Paying For College For Dummies
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Before jumping into completing the specific college financial aid forms that you are likely to encounter, consider whether you should apply for aid, learn how to use the net price calculator to estimate what a particular college may charge your family, explore financial aid form deadlines, and so forth.

As a general rule, you should apply for financial aid — especially and including so-called merit aid, which isn’t based upon financial need (which is called needs-based aid). Colleges provide merit money to high-achieving academic students and athletic scholarships to exceptional athletes.

Financial aid consultants say that you should assume you’re eligible. Don’t rule yourself out because of income or academics. And don’t rule out a college because you think it’s too expensive. The higher the cost, the more aid you may receive.

Some families are rightfully concerned that applying for financial aid may affect the attractiveness of their student to the college. Don’t colleges prefer accepting students from families that can pay in full? This is indeed a legitimate concern, which I help to make clear in this and the following sections.

Just over 100 colleges (see the figure) state that they engage in “need-blind admissions.” This denotes that the college admissions committee is making their admissions decisions regardless of a family’s ability to pay. Many of the colleges on this list are those that enjoy a hefty endowment and thus have stronger finances to be able to admit students on this basis.

Now, this is not to suggest that admissions committees literally know nothing about a family’s likely financial situation, because indeed they do. Consider the fact that the information a candidate’s admissions application conveys to the college admissions officers includes where the candidate lives and what his parents do for a living, among other information. Knowing this information, though, may not help a candidate with admission in the way that you might imagine.

For example, admissions committees at the more selective and popular schools see lots of candidates applying from zip codes populated with affluent families. So, if you work at a well-paying occupation and are yourself well-educated, admissions officers will typically think that your kids grew up with advantages compared with kids raised in lower-income areas with parents engaged in lower-paying jobs. And, from an admissions perspective, especially at need-blind colleges like those listed in the following figure, high-achieving students from lower socio-economic backgrounds actually have a leg up on their peers who grew up with supposed financial advantages.

colleges using need-blind admissions Colleges and universities that admit candidates using need-blind admissions.

How to use the “net price calculator” to estimate costs

There is a relatively simple method you can use right now to get a general idea as to what price you may pay at a given college or university (and therefore how much financial aid or discount you will receive from those institutions). Colleges are required to have a net price calculator (NPC) on their websites. You can usually find this in the tuition and financial aid section of a school’s website or simply type “net price calculator” in the college’s homepage search box.

You will be taken to the College Board’s webpage for that particular college and be asked a series of questions about your family’s financial situation. Alternatively, you can go to the College Board’s “Tools and Calculators” page. Then select the link for “The College Board’s Net Price Calculator,” which provides access to each school’s own such calculator.

You don’t need to sign in or personally identify yourself, so rest assured the college won’t be receiving any of your information at this time.

The NPC is different for each college, so while you will be asked similar questions by each college, the resulting prices can vary quite widely. One reason for this is that different colleges treat various aspects of your situation — like your home’s equity (difference between market value and the mortgage on the property) quite differently. I’ve seen situations for a given family where the pricing among private colleges can differ by tens of thousands of dollars among schools driven by factors like how much equity a family has in their home.

Know if financial aid harms your chances for admission

This is a great and important question. And the answer and truth is that outside of the 100 or so colleges that use a need-blind admission policy (listed in Figure 10-1), your applying for need-based financial aid may have a negative impact on your child’s admissions chances. Is this to suggest that you shouldn’t apply for financial aid at so-called “need-aware” colleges, which comprise the vast majority of schools? No, not necessarily.

Here’s how I would think about the situation when applying to colleges that do not use a need-blind admissions policy:

  • If you’re a higher-income family and are not going to qualify for need-based aid, you may not want to apply for financial aid. The reasoning here is that at some need-aware schools, you could put your child at a disadvantage in the admissions process. If you’re in this group, be sure to apply for merit-based aid.
  • Moderate- and lower-income families that see per the net price calculator that they will be eligible for a decent or large amount of financial aid should apply for such aid. Doing so will be necessary to afford college. Be sure to apply to some need-blind schools and that you have at least one safety school that appears to offer good pricing for a family like yours and is going to accept your child.

Meet deadlines

Before getting into the nitty gritty of completing some specific financial aid forms, here’s some important overarching advice about the financial aid process and deadlines:
  • Don’t wait to be accepted to a college to apply for aid. The coffers may be empty by spring.
  • Get application forms as soon as possible. You’ll need the latest version of the federal FAFSA® form. You may also need to complete the College Board’s CSS Profile application, state aid forms, and/or forms provided by the colleges. The FAFSA® form and Profile become available for the next academic year on October 1 of the current year (meaning the soonest you can apply for financial aid for your first year of college is October 1 of senior year of high school).
  • Know the deadlines and be sure to meet each one. Many colleges have different deadlines for different forms. Some may be due as early as November, though most are due in January–March.
  • Maximize your aid eligibility. Freshman year aid awards are based in part on income for the year ending Dec. 31 of the student’s sophomore year in high school. Consider also making appropriate adjustments to your assets, debts, and retirement provisions before you apply.
  • Follow instructions carefully on the application forms. Common mistakes that can disqualify your applications are forgetting to sign them, leaving lines blank, or using the wrong academic year’s version of the forms.
  • Know that only the college’s financial aid office will see the information provided on the financial aid forms. Admission office people aren’t supposed to know you applied for aid if the school is a need-blind admission policy school; otherwise, assume they will know. Professors and any other staff at the college outside of the financial aid and admissions offices will neither see nor have access to this information.

About This Article

This article is from the book:

About the book author:

Eric Tyson, MBA, is a renowned finance counselor, syndicated columnist, and author of numerous bestselling financial titles.

Tony Martin, B.Comm, is a nationally-recognized personal finance, speaker, commentator, columnist, management trainer, and communications consultant. He is the co-author of Personal Finance For Canadians For Dummies.

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