When it comes to seeking financial aid for college, many students and their parents feel at the mercy of the process. Actually, you can improve your chances of success—if you consider this issue from the very start. That means finding out about a school’s aid policies before you even think of applying there.
Some colleges provide excellent financial aid; some provide very little. Some offer generous grants only to the low-income students they admit, a few are able to give generous help to middle-class applicants, too.
If you just concentrate on the admissions process, with the hope of dealing with the cost of college later, you run the risk of being accepted at schools you can’t afford. Even worse, you might miss an opportunity at a great school because you didn’t realize how large its financial aid packages are.
Contrary to popular belief, the time to start thinking about financial aid issues is not during the winter of 12th grade. By then, all you can do is fill out the financial aid forms, cross your fingers and hope for the best. Instead, take at look at your financial aid prospects at least a year or two before that.
This is a guide to how to integrate financial aid planning into your college admissions process. To help you do that, here is an explanation of the many different forms financial aid can take. Understanding the interlocking issues can make all the difference to you and your family.
Begin the conversation early
Throughout the high school years, students and parents should have open conversations about college and what the family can afford. It’s important for parents to be honest about the family’s financial position.
It’s also important to understand that the official “sticker price” for a college may be much higher than the real price, once financial aid is factored in. Some schools may at first appear out-of-reach but may actually be the most affordable ones if aid is offered.
The best time to begin such family discussions is when a high school student is a sophomore or junior. That allows time for everyone to consider the question of financial aid from various perspectives. Parents who have initially ruled out certain colleges, based on preconceptions, may find reasons to reevaluate. Students who have their sights set on one or two particular schools may realize that other options are better for them.
Figuring out which colleges might give you good aid isn’t as easy as it should be. Most schools are somewhat mysterious on the subject. All too often, their websites offer little more than vague phrases, peppered with jargon. That’s why you need to be able to read between the lines.
International students should be aware that financial aid options for them at many American colleges are limited. Be sure to check a school’s financial aid policy for international students early on, to avoid misunderstandings.
Separating the truth from spin
Every college wants you to believe they offer excellent financial aid packages. But do they really? Some schools definitely do. Some schools certainly don’t. Many schools offer a confusing mix of different types of aid that may benefit some students but harm others by pushing them deep into debt.
The first step towards understanding what kind of aid a college might offer you is to understand the financial aid jargon they use. The meanings of some terms are counter-intuitive. But you can decode them.
What does a college really mean by “aid”? It may be referring to several different things: grants, loans or work-study jobs. Or it may be talking about a combination of all three. Make sure you find out which kind of aid the school is talking about—it could make a big difference.
Lifting the hood on financial aid packages
Not all financial aid packages are created equal. Some schools offer packages that are mostly loans. Some offer mostly grants, while others offer a combination of both. Aid in the form of a work-study job also may be included for students who meet certain guidelines.
Many colleges won’t give you the details about the aid packages they provide until they actually offer you one, but you can make an educated guess about what you might get and from whom.
One way to get a rough estimate is to use the net price calculators on college websites, but more about that later. First, here are some important financial aid concepts it’s important to keep straight.
Loans vs. grants
If a school gives you a student loan, you will have to pay it back—plus interest. Depending on the kind of loan you get and how long repayment takes, that interest may be substantial. Loans are a form of financial aid you should approach with caution.
If a school gives you a grant (sometimes called a scholarship or merit aid), you will not have to repay it. A grant is “free money” to cover the cost—or part of the cost—of your education.
Obviously, you want as much financial aid to be in the form of grants as possible, while minimizing the amount of loan money you accept. If you do take out loans, try to get federally subsidized loans (not private ones) and make sure the interest rates are not exorbitant.
The most generous grants
Not surprisingly, the schools that tend to offer the most “free money” in grants are the large private universities such as Princeton, Harvard, Yale, Columbia, M.I.T. and Stanford. That’s because these schools have the largest endowments, which give them much more money to hand out. In fact, they are so generous that some students pay less at these schools than they would pay at a state college.
That’s right, if a student who qualifies for financial aid gets admitted to Harvard, it may turn out to be less expensive than attending a state school.
Some smaller private colleges with large endowments also offer very good aid, including generous grants. Pomona, Vassar, Middlebury, Wellesley and Swarthmore are among the schools in this group.
Great aid—but high hurdles
While students who need financial aid have good reason to aim for these generous schools, a word of warning is in order. These well-known private colleges and universities are among the most difficult schools in the world to get into. Most have acceptance rates under 15%.
You need to be an outstanding student with impressive grades, test scores and extracurricular activities to have a chance of getting accepted to one of these colleges. If you are accepted, you’ll be one of the lucky few.
Why do these schools turn away so many more qualified applicants than they accept? It’s because tens of thousands of the best students from all over the world apply to this small group of schools.
How colleges define “financial need”
Colleges define “need” as the price of the school minus your ability to pay. That sounds so simple, but different schools determine your ability to pay in very different ways, based on their own formulas.
One college may decide your family can afford to pay $10,000 a year for your education, while another college thinks your family can pay $40,000. Each one’s definition of your need may depend partly on how much they can afford to give you. Don’t assume a college’s assessment of your need will agree with your own.
Need-based aid vs. merit-based aid
Need-based aid is financial aid based solely on a student’s financial need. This is different from merit aid, which is awarded for a student’s academic accomplishments.
Some colleges—such as the Ivy League schools–only award need-based aid. If a student is admitted, the college will provide the necessary funding to cover that student’s education. The Ivies, however, do not give merit aid or athletic scholarships. If you are wealthy, you won’t receive aid from an Ivy League school, no matter how smart or talented you are. They’ll expect you to pay full price.
“Need blind” vs. “need aware”
Many colleges declare themselves to be either “need blind” or “need aware.” When a college claims to be “need blind,” they are saying they offer students admission without considering their financial situations. That means that a student from a low-income family and a student from a high-income family have the same chance of being admitted, if their academic records are equivalent. So far, so good!
However, that doesn’t mean a need-blind college will necessarily offer aid to all the students they admit. If they do offer assistance, it may be nowhere near enough to make it possible for the student to attend. Smaller need-blind schools often don’t have endowments big enough to supply adequate financial aid for all admitted students who need it. These schools may offer complete aid for students in the very lowest income brackets but nothing—or not nearly enough—to middle class students.
When need-blind schools offer admission to students who have need, without offering them aid, the schools call it “admit-deny” or “gapping.” Needless to say, it puts those students in a difficult situation.
What “need aware” really means
Don’t let the pleasant-sounding term, “need aware,” fool you. Colleges that say they are “need aware” or “need sensitive” are actually saying they are likely to admit some students who can pay full price in preference to some who need aid. If you are applying for aid at these schools, you are less likely to get admitted than a student who is able to pay full price.
This doesn’t mean you can’t get admitted. If you are an impressive candidate, you may still have a good chance. It does mean your chances are slimmer than they would be if you weren’t any requesting aid.
This is especially relevant for students with borderline academic qualifications. If your grades and test scores put you in the lower reaches of the applicant pool at a college that is “need aware,” your chances of admission are much lower than if your academic qualifications put you near the top of the applicant group.
No-loan colleges are the Holy Grail
Some colleges are so concerned about students’ racking up large amounts of debt that they have instituted “no loan” financial aid policies. That’s good. It means they are committed to offering enough financial aid in grants and work-study jobs so that students will not need loans.
As you might expect, only colleges with deep pockets can afford to offer such excellent financial aid. Amherst, Brown, Columbia, Cornell, Dartmouth, Duke, Harvard, M.I.T., Pomona, Princeton, University of Chicago, Vassar and Yale are currently among the dwindling group of no-loan colleges.
Low-debt colleges are second best
One way to gauge which colleges offer the best financial aid is looking at the average debt their graduates owe. If seniors are graduating with low levels of debt, you might deduce the school offers generous grants or scholarships. (Though other explanations are possible.)
The Institute for College Access & Success, which is compiling important research in this area, issued a report that listed 20 low-debt, public and private non-profit colleges and universities. They included California State University (at Bakersfield and Sacramento), CUNY (Baruch and Hunter Colleges), College of the Ozarks, Berea College in Kentucky and Howard University.
Other schools known to have low student debt numbers are Barnard, Carleton, Cornell, Harvard, Middlebury, M.I.T., Northwestern, Pitzer, Princeton, Pomona, Rice, Swarthmore, Vassar and Wellesley. (Sometimes students at a no-loan college still decide to borrow to pay their family’s portion of the cost of college.)
If you visit the website for the Institute for College Access & Success, you can find the average debt owed by students at the schools that interest you.
Approach high-debt colleges with caution
Unless you can afford to pay straight cash for your education, be wary of schools where graduates owe large amounts of debt. Some schools lure students with financial aid packages that include tiny grants and big loans. Although such institutions may flourish using this formula, it could end badly for you.
Colleges known to have high student debt averages include Adelphi University, Boston University, NYU, Pace and Penn State. These schools all listed the average debt of their graduating students in 2012 as $35,000 or higher. The complete list of high-debt colleges is much longer.
Run your numbers through the net price calculators
Until a few years ago, financial aid information was almost a complete mystery to the general public. But since 2011, federal law has required colleges to put net price calculators—sometimes called financial aid estimators—on their websites. You and your family should be sure to take advantage of these tools. While they are not perfect, they can be very helpful.
The net price calculator on a college website allows you to estimate roughly how much money you would need to pay a particular school, after their financial aid package has been figured in.
You don’t need to wait until senior year to run your numbers. In fact, the sooner you use the calculators on the websites of various colleges, the sooner you can become realistic about your school search.
To get an estimate, you will need to input your family’s income data. It’s best to have family income and tax statements on hand before you start working on this. Have no fear: The process is completely confidential. No school will have access to your numbers during this process, nor will your financial data be stored anywhere.
Be sure to read the caveats that the colleges post on their calculators. Most sites point out that the rough estimate you obtain in no way represents a financial aid commitment from the school. And remember that its accuracy is partly dependent on the validity of the data you enter.
Even if you do use accurate data, there is no guarantee you will actually be offered the aid that the calculator suggests. Take these numbers as ballpark figures, but don’t plan your life around them.
Fill out the FAFSA…but keep it in perspective
Any student who wants to apply for financial aid must file a FAFSA, the Free Application for Federal Student Aid that is administered by the federal government. Usually, this is something students and their families do in January of the senior year of high school. But it’s wise to familiarize yourself with the basics of FAFSA well before then. You can do this by going to the FAFSA website and reading about the process.
After you complete the FAFSA form, the U.S. Department of Education will determine how much financial aid it believes you need. Don’t be surprised if that number is much smaller than what you believe you require.
Your FAFSA report will be supplied to the colleges you are applying to. Some schools will follow the FAFSA’s need estimate for your family and offer you exactly that much; but others will not. College financial aid officers realize that the way the FAFSA calculates need is outdated. However, only the most affluent schools can afford to make better offers than those suggested by FAFSA.
Who needs to fill out the CSS Financial Aid Profile?
The College Scholarship Service (CSS) Financial Aid Profile is used by almost 400 colleges to collect additional financial information about students to whom they are considering awarding non-federal financial aid.
If you are applying to private colleges or universities, you will probably be required to complete the CSS Profile in addition to the FAFSA. Check the financial aid page of each school’s website to be sure.
The CSS is more detailed than the FAFSA and requires more time to complete. Many people find that it takes upwards of four or five hours. But it also enables colleges with ample resources to be more generous with their financial aid awards. In many cases, it will be well worth the effort.
Keep the big picture in mind
As you can see, the subject of financial aid is a complicated one. That’s why you should start learning about it at the very beginning of your college search. Read everything that you can get your hands on, but don’t miss the forest for the trees. The most important take-aways are these:
- Check out the aid situation at each college you are considering early on.
- Gauge your aid chances by using the online calculators.
- Try to avoid high-debt schools and focus on “no loan” or “low-debt” schools.
- Choose the schools most likely to meet your financial needs, while matching your academic profile.
- Schedule adequate time to complete your aid applications and get them in early.
Following these basics is the best way to gain admission to schools you can actually afford to attend without taking out enormous loan debt.
Mona Molarsky is a private college counselor who offers advice and assistance to students and their families at every stage of the college preparation and application process. She also offers tutoring in English, social studies and language arts. She can be reached at The College Strategist.
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