Posted by Mike Smith :: May 5, 2009 @ 3:56 pm

By this time of year, many high school seniors have firmed up their college plans for next year. Whatever criteria they used to make their final decision, it’s clear that the economy likely played a large role.

With job losses and declining investment balances, many parents have had to advise more modest choices for their children. Even those with 529 College Savings Accounts, which should have been in highly conservative investments, so close to college, may have seen declines. Some improperly allocated 529 accounts saw major declines.

The College Hopes and Worries Survey, administered by The Princeton Review, summarized many of the concerns faced by students and parents. It found that:

• 67% of survey respondents said the economic downturn had affected their application decisions. Asked what the major way it affected them was: 38% said they were applying to colleges "with lower sticker prices," 34% said they were applying to "more 'financial aid safety' schools," and 28% said they were applying to "schools closer to home"
• 85% said financial aid will be "very" or "extremely" necessary (60% of which said "extremely")
• Respondents’ biggest worry about applying to college: "Will get into first-choice college, but won't have sufficient funds/financial aid to attend it"

An interesting point noted in my post, Top Value from Top Colleges, is that many “prestigious” colleges and universities rank high on value because they significantly offset the costs of attendance with grants and scholarships, which do not need to be repaid. I hope that students realized this and still applied to their dream schools, even if they also added some more affordable options to their list of prospective schools. Evaluating choices with as much information as possible will help you make the best decision. When choosing between schools that have accepted you, remember to consider the true cost of attendance. This will be an easier calculation now that the various financial aid packages (work-study, loans, scholarships, and grants) are known quantities.

All expenses are being monitored more closely during these difficult economic times. Larger expenses get the most attention and college certainly falls within this category. I hope that students are making good choices about which schools to attend and that they are considering the actual costs that will be incurred as opposed to the advertised prices.

Did you (or your child) change your college application plans based on the economy?