eng NEXT GEN PERSONAL FINANCE Case Study Summary Description: In this Case Study, students assume the role of a guidance counselor to help seniors walkthrough their college decision process, including clearing up misconceptions about sticker price. Internet Usage: None Spreadsheet Skills: None NGPF Activity Bank Paying for College National Standards for Personal Finance Education Managing Credit 0 4a: Describe the different sources of funding for postsecondary education o 103: Describe how failing to repay a loan can negatively impact a person's finances and life Earning Income 0 3.3: Evaluate the costs and benefits of investing in additional education or training CASE STU DY: What College Should I Attend? It's spring, which means college decision time! Guidance counselor Susan Smith is busy; seniors have been receiving their acceptances and financial aid packages over the last few days. They have a short time to make the enormous decision of where they'll be attending college. A number of students will be stopping by Susan's office today to share their results and seek her advice. Student #1 - Jordan The first student in Ms. Smith's office is Jordan. He's so excited! He has been accepted into his top three colleges and has everything figured out. He comes into the office to announce his decision with pride. Jordan: Ms. S, lgot all three of my acceptances yesterday, and i've made my decision! Can you guess what it is? Ah, never mind, I can't wait! I've decided to go to... Ms. 5: Congratulations, Jordan! I know it's exciting, but let's take a minute to look at some numbers before nalizing your choice. Jordan: Ms. S, i don't need to look at the numbers. All three schools gave me over $75,000! Can't ljust teil you what school We decided on? Ms. 5: Sometimes financial aid offers can be complicated. Once we've doublechecked some important information, id love to hear Where you decide to go. Do you mind showing me your offer letters? Exhibit 1 0000 0000 00000 Grant/Scholarship Aid Jordan: [Takes a moment reviewing the Financial Aid summary, and then responds, Here are the highlights of what he says:] 0 l can't teliyou how lucky l feel to get into a school like CoodTirnes U. Look at how much it costs! Clearly since it's more, it's a better school. i mean, who would drive a Kia when they can drive a Ferrari? i don't want a cheap education. GoodTimes is giving me a $26,000 scholarship! That's awesome! i'm getting thousands ofdollars less from those other schools l 'm not going to worry too much about the difference in prices; at most, it's an $78,000 difference and ill have my whole career to pay it off. lhaven't talked to my parentsyet, but i know when they see how much money i'm getting from the school they'll support me. And the rest l can take out in student loans! Answer this: 1. Calculate the net price for each school, To do so, subtract the grants and scholarships he received from the sticker price, and write the answer in the table above. Note: You can learn more about net price from this article, 2. Jordan seems to be making some incorrect assumptions. What information can you give him to ensure he understands the true cost of each school? 0 Underlinem statements that Jordan made that are incorrect. 0 Tell Jordan why his assumptions were flawed and clarify the situation by adding any relevant information that he's missing. Write your comments to Jordan below Jordan: Okay, so you think i should go to Fine State U? Ms. 5: That's important information, but there are other factors to consider too. Choosing a college is more thanjust picking the cheapest option. Jordan: Yeah, i also want to make sure my school has a good psychology program. Ms. S: Exactly, good point! l rememberyou wanted a small school, right? What else are you looking for? Jordan: Yeah, l want a small school where classes aren't too big, it's easy to get to know people, and i won't be lost in the crowd. l'm really worried about not doing well in my classes and finding a goodjob after graduation. All the college tours talked about clubs - it would also be fun to be in a frisbee club! Ms. S: [Pulls out a chart] Why don'tyou take a look at this? it's got some important information about the three schools you've been accepted to. Exhibit 2 GoodTimes University Prestige o Acceptance Rate: 61% o Psychology program not ranked by major sites Student Life A cappella, ultimate frisbee, and business clubs Stu dent1facu|ty ratio: 14:1 5,000 undergraduates Location 0 6rhour flight Student Outcomes + Cost 0 4year graduation rate: 35% Average salary 1 year after graduation: $40,000 Loan default rate: 10% Net Price: Fine State University Prestige 0 Acceptance Rate: 19% 0 Psychology program ranked #37 in the U.S. Student Life o Student newspaper, affinity groups, and political clubs 8,000 undergraduates o Studentzfaculty ratio: 12:1 Location a Behour drive Student Outcomes + Cost 0 4year graduation rate: 79% Average salary1 year after graduation: $54,000 Loan default rate: 2% Net Price: University of Happy Valley Prestige o Acceptance Rate: 38% 0 Psychology program ranked #24 in the U.S. Student Life 0 Peer mentoring, peer tutoring, and student radio station a 18,000 undergraduates o Studentzfaculty ratio: 15:1 Location o iehou r drive Student Outcomes + Cost 0 4year graduation rate: 81% Average salary1 year after graduation: $47,000 Loan default rate: 2% 0 Net Price: Jordan: [Reviews the chart for a few seconds and begins talking. Here are the highlights of what he says] Since GoodTimes U accepts more students, they'll probably have better students. GoodTimes U has the fewest students, so the classes will be the smallest. i know Fine State U has a lower ratio of students to faculty; but when l visited, I sat in an introductory psychology class that had over 200 students! i like OoodTimes U's lower graduation rate; it must mean the coursework is harder, so not everyone graduates. Graduating from a competitive school will make it easier for me to find a goodjob. I'm not sure what loan default means, but a higher rate is probably good, right? Answer this: 3. You think Jordan might have some misunderstandings about the chart. 0 Underline three incorrect statements that Jordan made. 0 Explain to him why his thinking may be flawed, and clarify the situation for him. 0 Write your comments to Jordan below. Jordan: Okay, so now I'm thinking Goodtimes U might not be the best choice for me. This is a lot of information how am i supposed to choose? Ms. 5: Sometimes it can be helpful to think about the pros and cons ofeach school. Let's try that. Answer this: 4. Complete the chart below. PROS CONS wwwng pforg Last updated: 9/i4/2i Answer this: 5. Which school should Jordan choose? Why is that school the best option? Student #2 - Riley The next student in Ms. S's office is Riley. They are an academic superstar with lots of extracurricular activities and leadership positions; Riley has set their sights high. They have been accepted to some of the top universities in the U.S. Riley: Ms. S, l'm so torn. l was up all last night tossing and turning. First i thought i should pick Blue University, but then i read an article about great research being done at Charles State. And Hightower is in the top 10 of every national ranking.l I want to go to the best school, but I can't afford outrofestate tuition.l Ughhhhhhhhh. Ms. S: Riley, take a deep breath. You have the best kind ofproblem.' a lot ofgreat choices! l'll help you narrow them down. Can you remind me: What are you looking for when choosing a college? Riley: Right now, I'm really worried about being able to afford school, since my Mom's hours werejust cut at work. After graduation, l want to be able to support my family right away, so I want to make sure I graduate with a greatjob but not a lot ofstudent debt. That means the best college possible with a good business program. We heard that it's easiest to find ajob ifyaur school has a good ranking, research opportunities, and a strong internship program. 6. You want to make sure that you're clear on what's important to Riley and that they feel understood. Summarize what you heard Riley say was important to them, Ms. S: I heard you say that... Riley: Yeah, that sounds about right. But it's a lotto think about when choosing a college! Ms. 5: Let's start by looking at net price and seeing if that helps you narrow it down. Here's a summary of your three schools, their costs, and their financial aid offers [hands Riley a chart]. Exhibit 3 Charles State Prestige o Acceptance Rate: 10% o Business program ranked #23 in the US. Student Life o Political, theater, and prelaw clubs o Honors program 0 32,000 undergrad uates o Stu de nt:faculty ratio: 20:1 Location 0 3-hour drive Student Outcomes + Cost 4ryear graduation rate: 83% Average salary 1 year after graduation: $57,000 Loan default rate: 2% Sticker price: $39,000 Gra nts/scholarship aid: $20,000 Net price: Blue University Prestige 0 Acceptance Rate: 11% o Business program ranked #5 in the US. Student Life 0 Investment, prelaw, and student newspaper clubs Careers office publishes a list of internships 13,000 undergraduates Studentfaculty ratio: 7:1 Location a 3-hour flight Student Outcomes + Cost 4ryear graduation rate: 95% Average salaryl year after graduation: $72,000 Loan default rate: 1% Sticker price: $62,000 Grants/scholarship aid: $49,000 Net price: Hightower College Prestige o Acceptance Rate: 8% a Business program ranked #6 in the US. Student Life a Student government, business, and political clubs 0 Established internship program with local firms 0 7,000 undergraduates o Studentfaculty ratio: 8:1 Location a 6-hour flight Student Outcomes + Cost 0 47year graduation rate: 89% Average salaryl year after graduation: $68,000 Loan default rate: 1% Sticker price: $57,000 Grants/scholarship aid: $51,000 Net price: Calculate the net price for each school and complete the chart above. After looking at the net price and basic info for each school, you think Riley should be able to narrow their search down to two schools. Which school do you think should be Riley's third choice? Why? Write your suggestion to Riley below. Riley: Okay, i think that makes sense. It's helpful to focus on choosing between the other two schools. i'm still not sure which is a better option for me, though. Ms. 5: Let's try writing out the pros and cons for each school. 9. Complete the pros and cons chart for Riley's top two schools. PROS couege #1: - conege #2: - Answer this: 10. What other factors might Riley consider, beyond what's included on the summary chart? How could they learn more about those factors? ll. Which school do you think Riley should choose? Why is that the best option for them