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Understanding your Financial Aid Offer part 3: Using the CFPB’s Grad Path Tool to Help with College Decision-making

For the third and final episode of this series, we spoke with Kate Mullan, Policy Analyst, Consumer Financial Protection Bureau, to discuss the Grad Path tool and how it can be used to compare programs, assess funding needs (or surplus), and create a financial plan for the academic year.

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Kate Mullan
Policy Analyst, Students and Young Consumers, CFPB


Brian Stone
Policy Analyst, Students and Young Consumers, CFPB

[Beginning of recorded session.]

BRIAN STONE: Welcome to the Financial InTuition Podcast where you can find your inner financial intuition one money topic at a time. The goal of the podcast is to educate, inform, and engage our audience with tools and resources created to help them make more informed financial decisions. These tools and resources can be found on our website at You can also click the link in the show notes for more information. This is the next episode of a three-episode Understanding Your Financial Aid Offer series which focuses on using College Scorecard to find your academic fit, what to know in filling out the FAFSA, and using the CFPB's Grad Path tool to help with college decision-making.

Before we get started, I'll read our Consumer Financial Protection Bureau standard disclaimer. This podcast is being produced by the Consumer Financial Protection Bureau. It is intended to generate discussion about using the CFPB's Grad Path tool to help with college decision-making. The questions asked and topics discussed were developed in coordination with the presenter and may not represent the Bureau's policy on any particular matter. Any opinions or views stated by the presenter are the presenter's own and may not represent the Bureau's views. Nothing said in this podcast by a Bureau representative constitutes legal interpretation, guidance, or advice from the Bureau.

Hello, everyone. I'm Brian Stone, a policy analyst in the section for Students and Young Consumers. Our section creates tools and resources for those working to help students, young adults, and their families manage their money, build credit, save or pay for college, and repay student debt.

We're excited to gain insight on using the CFPB's Grad Path tool to help with college decision-making from my colleague, Kate Mullan. So, without further ado, let's jump right in. Welcome to the show, Kate.

KATE MULLAN: Thanks, Brian. Happy to be here.

BRIAN STONE: Great. Can you tell our audience a little bit about your background and your work here at the Bureau?

KATE MULLAN: Sure. I'm a policy analyst also with the section for Students and Young Consumers. I focus on student loan repayment. Basically, I want to help student loan borrowers avoid defaulting on their loans. That's my big goal that I always try to keep in the back of my mind, and that includes helping students set themselves up for success at the beginning. That's where Grad Path comes in. Before I came to the Bureau, I was a high school math teacher for several years and an education researcher.

BRIAN STONE: What is Grad Path, and how does it work?

KATE MULLAN: Right. Grad Path is a Web tool. It just lives on the Bureau's website, and it helps students make a final decision about where to go to college and how to pay for it. That's once students have already applied, been accepted to, hopefully, multiple schools and applied to multiple schools, and now they have, hopefully, multiple financial aid offers in front of them that they're trying to choose between.

And, to do that, Grad Path will walk the student through these main questions. First of all, can you even pay for the upcoming school year? Is the funding even there to cover all your costs? If you can and you're going to be using student loans, then can you actually afford those loans in the long run? And, Grad Path will estimate how much debt you may graduate with and then bring in some salary data to help figure out if those loans are actually going to be manageable for you.

And then, finally, we want you to think about is this school going to pay off this investment that you're making. Just because you can afford something doesn't mean it's the right thing to invest in. You're putting a lot of time and money and opportunity cost into continuing your education, and we want you to be able to graduate and have financial success with your new degree. Bring in some data to help you think about that as well.

BRIAN STONE: Yeah, and that's great. I think about when I was actually in that position and thinking about college, and, you know, expenses, it was more so. I at least thought about it from the perspective of getting there and figuring things out from semester to semester versus having a plan on the front end. It sounds like Grad Path can help prospective college students avoid that.

KATE MULLAN: Yes, absolutely. I think it sounds like you and I had a similar approach to school, which was, in my case, just not very much of an approach at all, and the way I want students to think about it is if you can see an emergency coming from 3 or 6 months ahead, then it's not as much of an emergency. We can reach out, find help, see what your options are, and plan for it and have a much less stressful experience.

BRIAN STONE: And who should use Grad Path?

KATE MULLAN: Sure. Anyone with a financial aid offer from a college or university, and when I say college or university, I mean that very broadly. That could be going to farmers college. That could be going to flight school, a for-profit college like for a very specific skill, graduate school, your state university, community college. Any of these schools where you're paying to attend beyond high school, we can help you figure out if it's going to be a financially sustainable decision.

And then anyone else who helps those students understand their offers, so that might be parents, other family members, a high school counselor, other advisors. The tool is also meant to be helpful to people who are helping, right? It's something that a high school counselor can bring into their—all the resources that they're using with their students.

BRIAN STONE: And it's very important to have, again, some type of tool or plan that you can use before you make potentially costly decisions, which segues into the next question. Why is it important to have a plan before starting a program of study?

KATE MULLAN: Sure. You and I already mentioned this. First of all, we want you to avoid emergencies. We know that students end up having shortfalls that they weren't expecting, and that can have effects on things like, well, are they getting enough to eat, are they living in safe and appropriate housing. You know, just basic life necessities, we want you to have covered.

And then, again, back to this idea of the long run, we want you to come out of your college education feeling like the investment you made was worth it, that it's paying off, and that if you had to use loans to pay for it that those loans are not causing you bigger problems.

One of the best ways to make sure that you can successfully repay those loans is to make sure that you graduate because you need that degree to get the better paying job, and having that financial plan will help you stay in school, first of all, if you have those necessities, basic life necessities covered, if you're not working too much, if you're not so stressed out that you're doing poorly in your classes, because, of course, you need to be making that academic progress to get to that degree. That's kind of the order of operations here. We want you to be academically successful, have all your necessities covered, get to graduation, get that degree that helps you get into a better paying career, and then manage your loans and move on with your financial life.

BRIAN STONE: That makes a lot of sense. You talked about this idea of stress, which is important, because it can potentially start—depending on the decision that you make on the front end, it can start there and carry throughout your college matriculation and also into your later adult years, or you can be proactive and develop a plan on the front end and ease that stress and that pain and navigate through and eventually meet that end goal. That's important.

How does Grad Path factor into student debt and other loans?

KATE MULLAN: The Bureau's stance is that you should try to keep your total debt at graduation under your first-year salary. The amount of student loan that you graduate with should be less than that early-career salary that you're coming into. If you're looking at a career where, say, you're going to be a teacher like I was and you're going to be looking at like a $40,000 salary, then you should be graduating with no more than $40,000 in debt.

To help you check if you're likely to follow that rule, Grad Path has places for you to enter every type of debt you might be considering for the upcoming school year, whether that's federal, potentially your state has some loans that they're offering you. Then you can be looking off into private options from banks, credit unions. The school, we want you to do your due diligence on all of those. We can have places for you to enter the amount that you're considering, the interest rate, and the origination fee, which is the percentage that gets skimmed right off the top. And then based on the length of the program, Grad Path will estimate how much debt you'll graduate with, making some pretty broad assumptions that you're going to continue using approximately the same percentage of your limits.

Finally, we bring in some salary data from another great federal tool called College Scorecard that the Department of Education runs, and we can bring in some salary data from that, that based on your school and potentially the program that you're looking at, and so that will help you compare is your total debt at graduation likely to be less than you're able to, that first-year salary that you're hoping for.

BRIAN STONE: And what are some tips that are best practices when planning to pay for higher education that a prospective student should consider?

KATE MULLAN: I feel like I would be remiss to say that it's never too late to start saving, even if you are, for instance, in your junior year and you're just babysitting here and there, sock some of that money away, because some studies show that every dollar that you borrow can cost up to $2 or even more to repay in the long run. Every dollar that you can avoid borrowing through saving is going to help save you twice that in the long run. It's never too late to start saving, even if it's a little bit. It's worth more than you think it is. Definitely want to mention that.

And then, of course, what I've mentioned before, we want you to know what you're getting into. It's a little bit tricky with student debt because you're committing up front to potentially a multiyear program, but you're going to be taking on these loans bit by bit. And you don't really get when you're buying a car, you know up front this is the cost of the car, and you don't really have that with student loans. It's kind of a weird situation to be in. We'd encourage you to use a tool like Grad Path or just, you know, a calculator makes an estimation. Where am I going to be in 4 years, if hopefully, I'm going to finish my bachelor's degree on time?

And then the Department of Education has a great tool for estimating what your monthly payment might be. You can use our tool for that as well. We can give you some salary data. College Scorecard can give you some salary data. The Bureau of Labor Statistics has a whole wage data site where you can look at kind of the range of salaries of different types of jobs, separate from the colleges and universities. You can do—you gather some information there and see does this really make sense. We don't want you to have $100,000 in debt for a career where you're likely to make 40- or $50,000 a year. That's just going to eat up your budget in a way that's going to feel really unmanageable.

The next thing I would say is make sure you're talking to that financial aid office. We heard from a lot of students that they're really intimidated by the idea of calling the financial aid office and asking questions and saying, you know—it can be intimidating to say, "We can't really afford this. What are my other options?" but that's exactly what you should be doing. They're there to help. They want to give you that information.

We had many people who work in financial aid offices review the tool as we were developing it along with other students and counselors and all types of people, and all the financial aid people wanted us to say as many places as we could in that tool, "Please call us. We have information for you." Definitely, reach out to them, especially if you feel like you're out of options. They might have ideas you haven't thought of.

And then the last thing I'd want to push is going to sound like it doesn't have anything to do with finances, but make sure you're on top of your academic planning. Talk to that academic advisor. Get your degree plan in order. Know what credits you have. Maybe you have some coming in from high school or from previous enrollments at a college or a community college, and then figure out your grad degree plan and stick to it. We want you to graduate on time and start your career on time, and just keep your eyes out along the way for the cheapest way to get those credits that you need, so potentially, you know, you're going to a college. They accept transfer credits in the local community college. There are some courses that are not totally crucial to your degree or your future career. Maybe you can take those at the community college and save a few thousand dollars, which can make a big difference, especially if that's going to be paid for through loans. Like I said, that's worked out, though, in the long run.

Yeah, that's it. Know what you're getting into. Reach out for help. Reach out for information, and stay on top of your academics because academic planning is financial planning in college.

BRIAN STONE: Yeah, that's great. And I think you raised some pretty good points. I know one as far as seeking out and looking for every dollar you can potentially look for to reduce the actual cost, even if you're a junior or a senior, because it's going to save you money in the future, and also, continue to apply for scholarships, because there are scholarships that are out there. Like you said, sometimes schools have restricted scholarships. I know my school did, and if I didn't physically walk into the financial aid office, I never would have known. And I actually ended up getting that scholarship for 3 years, which saved me a substantial amount of money. That's an important point, and then also, I would say just thinking about what you hit on, the emotional decision-making, because a lot of times the students' friends might be going to a particular school or their parents might have gone to a school, and it might not be affordable for various reasons. But just taking that into consideration and not letting the emotion lead you to make a financial decision that's not feasible for you or your family.

KATE MULLAN: Absolutely. And, actually, your comments made me think of two other things. I want to just point out what you said about the financial aid office, walking into that office. Yeah, absolutely. Talking to them is not just for before you start college. Once you're already on campus, once you're going to school there, you want to continue that relationship.

I have also talked to multiple people who through that kind of ongoing interaction with the financial aid office made them aware of scholarships that they otherwise wouldn't have known about and saved them a substantial amount of money. I definitely want to emphasize that once you're already in school, continue that relationship.

And then the other thing, Brian, what was the second point you made? Oh, the emotional part. Right, right, right. Okay, yes. The emotional aspect of decision-making is really tough on this particular decision. The schools have been marketing themselves to you very effectively, and you apply to that school for a reason. There were things about it that you really loved, and it might turn out that, you know, okay, I can't go to this school the way that I thought I was going to. Okay. But maybe, you know, going back to the idea of don't assume something is impossible just because it feels that way at first glance. Maybe you can go to community college for a year and then transfer. Maybe you can move to that state, work for a year, go to community college, and then become an in-state student. There's lots of different ways to skin a cat, and we would want students to really keep their eyes open and get creative and think about what is my ultimate goal and then what are some compromises that I'm willing to make in order to get there with an amount of debt that I can feel good about going into young adulthood with.

BRIAN STONE: Yeah. Or know that, you know, that's an option too.

KATE MULLAN: Yeah, absolutely. That is certainly my preference.

BRIAN STONE: How can you use Grad Path to compare two or more programs?

KATE MULLAN: Sure. After you have put in all your information from the offer, we've helped you zero out your gap, we've helped you figure out, okay, can I actually pay for that coming school year, we've given you a bunch of information about the loans in the long term, if you do have to use them against Brian's wishes, and then we finally give you a summary page that takes you through back to all those numbers, line by line. You can go through the tool as many times as you want for as many schools as you want. As you go through the tool, you'll be actually generating a unique URL. Up in the line where it says www-dot, it will be capturing all that information that you've been entering into the tool, and then you'll be able to get summary sheet for each of those and look at them side by side so you can right-click and save it as a PDF. You can just pull up the one, go side by side. The tool does work on mobile devices, cell phones, tablets. Any of those things, it will work as well, and you can share that URL with other people. That's another—you know, we're talking about the comparison and talking through and figuring out this decision. You can share the URL with parents, counselors, teachers that you trust, and want their opinion. That's another way to share that, what the information that the tool is giving you.

BRIAN STONE: Great. That's a good point. You have your offer letter. Is there any additional information that a prospective student would need? Would they need some parental information or anything else to actually be able to take full advantage of the tool?

KATE MULLAN: Yeah, that's a great question. The offer letter is the main thing, like you said. It definitely is helpful to have a sense from your parents of—and not just a sense, an actual number from your parents on what they might be able to contribute, whether that's from savings that they already have or if they're able to set aside, you know, 100 bucks out of their monthly budget to help you pay for certain things. You'd want to have that conversation, and you want to—just this isn't really a part of the question, necessarily, but I just wanted to go ahead and say, you know, it can be very difficult as a parent, sitting down and having a conversation with your kids about money like this. If you're a student listening to this, especially if you're a high school student, this might be one of the first times that you have that kind of real nuts-and-bolts conversation with your parents about money and their finances, and so I would just encourage students to think about that very carefully and be very thoughtful and respectful about that conversation. I know it's hard, but think about what this means for your parents in terms of their retirement, in terms of other obligations, and try to keep that perspective, but they have a lot of different plates that they are trying to keep in the air.

A number from your family is great. If the student has savings, that's great, a good thing to know. If the student is planning to work—you know, maybe you're staying close to home. You had a job through high school. You're going to keep it. If you have a sense of "I've got money," how much can go towards your expenses, that would be helpful.

And then the last thing is not just about the money that you can bring but also about the obligations that you're going to have, the expenses that you're going to have. One thing that the tool urges students to do is to think big picture about what are all the costs and expenses that you're going to need to cover, not just the expenses that are, hopefully, included on your financial aid offer as a best practice from the school. That might be something like a credit card payment, if you have a car note that you're paying. Perhaps your family household is going to need you to contribute money while you're in school. That's another conversation you might need to have. How can I budget for this? Those kind of things as well. There's a spot in the tool where you can enter these other obligations that you're going to be budgeting for because, again, like I mentioned earlier, if you can see an emergency coming from 3 or 6 months away, then it's less of an emergency, right? We want you to be thinking about all of the costs and expenses that you're going to be covering for that year.

BRIAN STONE: Yeah. And I think those are all good points. Just something you said earlier, the tool is essentially for anyone. Those numbers, the parent contributions, those amounts might be zero. You could be like a first-generation student doing it by yourself, but it's for you too in that it will at least show you where you are as far as what you have and you have a goal of whatever school you're actually trying to go to, but then you can see what that need is, if there's a need. So, yeah, those are great points.

How does Grad Path incorporate the total cost of college?

KATE MULLAN: Great question. I think there's two ways. One of them, I just touched on, which is, you know, again, thinking about all of the expenses that you're going to be encountering, and then the other that I haven't gone into as much is about the length of your program. For instance, say you're coming out of high school. You're entering into a bachelor's degree. The typical length is 4 years, and we'll use that to estimate what your total debt is going to be.

One thing I'd want students to think about when they're thinking about the total cost of college is the fact that a lot of students don't finish on time, and I know it's really tempting to think that I'm definitely going to finish on time. And I certainly thought that myself. I was a really strong high school student. I graduated with excellent grades and got an academic scholarship, and I still graduated a semester late, even coming in with AP credits, a significant—a semester's worth of AP credits.

I would really encourage students, again, going back to that academic planning, the degree plan, making sure you're on a path that you feel good about and that you'll be able to finish, because having an extra semester or year of school can add substantially to those costs.

BRIAN STONE: Yeah, I can relate, because I had an extra year myself. I had a master plan, and then, you know, there are a few major changes and a double major and then a minor. And I looked up and I was like, "Oh, an extra year."

KATE MULLAN: Yep, exactly.

BRIAN STONE: An extra year of expenses.

KATE MULLAN: Exactly. Not just an extra year of expenses, but an extra year that you're not in the workplace. That's—you know, there's kind of a double whammy there. Anything you can do earlier on, whether it's in high school or that first year, if you're in the traditional bachelor's program, maybe you're going in undeclared, anything you can do to kind of narrow down what your interests really are, whether it's going in and sitting in on lectures, talking to professors, looking at volunteer opportunities, going to club meetings, you know, really—I don't know about you, Brian, but I did not take full advantage. I'm sure there's like 100 careers I didn't even think about that would have been a good fit. Really take advantage of all of those resources because you're paying for them. You may as well use them.

BRIAN STONE: Right, right. Yep. I didn't either. I just had my mind sort of locked on one thing and stuck to that plan until I graduated, and I was like, "I'm not sure I want to do that anymore."


BRIAN STONE: But, yeah, like you said, explore. It's a time to develop both academically and personally. Take those opportunities because, as you say, you are paying for them. They are there for you, and the college wants you to. It makes a lot of sense.


BRIAN STONE: Are there any other tools or features that Grad Path has that maybe we didn't hit on before?

KATE MULLAN: One thing that the tool does link to, at the end, it gives you a step of—or a list of next steps you can take, if you're putting the plan into action, if you're feeling good about it, or reconsidering other options if you're not feeling so confident. And one of those steps is to make a budget. We have a link to an excellent Cash Flow Budget that the Bureau offers. We're also working to make a student-specific one that will hopefully be out later on in 2021, but whether you use our tool or somebody else's, I would certainly encourage students to—again, that planning thing that Brian and I keep coming back to, part of that is making a budget and specifically looking month to month, where am I going to be. If you are using loans or if you have a big scholarship, you're basically going to get this big lump of money at the beginning of each term, and then it's up to you to make it last. Having a budget and knowing where you are, having maybe a weekly funding night, check in with your finances, how much do I actually have to spend this week, what costs do I see coming up, do I have enough, that will—again, that whole idea of an emergency you see coming from a ways off is way less stressful than one that sneaks up on you the next day. Definitely, whether it's our budget link or another tool, that would be something else I'd want students to think about.

BRIAN STONE: Yeah, yeah. I think a budget is extremely important, and it does add some clarity to a financial situation that can be complex, anyway, because the student, their expenses coming from everywhere. There might be funding sources coming from different places, and you're trying to match those funding sources with the expenses at the point when they happen. A budget can give like a clearer picture of what's happening this week or this month or even this semester and help reduce some of the stress in the process.

All right. We talked about a lot of great things in this episode. We talked about Grad Path. We talked about decision-making, budgeting, and overall just having a plan. Three takeaways from this episode. Use the Grad Path tool to help you develop a plan to cover the cost of college. Compare the cost of similar programs before deciding on one. Consider the cost of postgraduation student debt before taking out loans for higher education.

Thank you, Kate, for joining us today and sharing your expertise with our audience. We appreciate our listeners for tuning in. To stay connected, please visit our podcast page on, and so you don't miss future episodes, sign up to be notified of new releases. As always, remember to continue to develop your financial intuition and learn money management lessons you can use now to build a future you want tomorrow. Thank you.

[End of recorded session.]