Saving Green: College Funding

More Free Money, Fewer Loans

How to Pick the College That’ll Give You the Best Financial Aid Package

By Scott Weingold

Picking the college that will give you the best financial aid package can save you thousands or even tens of thousands of dollars on your child’s college education. Yet most families take a completely backwards approach when searching for money for college.

Normally, the process goes something like this: In the child’s junior (or even worse) senior year of high school, they start picking schools they may be interested in, and that they believe they can get into based on their grades, SAT scores, extracurricular activities, etc.

Many students pick a grouping of “safety” schools they know they can get into, “middle of the range” schools which they have a good shot of getting into, and “reach” schools which they would love to attend, but have a slim chance of getting into. Next, the student starts requesting literature from all of these schools (usually towards the end of their junior year of high school or in the summer preceding their senior year). Once they receive the literature, most families start planning weekend trips to visit one or more of the schools.

This is how most students and families get a “feel” for each college campus, and determine if they would feel comfortable being a student there. But all of this traveling from campus to campus can cost you a lot of time and money. It also happens to be the wrong way to do things if you want to be in control of the college selection process and get the maximum amount of financial aid.

Most families don’t understand that their child will probably be accepted to approximately 70 percent of schools to which they apply. This is often the case, unless your child is a borderline student and applying to the Ivy League or the most competitive schools. Otherwise, your student has a good shot at being accepted.

The reason: the old law of supply and demand. Today, the supply of available seats at colleges and universities is greater than the demand to get into these schools. It’s not like 10 or 15 years ago, when there were more students applying to college than there were available seats. Today, most colleges are struggling to keep their doors open, and they need students to help pay their bills.

This is great news for parents. This puts you in the driver’s seat if you know how to take advantage of this trend.

So what's the “right” way to look for colleges and universities for your child? Instead of blindly picking schools purely based on academic criteria, or sports criteria, or because your friend or relative’s son loves a particular college, you must ask one very important question: Can this school meet my family's financial need and give us more “free” money and fewer loans?

Remember, your child will get into most of the schools he or she is applying to (unless they are reaching for the Ivys or the most competitive schools). So the question is not, “Will my child get into this school?” Instead, the right question to ask is, “Will this school be able to give me the money I will need to send my child there for the next four years?”

Yes, college is very expensive these days. Even a state school can cost you $14,000 or more per year when you include tuition, fees, books, room and board, living expenses, etc. A private university can easily run you $34,000 to $50,000 per year and more. And that’s just for a single year. You have three more years to go after that. And what about if your child wants to go to graduate school? It’s expensive no matter how you slice it. But there are ways to minimize these costs.

One of the best ways to do this is by picking schools that historically have the best policies of giving financial aid. But first, a brief explanation of the financial aid process is necessary. Financial aid is awarded at each school based on a calculation of a family’s “financial need.” Financial need is calculated by subtracting the “Family Contribution” (this is the minimum amount you will be expected to pay at any school) from the “Cost of Attendance” which includes tuition, fees, books, room and board, etc. So, if a school costs $20,000 and the federal government calculates your family contribution to be $10,000, your “need” at that school is $10,000. It works like this:

$20,000 (Cost of Attendance) - $10,000 (Family Contribution) = $10,000 (Financial Need)

Financial need determines how much financial aid your family is eligible to receive. However, just because your need is $10,000, does not mean you will be offered $10,000 at a given school. This is where picking schools that historically give the best financial aid packages comes in. Some schools can meet 100 percent of your family’s financial need while others will only meet 20 or 30 percent.

The other thing to know when picking schools is how much of the “need” they meet in “free” money, which you never have to pay back, and how much need they meet in “Self-Help” money, which includes loans that you do have to pay back. By knowing each school’s ability to give financial aid, in advance, you can pick schools with the best financial aid packages and save yourself the time, energy and hassle of applying to schools that will never be able to give you the money you need. This puts you, instead of the schools, in control of the process.

This type of planning should be done as soon as possible before your child’s senior year of high school, so you don’t end up visiting and applying to colleges you will never be able to afford.

Wondering how you can find out about this type of information? You can start by asking the financial aid officer at each school. Some of them will be completely honest about their ability to give money, and others will keep very silent about these numbers. The other option is to use the services of a college-funding consultant who maintains an updated version of these statistics on a computer database.

Whichever way you decide to do it, make sure you know each college’s statistics on meeting your financial need, and typically how much they give in “free” money versus Self-Help (loans and work study) before applying to them. Once you know these numbers, you are in the driver’s seat.

You can also save yourself a lot of time, energy, and money by not applying to or visiting schools that will never give you the money you need to send your child to their institution.

Finally, parents with exceptionally high incomes ($250,000+) who will not qualify for need-based aid need should be aware that certain colleges have what is called “Category 3” money. These colleges can open up a whole other treasure chest for parents, but only if parents go through the system properly. We’ve seen people with incomes in excess of $300,000 get between $10,000 – $20,000 per year in “free” money from the college their child was going to attend – simply because they knew the rules of the game.

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About the Author: Scott Weingold, co-founder of College Planning Network LLC and publisher of CollegeMadeSimple.com, is one of the nation's leading authorities on college financial planning. He was ranked the #1 'College Financial Aid Expert Worth Knowing About' in the country by CollegeStats.org and is co-author of The Real Secret To Paying For College. As a sought after speaker, Scott contributes his expertise to CNN Money, Smart Money, and Reuters, and gives insider tips to parents directly through his e-letter College Funding Made Simple. For more information and resources, visit http://www.CollegeMadeSimple.com and http://www.CollegePlanningNet.com. Contact Scott at info@collegeplanningnet.com.