All, College Fit, College Planning, Financial Fit

Start Thinking About Financial Fit

College costs are a topic that many families avoid addressing until late in senior year, when their student has a stack of acceptance letters and none of them are affordable.  Taking time to consider financial fit earlier in the process may lead to better options at the end.

College is easily one of the most expensive purchases a family makes.  You wouldn’t buy a house or a car without considering cost, ability to pay, and value of different features, and I don’t think you should approach college decisions without asking similar questions. 

A critical first step is to consider how much colleges will expect your family to be able to pay.  This is the Expected Family Contribution (EFC).  It is an assessment of family income and assets and can range from zero to the full cost of attendance.  Most colleges use the FAFSA (which stands for Free Application for Federal Student Aid) to determine what a student’s EFC would be.  The FAFSA is administered by the federal government and is required for eligibility for Federal Pell Grants, Federal Work Study, and Federal Student Loans.

Some colleges also require a more in-depth financial assessment, through the CSS/Profile, which is managed by College Board, the same entity that does the SAT and Advanced Placement exams.  These two methods produce different EFC numbers, mainly because they count assets differently. 

To get an idea of what your EFC would be, there are several good EFC calculators online.  The one on the College Board Big Future site is my go-to calculator, because it produces two separate estimates, based on both the FAFSA and CSS/Profile methods.  To get both estimates, pick the option for “Both FM & IM” formulas.  FM is based on the FAFSA method and IM is based on the method used in the CSS/Profile. 

Don’t stop with just estimating the EFC, since this may not be a full estimate of the cost of attending individual colleges.  Some colleges have generous need-based or merit-based financial aid that can reduce the cost of attendance.  Other schools have tuition, room, and board costs that exceed the EFC by a wide margin.  You should take the same info you used for the EFC estimate and find the Net Price Calculator (NPC) for colleges your student is considering.  The more detailed the questions, the more accurate the NPC is likely to be.  They are likely to include not only financial questions, but also questions about state of residence, GPA and test scores.  There isn’t a single Net Price Calculator, but the Department of Education Net Price Calculator Center has a search box that lets you easily find the right calculator for individual colleges.  

The results from an NPC will help you to see what the Cost of Attendance is likely to be at different colleges.  I suggest going through the NPCs at several different schools.  Don’t be seduced by results that suggest a large tuition grant or that an overwhelming percentage of students receive financial aid.  Details matter here.  What is the final amount that the student will have to pay (Net Cost of Attendance)?  Does the school include loans as part of the financial aid package (these defer payment to a later date, but still have to be paid back)?  Does the college meet full need, or does it expect zero EFC families to still pay $10,000 – 15,000 a year?

It’s difficult, if not impossible to make sweeping statements about what type of college will cost less.  A public college in your state may be the best financial fit, with reduced rates for in-state students.  Public universities (those supported by state tax dollars) usually charge more for students who are not residents of that state, but some offer generous merit-based aid for students with high test scores and GPAs.  Private schools often have higher tuition costs, but may also offer larger grants, especially if the college has a large endowment and a commitment to offer need-based aid.  Some students may find that their best financial fit comes from starting at a community college and transferring after a couple years.  Some states have strong programs with guaranteed transfer agreements that create a pathway for graduating from a coveted public university, but starting locally at a lower cost community college.  For example, Virginia has Guaranteed Admissions Agreements between Virginia 4-year colleges and universities and all 23 community colleges in the state.

The bottom line is that individual family situations and the specifics of the college’s financial priorities will drive the final cost of attendance.  Don’t assume or base decisions on what you heard happened for someone else.  Avoidance isn’t a great strategy; you’ll have to face these numbers eventually.  It’s better to do it at the beginning of the process than at the end of senior year, when taking time to broaden the college list to include better financial fits might require delaying college for another year.