Category Archives: Merit-based Aid

EFC, Net Cost and Aid Packaging

Step 1 in figuring out how to pay for college is estimating your EFC. You can use the FAFSA4caster, or the more detailed EFC Formula Guide (note that’s for 2018-2019; the 2019-2020 version should be released this month). But EFC is just a starting point: schools aren’t required to meet your need, and they certainly aren’t required to meet it through gift aid. That’s why net cost and aid packaging are important concepts to understand.

Colleges are required to have net price calculators on their websites. Many have adopted the helpful tactic of linking them through the College Board website so you can save your information rather than re-enter it for each school. A good net price calculator will ask about all factors that go into aid decisions at the school– need and merit, if applicable. If you’ve estimated your EFC, you might be disappointed at your net cost. For example, the closest anyone came to our EFC was $6,000 above it. Our net cost for two schools we visited was $10,000 more than our EFC; another was $20,000 more; a fourth offered us full-price admission. (In our case, the gap between EFC and net price is partly due to the fact that the FAFSA divides your EFC evenly between two college-aged children, whereas private schools tend to assume it’s not evenly divided; and partly due to the CSS PROFILE including home equity and thus calculating a higher EFC to begin with.)

Once you’ve got your net cost, though, you need to look at the actual aid package. Taking a step back, colleges are generally funded primarily through one of the following:

  • State or other public revenues
  • Endowments
  • Tuition

Aid packaging philosophies follow from there. Publicly-funded schools typically rely on state grants and Title IV federal aid programs including Pell Grants, direct student loans, and parent PLUS loans. (Yes, some public universities also have sizable endowments which may contribute additional scholarship funds.) Endowment-funded schools tend to have larger grants available, which are awarded based on the institution’s priorities. Tuition-funded schools are just that, and will have limited scholarships or discounting available outside of federal aid programs.

All by way of saying, a net cost of, say, $25,000 may be considerably more than that, depending on how the aid is packaged. Let’s say a school costing $60,000 annually offers the student the following:

  • $25,000 scholarship
  • $2,500 subsidized direct loan
  • $3,000 unsubsidized direct loan
  • $2,000 of work study
  • $2,500 parent PLUS loan

In that case, the student’s net cost is really $35,000, not $25,000, because the work study and loans are in fact the student’s or family’s money.

So your EFC is a good starting point, but once you start identifying schools of interest you need to be doing their net price calculators, and then comparing how the aid is packaged.

Application Deadlines

I just returned from a cross-country trip to visit colleges with my daughter, who’s a rising senior. It was a great trip– informative and enlightening, plus a wonderful opportunity to spend some quality time with her. We visited so many schools we joked that we should have made tour t-shirts– seven “official” tours and two visits on our own. According to my phone, we averaged over 6 miles walking and 19,000 steps each day of the trip. That Continue reading Application Deadlines

EFC vs Net Cost

Families who are a few years out from college should calculate their EFC, but as college approaches and students start identifying schools they’re interested in, net price calculators become far more valuable. There can be vast differences between EFC and net price, and even significant school-to-school differences in net price due to different aid policies. Continue reading EFC vs Net Cost

Finding Scholarships

Did you know you can get a scholarship just for being enthusiastic about the number 5? Or for being tall? Or well-rounded? Or wearing a dress made from Duck Tape to prom? While the vast majority of scholarship dollars on any college campus come from the school’s own funds and donors, there are plenty of other scholarships out there for students willing to track them down and apply. Summer– when school-related writing is on hiatus– is a great time to apply for outside scholarships. Here are some of the best ways to find them: Continue reading Finding Scholarships

Scholarships and Why You Still Need to Save

According to the College Board, about 2/3 of college students receive some form of scholarship or grant. And the NCAA doles out more than $2.9 billion in scholarships annually. Many parents see numbers like those, look at their own children’s awesomeness, and say, “We’ve got this.” But breaking down those numbers shows that you will still pay quite a bit for college and therefore probably need to save. Continue reading Scholarships and Why You Still Need to Save

When to Accept an Admission Offer

Sorry not to have written anything in a while. We had spring break (more on that later) and now it’s the crazy season at my day job (financial advisor).

With admission offers out and acceptance deadlines coming, many students jump on the acceptance from their top choice. Often, that’s the right thing to do: it relieves the stress Continue reading When to Accept an Admission Offer