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Choosing a College: 3 Key Affordability Questions to Ask

The United States is home to over 4,000 colleges and universities. Having that many schools to choose from is both a blessing and a curse. Yes, every student can find just the right fit for them, but on the flip side, a student can become overwhelmed by the sheer number of choices. When it comes to choosing a college, how does a student know where to start in narrowing down their list?

We talk about college fit a lot. What makes a school the right fit for a student? Many features can be considered:

  • The desired major/courses
  • Size (small, medium, large, massive)
  • Setting (urban, suburban, rural)
  • Distance from home
  • Extracurriculars
  • Special programs (study abroad, Greek, honors programs, ROTC, etc.)
  • Housing
  • Campus facilities (labs, recreation, classrooms, gyms)
  • Student life/community/involvement

Students need to decide which of these characteristics are the most important and then find colleges that check those boxes.

How much weight should we put on the cost when choosing a college?

The above list of considerations are important, and we have great partners that help guide students through the college selection criteria mentioned; however, we would strongly suggest clients put cost near the top of their list. Cost needs to be a make it or break it factor when choosing a college.

Among the Class of 2019, 69% of college students took out student loans, and they graduated with an average debt of $29,900.” While some debt may be unavoidable, the goal is to keep it at a manageable level to minimize the impact on the future graduate.

Figuring out the cost is not a simple matter of looking up the tuition, room and board, and fees on a college’s website. Those figures are what we call the “sticker price.” And just like buying a car, you rarely pay full sticker price when you make a purchase. If your client is an informed college consumer, the sticker price is irrelevant. It is all about their “net cost” to attend.

Financial aid policies can be difficult to decipher by simply looking at a school’s website. Every family’s financial situation is unique, and clients should never assume that the average financial aid packages touted on the website and in the brochures will apply.

Here are 3 key questions to ask when assessing a family’s affordability at a particular college:

 1.  What type of aid does the college provide?

Aid can be divided into two broad categories:  need-based and merit aid. Families often mistakenly assume all universities offer merit aid for academic or other talents. They are surprised to find out that not all schools do. Many of the most elite private universities for example award very few (if any) merit scholarships. On the flip side, families that are eligible for need-based aid often assume a college will be able to meet a student’s entire need, and that isn’t true either.

So, as a basic first step, your clients must understand what types of aid a college may provide by exploring the financial aid/scholarship section of the college’s website. They must be sure to ask specific questions on college visits to see how they fit into the college’s awarding of aid.

2.  How can the student get the most financial aid?

Now that the client understands the types of aid at a college they are researching, how does their student match up? Will the student’s credentials or characteristics trigger the award or gift aid? They need to match their student with those colleges providing the best financial position.

For need-based aid candidates, families need to know their Expected Family Contribution or EFC. Determined by completing the Free Application for Federal Student Aid or FAFSA, this number is the amount the government thinks a family can afford to put towards college each year. (This number will probably make families gasp because it is higher than they expected.) A calculator like this one from the College Board can help them figure out this number.

When the cost of attendance at a school is higher than the EFC, the difference is the student’s “need.” Just because they are “eligible” to receive need-based aid does not mean that the college has the money to give them. Some schools meet 100% of need and others may only have the resources to meet 50%. Seek out those colleges that will cover at or near 100% of need.

Additionally, keep in mind:

  • Any “unmet need” is additional out of pocket expense.
  • Need-based aid is frequently awarded in the form of student loans and work-study.

If they don’t qualify for need-based aid, focus on schools that will award merit money–typically referred to as “non-need merit” scholarships. In general, colleges who provide competitive merit scholarships award them to students in the top 25% of their applicants. Families can visit a website like College Navigator, find the college they are interested in, and check out their middle 50% range for test scores. If their student’s test score is above the top number in that range, they have a better chance of receiving money.

Some schools provide merit money automatically for certain GPAs and test scores. We like to call them “grid scholarship” schools because they will present their awards in a grid on their website. Colleges want families to know about the money available so they make it very clear. Miami University has a good example on their website.

Families need to understand a student’s position–need vs. merit–and match it up with colleges that will offer the student the best education at the best price.

3.  How can a family estimate their “out of pocket” cost at each college?

Colleges are required to have “net price calculators” on their websites, and they can be helpful. Every college’s calculator can be slightly different. In general, the student plugs in lots of financial information, as well as some information about themselves, and the college gives them an estimate of cost. Remember, this number is just an estimate and only applies to a student’s freshmen year. Beware that some calculators will include federal student loans and work study as financial aid. Others will only include “free money” in the form of grants and merit scholarship money.

With the net price in hand, does that college still fit? Is this cost something a family can meet?

The answers to these questions are key to narrowing down a college list and making an informed college choice. Never rule a school out based on the “sticker price.” Families need to answer these three questions for the colleges they are considering, and they shouldn’t keep colleges on their list that they know they cannot afford. That only leads to heartbreak for their student, and we have seen that play out many times.

Of course, we would NEVER recommend a student choose a college merely based on price! The simple fact is many schools are well worth paying the premium to attend. However, if attending that school results in over-burdensome student loans and robbing retirement, we would encourage to cast the net a little wider. With so many wonderful colleges to choose from, they can find an excellent fit at a comfortable price.

Originally published 6/2017
Updated 3/2020