later, and if taking on college expenses is even a wise choice right now.

If students do choose to forego their college plans this year altogether, we highly suggest that this time be used wisely with work or volunteering, applying for scholarships, and focusing on activities that help them grow, enhance skills, and extend their experiences and networks. There are many organizations and initiatives who would love to have young people engaged in their work. For example, programs like City Year and Year Up have rolling application deadlines and can give students hands-on training in real-world pathways.

With these and other real-world factors in mind, we also know that it gets harder and harder to enroll in college the longer one waits. And all those “empty seats” that may not be taken this year will be more difficult to get into next year and beyond. We advise students and families to be sure they have a plan. Choosing to hold off on college gives them a chance to reconsider and rebuild their lists — and decide which colleges they will reapply to during their year off.

Whichever option students and families take now, keep in mind that there are tradeoffs that need to be weighed. For instance, we know that going to and graduating college typically means increasing one’s lifetime earnings. According to a 2018 report, college graduates will earn an average of $900,000 more than the typical high school graduate over the course of their working lives. We know that college graduates are less likely to face unemployment and more likely to have senior level jobs, be homeowners, have better health, and be more financially savvy. For just these reasons alone, going to (an affordable) college is a financially smart option in the long run. When students push college back a year, they are trading postcollege earning potential for whatever they may earn during their year off. Whatever that tradeoff, we strongly advise students to think critically, do their homework, and commit to a decision.


What keeps you up at night?

What keeps me up is ensuring that our team has the necessary resources, partnerships, and capacity to work as effectively, thoughtfully, and quickly as possible so that we can help empower as many students in this country as possible—not in five years of even three years, but starting now. Add in the unfolding near and longer-term consequences wrought by COVID-19, and we see that it is a recipe for an even more drastic paradigm. This keeps me up at night.

On the flip side, this same sense of urgency and responsibility is what also fuels me and the questions my team is asking: How might we meet the seemingly intractable problem at the scale and urgency at which it exists? How might we take our learnings to build better solutions in order to put students and their families in the driver’s seat? How might we use our tools to ultimately create greater pathways to economic mobility and social capital?

I don’t sleep much these days.


In addition to Moneythink’s DecidED, other online tools to help with college financial decisions include resources from the Consumer Financial Protection Bureau and a college cost estimation tool by MyinTuition.