Paying for College

Juniors: Look Ahead to Paying for College

Today I’d like to address high school juniors and their parents. We’re nearing the end of another school year. After classes end for you this spring, you will become “rising” seniors. Hopefully, during this junior year, you had a chance to begin (or continue) your discussions with your parents about your college process. If you did, that was (is, and will be) time very well spent.

One of the key aspects within the college process is the link between college selection and the ability to afford those candidate schools. Students tend to be idealistic and lean toward schools about which they’ve heard good things or whose names and reputations populate their discussions and dreams. Of course, I’m talking about the so-called “elites” — the Ivy League Eight and other “prestigious” colleges and universities.

Most parents, on the other hand, take a much more pragmatic approach, trying to strike a reasonable balance between their child’s idealism and the real-world ability to pay. With some schools now heading north of $300,000 for an undergraduate degree, pragmatism is prudent.


In my last post, I presented the thoughts of Smith College admission dean, Deb Shaver, regarding the college admissions “frenzy.” In a nutshell, she appears to be concerned about the increasingly prohibitive rise in the number of applications to elite schools. Her contention is that the quest for prestige is outstripping the search for “fit,” that favorable match between a student’s needs and a college’s ability to meet them.

 

In reviewing the comments to the thread I posted about this on the College Confidential (CC) discussion forum, I found quite a different story regarding the true motivation for students applying to America’s top schools: the need for money. Most of the elite college and universities in America have a “meet your need” policy regarding financial aid. If you qualify, they’ll make up the difference between what you can afford and the full cost of attendance.

Thus, inspired by the heartfelt posts of both students and parents on my CC thread and the cogent comments of my CC colleague, Sally Rubenstone, I thought I would share some information, as I did last spring, about how to approach the college search, keeping in mind the need to anticipate (and find out) how much you’ll be required to pay, balanced against your ability to meet that requirement. These are insights that bear repeating, so I will.

So, juniors, what you should do now is sit down with a parent (or parents) and ask them to be as frank as possible with you about college costs. I know that many parents balk at the idea of talking about money with their children, so don’t force the issue. However, it would be very useful for you to know how much your parents think that they would be able (and willing) to pay each year towards your college costs. So here is the first question for which you need an answer:

– What is the total amount per year your parents think they can (or will) pay for your college education without staying awake all night with worry or eating macaroni and cheese at every meal?

Next, you need to determine your EFC*, the question being:

– What is your estimated EFC using the Federal Methodology and Institutional Methodology?

*In case you haven’t encountered it yet, EFC 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 overall Cost of Attendance (tuition, room, board, books, travel, and all other fees). And that figure shouldn’t change, whether you are attending a college that costs $50,000/year or one that costs only $5,000/year.

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

College A costs $42,000. If your EFC is $10,000, this college should give you $32,000 in scholarships and loans to make sure you can attend. [Please don’t overlook the word “loans.”]

If College B costs $25,000, your EFC is still $10,000. It won’t change from school to school. So College B then should give you $15,000 in scholarships or loans.

This is called “need-based” aid.

Whenever your EFC is higher than the total cost of attendance, you won’t qualify for need-based aid at that school. But if it’s lower than the cost of attendance, then you will qualify for need-based aid, although you don’t always get it.

Why not? In reality, many colleges practice what is known as “Need Gapping.” They say, “Okay, we see you require $32,000, but we’re going to give you only $12,000. 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, or whatever. It’s not our problem.” [This truth can hurt.]

Most of the highly competitive colleges promise to “meet full need.” That is, they will give you enough aid to cover the difference between your EFC and their total costs. But, commonly, some of the money they give you is made up of loans, which must eventually be repaid. So even if a college claims to meet full need, it doesn’t necessarily mean that your financial worries are over. [Beware excessive loans!]

So, in order to answer Question 2, you and your family should do the College Board’s online EFC calculator that you will find here.

Shortly after you start, you will be asked to pick a “formula” — “Federal Methodology” or “Institutional Methodology” or “Both.” Select “Both.”

Once it’s time to actually apply to college, you’ll find that all colleges on your list will require the Free Application for Federal Student Aid (FAFSA) form for those seeking aid, and some will also require the CSS Profile form.

 

 

Colleges that ask for only the FAFSA will compute your aid award based on Federal Methodology. Colleges that also require the CSS Profile, too, will use Institutional Methodology (more or less; their final figures may not be exactly the same as the results you get from the calculator).

So, for now, it will be helpful to get an approximation of both figures. This may give you a better idea of where you will ultimately get the best financial aid. It will also help steer you toward colleges that you can ultimately afford to attend and to warn you when your top-choice colleges could be too pricey.

Finally, if all that financial aid information isn’t cumbersome enough, here’s another twist. It might help you out or it could just muddy the waters:

All colleges in the U.S. are required to put a “Net Price Calculator” on their Web sites. The NPC is usually similar to the College Board’s EFC calculator. However, most of them are more specific and may consider factors that are especially important to that particular college. Some even estimate if you will be in the running for merit aid.

It can be very time-consuming to fool around with the NPC’s for every college on your list. But, once you’ve done the College Board’s generic version, you might want to try one or two of them, just to see if the figures you get are different.

For instance, here’s a link to the NPC for Bentley University, which does give merit aid. And here’s one for the University of Pennsylvania, which does not.

As I said above, you will need parental help to play with the College Board’s EFC Calculator because your Mom or Dad will have to provide figures from income tax returns. But, once you have those numbers, you will probably be able to do the college-specific NPC’s on your own, should you choose to try them. Some will ask almost the exact same questions as the College Board asked. Others will also want data such as your SAT scores, GPA, and sometimes even extracurricular interests or prospective major.

Keep in mind that you’re just “playing” here. You can try plugging in different numbers (higher SATs that you hope to achieve, varying majors) just to see different outcomes. None of this is official; but the results, if you share them with us, can help us figure out how to create a college list that will maximize your options.

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Of course, this is just the beginning of the process that, ideally, will generate a group of schools for your consideration that have the right balance of fit and affordability. You may already have a start on your list of candidate colleges. If so, that’s good. What you need to do now is some deeper research about the affordability factor using the tools and techniques mentioned above.

One note of caution: In light of the absurdly low acceptance rates of the “meet your need” schools, don’t put too many of your financial aid “hope eggs” in your basket. Obviously, as long as a school’s acceptance rate is above zero, you do have a “chance.” Be realistic, though. A school like Stanford that denies over 95% of its applicants will — on average — probably deny you, too.

Don’t be afraid to apply to the heavy hitters, but balance your list with better matched schools that are also affordable for you and your family. How can you know if a school is both well matched and affordable? Do your research, visit, and follow the financial aid investigative protocol above. You’ll be glad that you did.

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Be sure to check out all my college-related articles at College Confidential.