Paying for College

Is Financial Aid Available for Family with $200K Income?

Question: I'm a high school senior and come from a fairly well-off family ($200K per year) I have one brother who is already in college out of state, and another who will enter college the year after me. I realize that my family makes enough money that it would not be fair to give us much financial aid, but can we expect any, given the astronomical expense of sending three kids through college?

If you and your older brother are both in college at the same time, then you MAY qualify for some "need-based" aid from the Federal Government and/or the college you attend, depending on assorted information such as overall family size and other financial obligations. If all THREE of you are in school together, then your family should be eligible for aid almost for sure. (This will depend on the cost of your older brother's college as well as the schools that you and your younger brother attend.)


If you want MORE SPECIFIC information about how much need-based aid you think you might receive, then you and your parents should play around with an online EFC calculator, like this one on the College Board Web site:

http://apps.collegeboard.com/fincalc/efc_formula.jsp?updateID=1

EFC--in case you haven't encountered it yet--stands for "Expected Family Contribution." It's a figure that is computed for you by the Federal Government based on your family finances.

In theory, the EFC is the amount that your family SHOULD pay each year for your college costs (tuition, room, board, and all other fees). And that figure should not change, whether you are attending a college that costs $45,000/year or one that costs only $5000/year (but it WILL change depending on how many children are in college at the same time).

Also in theory, when your EFC is low, then the colleges SHOULD make up the difference.

Example: College A costs $42,000. Your family EFC is $2,000. So the college SHOULD give you $40,000 in scholarships and loans to make sure you can attend. If College B costs $20,000, your EFC is STILL $2000. It won't change from school to school. So College B then SHOULD give you $18,000 in scholarships or loans. You dig?

Whenever your EFC is HIGHER than the cost of attending, then you won't qualify for need-based aid at that school. But if it's LOWER than the cost of attending, then you WILL qualify for need-based aid ... though you don't always get it.

Why not? In REALITY, some colleges practice what is known as "Need gapping." They say, "Okay, we see you need $18,000, but we're going to give you only $6,000. You'll have to make up the difference on your own. We don't care how you do it. Take out extra loans. Hit up Grams and Grampy; sell the family heirlooms. It's not our problem." (Well, okay, they're not quite that rude, but you get the idea.)

Typically, the highly competitive colleges promise to MEET THE FULL EXTENT OF NEED. That is, they WILL give you enough aid to cover the difference between your EFC and their total costs. But even some of the highly competitive colleges practice need-gapping.

Note, too, that the EFC calculator will ask you at the start to "Pick a Formula." You can choose between the "Federal Methodology" and the "Institutional Methodology," or you can pick "Both." I suggest that you choose "Both." The Federal Methodology is the formula used by colleges that use only the FAFSA (Free Application for Federal Student Aid: http://www.fafsa.ed.gov/) to determine aid awards. Those that use the FAFSA plus another form (usually the CSS Profile https://profileonline.collegeboard.com/index.jsp ) go by "Institutional Aid," and those figures may be different. (Institutional Aid considers different things--like whether or not your family owns your home and how much it's worth) that the Federal Methodology doesn't care about. Confusing, eh?

So what if you don't qualify for ANY need-based aid? You still may receive "Merit Aid." Merit Aid is the money that colleges use to lure their most desirable applicants, even if the family does not qualify for "need-based" aid. However, there are a couple big problems with merit aid:

1) It's almost impossible to predict in advance how much one will receive. Once a student receives an admissions decision, the college also notifies the student about merit aid awards. Most of the time (though not always), students do not apply for merit aid. In many cases, all applicants are automatically considered, but you won't know until the decision letters arrive whether you will receive a lot of merit aid, a little merit aid ... or none. A few colleges offer guidelines on their Web sites to help you predict whether you're likely to get merit aid, but many don't. In general, the best way to get merit aid is to apply to a college that offers it (most do, but not all) and to those places where the typical admitted student has grades and test scores that are significantly BELOW yours.

2) Even with a good merit scholarship, many colleges are still pricier than their public counterparts. State universities are often a very good deal. Last year, for instance, one of my advisees from New York was excited because she'd been awarded a $20,000 merit scholarship from a private university in New Jersey. The scholarship also came with a "free" laptop. So I had to be the bad guy and point out that, even with the $20K "discount," the NJ school (which costs about $40,000/year to attend including room and board) is pricier than The State University of New York at Stony Brook (where she had also been admitted), which is about $15,000. (That would give my student about $5000 to buy her own laptop ... and you can get a pretty snazzy computer at that price. :-)) I also pointed out that the caliber of the student body at Stony Brook is higher across the board than at the other private college. So the moral of the story is that sometimes even a great merit scholarship isn't as good a deal as going to an in-state institution. I'm wary of merit awards much in the same way that I avoid coupons for name-brand products like Hellman's mayonnaise and Heinz ketchup because the store brands are usually cheaper, even after the coupon.

Finally, you can also look for "private scholarships" that come in all shapes and sizes. Private scholarships are awarded by businesses, civic organizations, local governments, etc., not by colleges.

If you haven't already, check out FastWeb for these scholarship options. Here is an easy link: www.fastweb.com

This is a no-cost way to access information about private scholarships for which you may be eligible. The online questionnaire takes about 10 or 15 minutes to complete. You'll find that the majority of resulting scholarships tend to be in the $500 to $1,000 range, though there are some "biggies" on the list, too. Needless to say, the greater the award, the more competition you'll face. Keep in mind, however, that in most cases, the best financial aid comes from colleges themselves in the form of need-based or merit-based grants.

Once you fill out the FastWeb questionnaire, you will receive periodic e-mail updates about new scholarships and reminding you about upcoming deadlines. FastWeb is free and completely legitimate, so if you haven't filled out the questionnaire yet, do it now!

Admittedly, the financial aid/scholarship search process can be a big hassle, but it is often well worth it. So be persistent and don't hesitate to ask for help (from your school counselor or college financial aid offers ... or even "Ask the Dean" ) if you get lost in the maze.