The cost of college is a little bit like the cost of airplane seats – everyone pays a different price for pretty much the same experience. But unlike airplane seats, college cost isn’t based on when you buy it; it’s based on a variety of other factors. And it’s better for you to start your child’s college search understanding what these factors are, and how you can be a smart “shopper.”
Those of us who are intimately involved in the college admission process will tell you that we HATE college rankings (we do – we really do!). But in reality, the colleges themselves are doing whatever they can to move up those rankings. One of the ways they do this is by attempting to lure highly qualified students – students whose grades and test scores are a bit higher than their own average – away from other colleges through financial incentives. This is what we refer to as “merit scholarships.” They’re intended to make it difficult for you to choose between College A, with possibly a slightly stronger reputation or ranking, and College B, whose reputation may be a little lower, but which could cost you tens of thousands of dollars less per year.
Believe it or not, there are companies out there that specialize in helping colleges – specifically, the ones doing the incentivizing – determine exactly what level of scholarship it will take to tip the balance and help you make the decision in their favor. This article has more details about that.
The flip side of this coin is sometimes surprising to parents. Top colleges – those whose students scored literally at the top in both grades and test scores – don’t have much above them, nor a dearth of highly qualified applicants. Despite what you’ve heard, therefore, there’s no real need for these colleges to offer financial incentives based on these metrics. If you’ve heard someone say something like, “If Princeton REALLY wants you, they’ll make it work for you financially,” I’m here to tell you that this is wrong.
Most of the colleges at the top of the rankings give financial aid based ONLY on demonstrated need.
Demonstrated need is determined using a financial formula that results in a number called the Expected Family Contribution (EFC). You can learn more about that if you watch our financial aid webinar. And honestly, if you only have 35 minutes to devote to learning something important about college admission and financial aid, this is where you should spend it.
You should know your EFC before your child begins building his or her college list. Our financial aid webinar will guide you in getting a head-start on this.
Your EFC will always be the starting point as colleges determine how much NEED-based aid to offer you. There are many problems with this process, though. The first, as this NY Times article details, is that the FAFSA is based on an outdated formula that lacks nuance related to cost-of-living and other geographical factors. The resulting EFC is almost always a number that surprises parents. “They really think we can pay that much….each year?” is something we hear regularly.
If finances will play a role in your child’s college decision, it’s truly critical for you to understand these things:
- What is your EFC?
- Do the colleges on your child’s list give based on need or based on merit, or both?
- Do the colleges on your child’s list fill 100% of need, and if so, how do they do it? With loans, work-study or grants that do not need to be repaid?
Our webinar will really help you understand how to research colleges’ track records in giving merit and/or need-based aid. The goal, in our view, is to help you make decisions that make financial sense for your family, and help your child understand the value of the education you’re about to help them fund.
Here’s some additional information we’ve published about college financial aid:
If you need more help thinking through this process, please feel free to give us a call.