Paying for college: some basic principles
It’s really hard to talk about paying for college with a broad audience, because every individual’s circumstances are different. And individual circumstances are really important to college affordability, since the price of college depends to a huge degree on your individual circumstances. One of the great things about college education—but also one of the complicated things—is that most students pay different amounts for the same education. The pricing for college is some of the most complex and opaque pricing out there. Still, there are some basic principles that can help make the process a little easier and more rational in the long run.
1. You don’t know what any individual college will cost you until you apply and are accepted.
You can look at the published full cost of a university, but remember that only about 13% of college students pay full price. On the end, about 2% of college get a “full ride” scholarship that pays for everything. Everyone else gets at least some financial aid, probably including you. How much financial aid? Well, that depends on how much you need. And it also depends on how much the other accepted students need. And, of course, it depends on how much money the school has to give out for financial aid. If a college accepts a lot of wealthy students who can afford the full price, then they have more to give as aid to less wealthy students. But it also means they have a lot more wealthy students and a lot fewer others. Colleges balance these things—the desire for a diverse student body and the money to provide financial aid—on a yearly basis. So your aid package is unknown until you’re part of that year’s calculations. There’s just no way of knowing until then.
There are ways to get an idea of how much financial aid you may get, but it’s only an idea. Each college provides a net price calculator. You enter in some financial information, and the calculator will tell you how much aid to expect based on estimates and averages from the past. But again, you don’t know for sure until you are accepted and get an actual offer.
You can also look up the school’s average percent of need met. The higher that number the better. A school that is able to meet 100% of their student's’ financial need is probably going to be more affordable than a school that can only meet, on average, about 70% of their students’ need. Knowing the average for last year doesn’t tell you how much you’ll be offered this year, but it gives you some clues about what the school is able to do.
You can also look up a college’s average indebtedness. It’s the average amount of school debt that students have when they graduate. For most universities, that number is between $20,000 and $30,000. Be careful for schools where the average debt is higher than that.
The main thing I want you to remember is to never decide not to apply to a school simply because you think you can’t afford it. You may be right, but make them tell you so. Surprises happen all the time. On the other hand, always make sure you keep schools on your list that you’re more confident you can afford.
2. Talk to your family about money. Soon.
There’s a line, or at least a range, between your family saying “yes, we can afford that” and “no, we can’t afford that.” There’s a line, or at least a range, between “yes, that’s an acceptable amount of debt” and “no, that’s too much to borrow.” There’s a line, or at least a range, between “I can work after school to cover that cost” and “I can’t make that much money on top of full-time school.”
We may not want to think about those lines, and we may not want to talk about them, but they’re there. The sooner you talk about where those lines are, the better. It’s not always an easy talk. It’s almost never an easy talk. But it’s a talk you must have with your family. It’s better to have it now, before you have your mind set on a school, than after you think you’re going to a school and are then told “no, we can’t do that.”
3. Most or all of your financial aid will come from the college.
Think like a donor. If you want to donate $100 to help a student afford college, how are you going to go about that? By spending hours and thousands of dollars setting up a scholarship fund? Nope. You’re probably going to donate your hundred bucks to a specific college for their scholarship fund. Even if you have $1,000 to donate for scholarships, it’s much simpler to give it to a college for their funds. Even Michael Bloomberg, who donated almost two billion dollars to help with college affordability, gave it to a single school for their financial aid funds. That’s why your biggest financial aid awards are going to come through the college.
Lots of financial aid actually comes from the federal government, in the form of Pell grants and subsidized student loans. Many states also have grants for college affordability. But it’s the financial aid office at the school you attend who coordinates all those awards and loans. The money, even when it isn’t the school’s money, usually makes its way to you through the school.
There are some big private scholarships out there that you apply to directly, not through the college. The Coca-Cola Scholarship is a well-known example. So yes, there are other sources of funding outside the school. But it’s a very small portion of overall funds, and those national scholarships are fiercely competitive.
There are also tons of smaller—$100 to $1,000—scholarships out there. A lot of students find, though, that these simply aren’t worth the time it takes to find and apply to a bunch of them.
4. There’s paperwork to complete.
It’s not simple or easy. It requires your family’s tax forms and sometimes other financial statements.
Luckily, it’s consolidated. Everybody should fill out the FAFSA. Do it as soon as you can. It opens up October 1. Don’t wait any longer than you have to, even if you haven’t decided where you’re going to apply. It’s a federal, standard form that all the schools will ask for, so just go ahead and do it. Even if you’re not expecting to get any financial aid, fill out the FAFSA. Surprises happen all the time. Plus, plenty of places won’t even consider you for merit aid if you haven’t filled out a FAFSA.
Some colleges, mostly private schools, will also ask you to complete the CSS Profile. It’s similar to the FAFSA, but administered by the College Board. It’s more detailed and broad than the FAFSA.
5 There are some terms to understand.
I’ve already covered the basics. Click the links below for a longer explanation of:
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