Colleges don't give you money

Tomorrow, December 1, the newly revised FAFSA will open up online, several months later than it usually does.

I haven’t seen the updated website yet, so I don’t have any specific advice about the FAFSA. But I do have some big-picture advice about affordability and paying for college. And that advice comes down that one reminder: colleges don’t give you money.

Pretty much everyone, myself included, goes along with the idea that financial aid is money that the colleges are giving away. We use the verbs “give” and “offer” all the time. If the sticker price is $50,000 and the price that you’ll be charged is $25,000, then they “gave” you $25,000 in aid. You might contact them to see if they can “offer” you more. And that $25,000 is real. It’s money that you’re not paying, and it makes a huge difference in your life. But it’s not money that they’re giving you, it’s just a discount on what they charge you.

Compare it to buying clothes. Imagine you go to Macy’s to buy some jeans. The price tag says $100, but they’re on sale for 20% off. So you pay $80. That $20 difference is real—it’s money that you can spend on something else. But it would sound kind of silly if Macy’s told you they were “giving” you $20 to buy the jeans. It would sound ridiculous if Macy’s added up all the discounts they gave over a year and claimed they “provided” Americans with millions of dollars in aid. That sale price isn’t money they’re giving away, it’s a discount on what they’re bringing in. It’s a slight distinction, but it can have a huge effect.

Unlike Macy’s, colleges do this all the time. They have a sticker price, and they offer you a discount, and then they frame it as money they’re offering you. They can have you focus on how generous their offer is instead of how much money you and your family are paying. You don’t have to play along if you don’t want. You can stay laser-focused on your cost, not their generosity.

And then there’s debt. When colleges offer you loans to help you pay for college, this counts as aid. That actually makes sense, because if you’re able to afford the college by taking the loan and paying over years when you wouldn’t be able to afford it in cash, then they are indeed aiding you in your ability to go to college. But don’t let that aid get too caught up in the language of “offer” and “giving.” It’s money you’re spending. You’re spending it over time, not all at once, and that’s really helpful. But you’re spending it, and taking a risk doing so. Give your future self credit for that money, not the college, because it’s your future self that is actually paying.

This advice is about mindset and perspective. By reminding you that colleges don’t actually give you money, I’m hoping to help you make more rational decisions and have healthier emotions. So when you get your financial aid offers in the coming months, keep a few things in mind:

Stay completely focused on the cost to you, not what the college is offering. If you read a financial aid offer and still aren’t sure what your cost is (it happens often), get in touch and ask them to explain the offer so that you can understand what your cost it. While you’re at it, ask them what the average price increase is every year.

The sticker price is completely made up and arbitrary. On average, only about 15% of students pay the full price. There are lots of factors that go into the sticker price, but one strategy that some schools use is setting a higher sticker price so that they can advertise how generous they are with aid. It’s like Macy’s changing the price of those jeans from $100 to $110 so they can still get $80 but also advertise a $30 discount instead of $20.

The price that you pay is your price, and almost every student has a different price. How much of a discount schools offer is determined based on your family finances and how much you can afford, your perceived long-term value to the school, and how many discounts they’re offering other people. Your perceived long-term value to the school is complex. How much a school perceives your value to them may take into account how likely they think you are to graduate; how much time and talent you may contribute to the campus while you’re there; athletic, artistic, or other talents you have that can be useful to a school team or program; how likely you and your family are to donate to the school in the long term; and what academic and/or social gaps the school is experiencing that you can help fill. When you hear “merit,” you probably think of how well you performed in high school. When the colleges say “merit,” they’re probably thinking about your long-term value to them. They aren’t the same. There’s no way for you to know your perceived long-term value to a school ahead of applying for admission and financial aid.

If you’re trying to estimate your cost at a particular school, skip over their stats about average aid offered or percentage of students who receive aid. Don’t get caught up in the “offers.” Look at two numbers: the average net price and the average indebtedness at graduation. Use those as your reference points. If your family has normal finances, that is likely to be around the price they ask of you. If your family has less money than average, expect a lower price. If your family has more money than normal, expect a higher price.

Pay attention to debt. If you graduate college within five years and don’t take on too much debt, then the debt is probably worth it. The average lifetime earnings of college graduates is much higher than that of people who don’t have a college degree. If you already feel like there are obstacles that may keep you from graduating, then you should be very hesitant to take on student debt. You should also be hesitant of taking on more than $30,000 debt total over the four-five years you’re a student. I’d like to say that you can adjust a reasonable debt load based on your career path. Maybe higher debt is fine if you’re going into computer engineering, and you should be more frugal if you’re going into early childhood education. But the truth is that you don’t know what job you’ll have in your first few years after graduation, or how much it will pay.

Talk to your family about money, as soon as possible. You should know your line between “affordable” and “not affordable” before you apply to schools, and definitely before you start getting financial aid offers.

Never skip applying to a college that you think is a good fit because you think you can’t afford it. Wait until you know your cost, and then decide if you can afford it. People are surprised by their financial aid offers, in both directions, all the time. Maybe you’re right and you can’t afford it, but make them tell you so.

Assume that you’re going to attend the least expensive school that accepts you. If you decide to go to a school that is more expensive than other schools that accept you, you should be able to explain—to yourself and others—why. “Because it’s a better school” or “because it’s a better fit” aren’t good enough. Be able to explain why you think it’s a better school for you and why you think the extra cost is worth it.

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Things for parents to know about paying for college

   Not all merit aid is the same

   Three things parent should stop saying to their children

3. Ask a question in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Angela Elisabeth

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

Help with money

When I talk to students about money, it’s usually in the context of financial aid and paying for college. However, there’s a lot more to money and finances than that one expenditure, no matter how large. Most students—and most adults—could use some help with financial literacy. “Financial literacy” is the basic knowledge of how to manage your money to be better able to live your life the way you’d like to. It’s one component of what we now call “adulting.”

To build up my own library of financial literacy resources I can share with students, I asked a bunch of friends—including two Certified Financial Advisors—what sorts of tools they would recommend to high school students. I got a lot of good answers, and I’d like to pass on a few them. Here are some good places to begin learning more about financial literacy: a book, a game, a podcast, and an app.

The book. Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind, by Sarah Newcombe. While Newcombe’s 2016 book includes lots of practical things like assessments, exercises, worksheets and strategies, what makes it great is the focus on emotion and values. Loaded understands that money and finances come with very deeply rooted stories, experiences, feelings, and values. Money is loaded with our very sense of ourselves, our culture, and our families. Loaded begins with the psychology and ethics, and only then moves into the practical how-to exercises. Newcombe treats the readers as complex people, not just entities with bank accounts.

The game. Build Your Stax. This game takes about 20 minutes to play. You’re given a starting amount of money, and you get “paid” more on a regular basis. Your task is to invest that money as you get it, with the goal of making as much money as you can by the end. It introduces and explains, one at time, seven different investment types: savings account, certificate of deposit, index fund, individual stock, government bonds, crop commodiites, and gold. You choose how much to put in each type of investment, and then you can see how well you fare. You can play alone or with a group to make it a competition. You’re not going to learn how to balance your checkbook, manage credit cards, or budget from this game. But through repeated cycles of the game, you can learn a lot about how to balance risk and the pros and cons of different types of investment. Plus, it’s fun!

My stax, being built

The podcast. Planet Money Summer School. Planet Money has long been one of my favorite podcasts—just ask my kids, who have to hear “Planet Money did a podcast on that” all the frickin’ time. There are years’ worth of episodes to sift through to find what you may want. Luckily, the past two summers they’ve done a series called Summer School to go over the basics. These episodes are made with students in mind. Last summer’s series was on microeconomics (the kind of economics that’s about individuals, not national economies), and this summer’s series was on investing. Everything I know about economics—which is less than an actual economist, but more than most non-economists—I learned from listening to Marketplace and Planet Money. Planet Money’s Summer School can help anyone reach that level of understanding easily and quickly.

The app. YNAB. YNAB, for You Need A Budget, is a budgeting app that helps people set up and follow a budget. It’s made for your phone and is high-tech, but its basic methodology is old and proven: the envelope system. The app isn’t free, but there is a free trial period. And a month may be long enough to learn their four rules and see how they work in reality. I’ve found that budgets, like meditation routines or organizing systems, are highly personal and difficult to begin. But the more you try, and the more systems you try, the more likely you are to find something that works for you.

Good luck with your money, no matter if it’s a little or a lot!

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Some fun financial exercises

   A good example of a family doing it right

3. Ask a question in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Zoe Herring

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

Trying to get more financial aid

It’s early April, seniors. By now you should have all your admission decisions back from colleges, and you should also have your financial aid offers. You’ve got a little less than a month to make your final decision, and cost is probably a major—if not the only—factor that will guide your decision on where to go. Comparing financial aid offers is tricky, because they’re not uniform and not always very clear. So the first thing to do is to go through them carefully and slowly with your family. If you have questions, ask. The schools should have given you the contact information for questions and concerns, so use that.

It’s very typical at this point to have two or three good choices and no clear top choice. If that’s the case, then you’ll probably choose the most affordable of them and be done with your search. But if you still have a single standout favorite, then after understanding the competing offers you may find yourself realizing that you’re unable to attend your top-choice school because of finances. If that’s the case, there’s still time to ask for more money, but you have to move quickly.

It is absolutely essential that you know how much money you still need. You should have this number already, because you and your family have talked about what is affordable for you. You’re down to the final days and very specific dollar amounts. You need a real number, not a hazy concept. If your family is saying that the top-choice school is still not within range, ask them how much money would make it affordable. You need that number. Otherwise, you don’t know what you’re asking for and won’t know if you get it.

Next, prioritize. You can make an effort to change one, maybe two, offers. Limit yourself to that. Don’t put yourself through the entire process again with a lot of places. Focus.

Have your back-up plan. Assume there will be no financial aid changes, and make a plan based on that assumption. Make your appeals, but assume that the offers you have are your final offers. Don’t hold onto so much hope that you don’t plan for the likely outcome.

Finally, understand that you’re not really negotiating. You’re not in a position of strength here. You’re not haggling, this is not a game, there is no winner. You’re simply asking for more money. You may get it, you may not. Be prepared for both. If you want to have a sense of how likely a school is to work with you, there are a few things to look up. First, see how many people took a place on the waitlist for the past few years, and also how many people on the waitlist actually got a spot. If the school uses a large waitlist and few people actually get off the waitlist, then “if you don’t give me more money I won’t go there” isn’t much of a threat. Also compare your bottom-line number to their average net price. If they’re asking more from you than what’s average, there may be some room to work. But again, these just give you an idea. They help you manage your own expectations. You don’t get an answer from the school until you ask, and last year’s stats don’t necessarily tell you anything about your own situation.

Understand what you’re asking for and why. Then explain both of those things as clearly as possible to the school. This isn’t the time for clever narratives or emotional pleas. Let them know what the problem is and ask them politely if they’re able to help solve it. Here are some common scenarios.

You’re asking for more need aid because your situation isn’t the same as what’s on your FAFSA. Your Expected Family Contribution and need are based on the information you submitted to the FAFSA (and sometimes the CSS Profile). But that information may be out of date, and your circumstances have changed significantly. One example might be that a parent or guardian is at a different job or no longer has a job, so their income is much lower. If this is the case, explain the issue, and provide as much documentation as possible. The more evidence, the better. Send along more recent tax documents, pay stubs, medical bills or other official documents that can help you show that your actual need is very different from the one that was calculated earlier.

You’re asking for more need aid because they gapped you. This probably isn’t an accident—they know they gapped you. Tell them that the school is still your top choice, but that you won’t be able to attend with the package they offered you. What if you can get by without getting the full need met? This is a difficult situation. If you let them know you don’t really need your full need met, then you may be asking for less than they might actually offer you. This is unlikely, but still a risk. If you tell them you absolutely need the full need met, then they may offer you nothing even though you may have got the lesser amount. So there’s a risk either way. I advise people to be upfront and tell them exactly how much you really need, but I understand people not wanting to ask less than the full need amount and “leave money on the table.”

You’re asking for more merit aid because, despite getting full need met, you don’t think you can actually afford to go without more. If they’ve met your full need beyond EFC, this is going to be tricky. But let them know and see. Be polite and show gratitude for meeting your full need. And let them know that, despite the formula, you still won’t be able to attend without more aid. Let them know exactly how much more you’re asking for—the smaller the number, the easier it may be to get them to offer it.

You’re asking for more merit aid because you got a better offer from a different school, but this one is still your top choice. It’s difficult to accept an offer from a school, even your favorite, when another school is offering a much better aid package. Let the school know your situation. Provide documentation of the better offer. Remember, you’re not haggling or negotiating. If you say “match this better offer or I’m not going to your school,” they can easily say “have a great time at the other school!” But if you’re saying that you and the school are a great match and it’s truly your top choice, but that your family just ins’t in a position to walk away from a better offer from another school that’s also a good fit…but not as good a fit, then say so and see what they can do. Again, make sure you’ve talked to your family and know what kind of price you’ll accept. The school is likely to give you more aid, but not as much as that other school is actually offering. Be emotionally prepared for this.

You’re asking for more merit aid because you would like more aid even though you can afford it. You won’t have to walk away from your top choice, you just think it doesn’t hurt to ask. You’re right, it doesn’t. But it’s difficult to explain and difficult to get sympathy. If they’ve meet your full EFC and you don’t have a cheaper offer from another school to document, you're essentially asking “hey, got any aid money left?” If this is what you’re doing, emphasize how great a fit the school is and how it’s your very top choice. Let them know that the aid package they’re offering is really going to stretch your family budget in a way that is difficult, that you’re hoping that more aid has been freed up, and that if it has you would like to be considered.

I wish you well in these final weeks, seniors! It’s still really stressful, but you’re almost there.

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Don’t pass up a full ride

   Make your choice and don’t look back

3. Ask a question in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Zoe Herring.

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

Lots of college admission news!

This time of year can be pretty boring for college admission news. While admission offices work through their piles of applications, there’s usually not much to report until they start sending decisions and stats. But this month has brought three major pieces of news. Below is a quick summary of each, with links to learn more, and my ideas about how likely the news is to affect you, a current high school student.

16 colleges are being sued over their financial aid practices.

What’s the story? Colleges aren’t supposed share notes with each other on their financial aid decisions. Each school has to come up with their own offers—and their own way of deciding how much to offer—so that students can compare offers and go to the school with the most financial aid if they choose. There has to be competition, and that’s the law. However, there’s a group with an exemption to the law. They get together and come up with a single shared “methodology” for determining financial aid awards. They’re able to do this because they don’t discuss who gets accepted, and because they’re all need blind, meaning your ability to pay isn’t part of their decision to accept you. That, says the law, is competitive enough. But the lawsuit, brought by five people, says that nine of the colleges aren’t exactly need blind. Because the admission offices may track which applicants are from families that are big donors—or have the potential to be big donors—then the ability to pay is in fact a consideration…and one that only works in the favor of wealthy applicants. They’re essentially competing for rich students and then conspiring with each other about how much to offer the not-rich students. So, say the people suing the schools, they’re not actually need blind and therefore shouldn’t be allowed to share information. What about the other seven schools? The lawsuit claims that since most of the schools in the group are tainted by the double-standard, the whole group is, because they all share their data to come up with a shared “methodology.”

Will this affect you? Probably not. Lawsuits like this take a long time to work their way through the courts. It’s likely that you will be through college, or at least already in college, before this litigation has any impact. But technically, if the group decides to disband soon, and if you apply to any of the 16 colleges and are accepted, then it could affect your financial aid offer. Technically. But nobody knows what that effect might be.

Want to read more?

Lawsuit says 16 elite colleges are part of price-fixing cartel. (New York Times)

Class action suit filed against to private colleges. (Inside Higher Ed)

Affirmative Action case is going to the Supreme Court.

What’s the story? Colleges and universities are legally allowed to consider race as a factor for admission. There are some guidelines, though: race can be used in order to increase the educational goal of diversity; it can’t be used to make schools intentionally less diverse. There can’t be quotas; a school can’t decide beforehand that, for example, 25% of their students will be Black. Race can only be used as part of a holistic approach; it can't be the only, or first, criteria. Affirmative Action has been upheld by the Supreme Court—including those guideline—as recently as 2016. But now the Supreme Court will hear two previously separate cases combined into a single one. Both Harvard and UNC won their initial Affirmative Action cases when they were sued by an anti-affirmative-action group. Harvard also won their case in the next level of appeal. But the Supreme Court is willing to hear both the cases, and the basic assumption is that they wouldn’t want to take the cases unless they were willing to change something about the laws.

Will this affect you? Possibly. The case won’t be heard until this October at the earliest, and nobody’s expecting a ruling until summer of 2023. But if there’s a major change to what’s considered legal, then universities may make some fairly large changes pretty quickly after that. But what kinds of changes those may be depends on the outcome of the case, which won’t happen for a while. So it’s possible there will be some major new rules around race and admission by the time younger high school students apply to college, but it’s far from guaranteed.

Want to read more?

Supreme Court will hear challenge to Affirmative Action at Harvard and U.N.C. (New York Times)

Supreme Court takes affirmative action case. (Inside Higher Ed)

The SAT is making some major changes.

What’s the story? Beginning in 2023 outside the US and 2024 in the US, the SAT will only be given online. It will be administered in test centers; students will not be taking it at home. Not only is the test going digital, but the format will change. There will be shorter reading passages with fewer questions. Calculators will be allowed for all math portions. Instead of every student answering all of the same questions, the computer program will use different questions to “figure out” what level you’re at in less time with fewer questions. The new test will take around two hours instead of three, and 80% of the students who took the pilot test said it was less stressful than the old pencil-and-paper test.

Will this affect you? If you’re in the 9th grade now, then absolutely it will. You may end up taking the new SAT, you make take the ACT, you may take both, you may take neither. But if you already hear strategizing and scheming at your school around standardized tests (Should I take the test? Which one? How many times? What do my scores mean? Should I report them to test-optional schools?), then those conversations are going to be amplified in the coming years as people try to figure out what to make of the new SAT. I hope you won’t get stressed about the SAT. But if you were already inclined to get stressed about the SAT, this is going to make it worse. At least until you take the test, which they say will be be less stressful. Maybe. Be prepared.

Want to read more?

Put down your No. 2 pencils. Forever. (New York Times)

The new SAT. (Inside Higher Ed)

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Check out these related Apply with Sanity posts:

   The Glossary: need blind

   What’s important about the Harvard trial

   What’s wrong with Affirmative Action?

   Should you bother to take the SAT or ACT?

3. Ask a question in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Angela Elisabeth.

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

Things for parents to know about paying for college

Last night I had a great conversation with some neighbors about paying for college. Most of them I’ve known a long time, but this get-together was organized specifically for me to answer their questions—as best as I could—about college admission and affordability.

The discussion kept circling around two central themes. One, it is so important for parents to talk to their students about the cost of college, their expectations, and their budget. Soon. Don't save those conversations until after the finial aid offers come in. Secondly, because the cost of college can be so unpredictable and confusing, you have to apply broadly. This broad approach to cost mirrors the broad approach to admission. You need to apply to a few college that are a good fit and that you’re really confident you can afford. You can also apply to some that may or may not be realistic depending on how much merit aid they may offer. And you need to be aware of which schools are so selective that they offer no merit aid.

I wasn’t sure where the conversation would lead, and so I made sure to have my main “talking points” ready. We covered some of these, but not all. I’m sharing them here for anyone.

(I’m also compelled to point out that it’s October 1st, which means the FAFSA and CSS Profile are open for current seniors.)

You don’t know what any individual college will cost until your student applies and is accepted. You can get estimates. But how much your student gets depends on how much the other accepted students get, among other factors. So the price is different for everyone, and it’s not settled until aid offers are made to all the accepted students.

Talk to your student about the financial expectations. Be specific. Use numbers. The calmest students I work with are the ones who know what their budget is. Lots of parents don’t want to share too much about their financial situation. It’s common and understandable, but not practical. Be as upfront as possible about your financial goals and limits.

Chances are that nobody wants to pay for your student to go to college more than you do. Colleges usually do help with the cost, but it helps to understand their motives and limits. I sometimes hear parents say “If the college really wants my child to go there, they can offer more aid.” The amount of aid they offer is part of their business model and complicated formulations—not how much they like your kid.

Most parents I talk to say that they fall into that slice of people who make too much money to qualify for financial aid but don’t make enough money to pay for college. All those parents send their kids to college. I’ve yet to meet the person who didn’t go to college because their parents made too much money. Those families end up making choices they didn’t want to make, by choosing a more affordable school over the “dream school,” taking on more debt than they hoped to, and/or selling assets they wanted to keep. But they always choose college.

There are thousands of colleges in the US. Each is unique. But you can break them down into three broad categories: in-state public, out-of-state public, private. Each has a different price range, and each is going to have a different approach to aid.

Roughly 85% of students receive some kind of financial aid. Around 15% pay the “sticker price.” Only about 2% receive a “full ride.” Full athletic scholarships are actually very rare.

Most or all of your aid will come from the college. Start there. 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.

Merit aid probably doesn’t mean what you think it does. There are several different flavors of merit aid, and it’s often unpredictable. It rarely has anything to do with what a student “deserves.” Again, nobody really wants to pay for your kid to go to college more than you do.

There are two forms you may be asked to fill out. Neither are fun or easy. The FAFSA is administered by the US Department of Education and relies on tax forms. Almost everyone uses this. The CSS Profile is administered by the College Board and tries to understand your assets, not just your income. Many private universities ask for this on top of the FAFSA.

Future earnings correlate to your major more than they do to your college.

Some debt is normal. And debt counts as “aid.” College students having around $30,000 total debt upon graduation is average. For most college grads, that’s manageable. You can get into real debt trouble if you take out much more than that, and you can get into real debt trouble if you borrow money but don’t finish your degree.

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Thinking about Return on Investment

   Thinking about debt

   Three things parents should stop saying to their children

   Paying for college: some basic principles

   Not all merit aid is the same

3. Ask a question—or share other resources—in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Angela Elisabeth.

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

Not all merit aid is the same

It’s generally understood that there are two types of financial aid: need-based aid and merit aid. Need-based aid is relatively straightforward. Your family submits financial documents (mostly income tax forms) so your Expected Family Contribution, how much you and your family might be expected to pay, can be determined. The difference between the price of a college and your EFC is considered need. Need-based aid, loans that have to be repaid and/or grants that don’t have to be repaid, is awarded to help you cover that need.

Merit aid, on the other hand, isn’t based on financial need. Merit aid—scholarships and grants—is what colleges offer to students trying to entice them to choose their school over other schools. It’s a tool universities use to make sure they get enough students to enroll and to get the student they really want.

(There is a lot of overlap between need-based and merit aid. If a college is really interested in a student, they may find a way to reduce their EFC and therefore get more need-based aid. Also, being able to meet full need and not gap a student on aid is definitely a way to entice students. But let’s ignore the overlap today and focus on pure merit aid.)

What’s less generally understood is that there is a wide variety of merit aid. To get an idea of the spectrum of merit aid, let’s look at two examples from my home in Houston.

When you look at the scholarship page on the University of Houston’s website, you get a lot of information. There are so many different scholarships, both funded by the university and outside sources, that they have a special navigation tool to help you search through all of them. Each scholarship has a name, a description, and instructions for how to apply. You can spend a lot of time looking through the scholarships and see exactly what you may be eligible for. It’s overwhelming at first, but it’s transparent.

Screenshot of the Scholarship Universe page at the University of Houston website.

For comparison, have a look at the Rice University merit scholarships page.

All admitted freshman applicants are automatically considered for merit-based scholarships so that no separate application forms or interviews are necessary. The Office of Admission notifies scholarship winners at the time of admission to the university.

That’s it. There aren’t individual scholarships you can apply for, nor are there descriptions or requirements. It’s the scholarship version of “don’t call us, we’ll call you.”

Screenshot of the Merit Scholarship page at Rice University’s website.

These are two extremes. On one end is U of H, which is basically a list of individual scholarships that require extra applications on your part. On the other end is Rice, where merit aid is not separately applied for, but is just part of your overall application. One is limited, but transparent. One is open-ended, but opaque.

Merit aid at most colleges is somewhere in between. There are named and defined scholarships for which you can apply, but there are also “merit aid” tuition discounts that just…appear. It helps to remember that while need-based aid is all about you and your particular circumstances, merit aid is all about the school and the funds they have to try to entice students to apply and enroll. Some schools have limited funds to hand out merit aid, and some schools have tons.

These two extreme examples remind us of several key ideas when it comes to merit aid:

Not all merit aid is the same. There’s the specified and limited kind like you see on the University of Houston website, and then there’s the mysterious kind you see on the Rice website. When I talk to students, they’re usually thinking of the UH kind. They’re talking about scholarships for which they can apply. When I talk to college admission professionals, they’re usually thinking of the Rice kind. They’re talking about the tuition discounts that are offered out of the blue by algorithmic calculations the college makes to decide how much to offer you to entice you to enroll. When you’re thinking about applying to a college, spend time on their financial aid sites to see where they fall in their approach. You don’t want to miss an opportunity to apply for a scholarship, nor do you want to assume that there’s no merit aid if there is. But you should know what the school offers.

Merit aid is often out of your control. It’s all about them enticing you for their enrollment needs, not necessarily you earning something through a competition. There are all sorts of reasons a university may want to entice you, and you often don’t know what it may be. Maybe the college is trying to improve the stats of their incoming class and therefore their ranking, so they want to lure students with higher test scores and higher GPAs. Maybe they’re trying to improve diversity, so they want to lure students from different parts of the country or with different experiences than those who typically applied in the past. Maybe they’re trying to fill up a new major they offer or revitalize a declining program, so they want to lure bright students with a particular course of study in mind. Maybe they want to lure wealthy students who can pay cash, so they flatter them by giving them a merit-based scholarship and a small discount to get them to come and pay most of the tuition. So think of merit aid as “acceptance plus.” You’ve been accepted to the college, plus they want to give you a discount in order to really lure you in. Some schools give very few applicants this kind of bonus, and some schools give most—or even all—their applicants some kind of bonus.

Generally speaking, expect more transparency from public institutions. It’s not surprising that University of Houston has the navigable list of specific scholarships. Public institutions, which are subsidized by tax dollars and overseen by public boards, tend to have more regulations in place for transparency. Private colleges are more likely to use the un-announced, un-applied-for type of merit aid. To be clear, I’m not saying that public universities are more or less likely to give you merit aid, just more likely to tell you upfront what it might be, and to make you apply for it separately.

Generally speaking, expect less merit aid the more selective an institution is. Remember that merit aid is meant to entice you to apply to their college, and to enroll if accepted. So it makes sense that the lower the acceptance rate of a college, the less merit aid you might expect. They already have enough applications; they don’t need to entice more. That’s how a private university with a low acceptance rate like Rice can be so nonchalant about merit aid. And it’s how the schools with the very lowest acceptance rates, like Harvard and Stanford, don’t give merit aid at all.

With each school you apply to, know what their merit aid landscape looks like and what you need to do. If you’re considering applying to a school, make sure you check out their website to learn more about their merit aid program. Is it more like the one at the University of Houston, or more like the one at Rice University? If you want to know even more details about aid, look up the Common Data Set for the college. Just do a web search for “[name of school] common data set”. Most colleges have this information available, and you can scroll through the spreadsheet to find all kinds of financial information. It takes some searching, but it’s there.

You can’t assume you will get merit aid. Whichever type of merit aid you’re thinking of, there’s no guarantee you’ll get any. If you meet certain qualifications to get automatic merit aid at a particular college (being a National Merit finalist, for example, or having really high standardized test scores), that doesn’t necessarily mean you’ll get that automatic aid from other schools. Each sets their own policies, and—as we’ve seen—not all of them even tell you what those policies are.

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Schools can, and should, teach college affordability

   Three things parents should stop saying to their children

   Don’t pass up a full ride

   Asking for more financial aid

3. Ask a question—or share other resources—in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Angela Elisabeth.

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.

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:

Expected Family Contribution

Gapping

Need Aid vs. Merit Aid

Need Blind

Thanks for reading! If you enjoyed this post, here are three easy things you can do:

1. Share it on your social media feeds so your friends and colleagues can see it too.

2. Read these related posts:

   Schools can, and should, teach college affordability

   Three things parents should stop saying to their children

   Don’t pass up a full ride

   Asking for more financial aid

3. Ask a question—or share other resources—in the comments section.

Apply with Sanity doesn’t have ads or annoying pop-ups. It doesn’t share user data, sell user data, or even track personal data. It doesn’t do anything to “monetize” you. You’re nothing but a reader to me, and that means everything to me.

Photo by Angela Elisabeth.

Apply with Sanity is a registered trademark of Apply with Sanity, LLC. All rights reserved.