Needless to say, the cost of a college education has skyrocketed: the total cost of a four year education frequently exceeds $250,000. Between private, public, and university scholarship packages and all the different types of loans, funding a college education can become quite complicated. Just understanding the loan packages can be confusing—many of them require the parents to cosign the loans, which in certain cases can be a “mortgage” against the parents’ future retirement.The unavoidable fact is that you will need to grapple with complexity as you navigate the more convoluted pieces of the financial aid package. However, several things are clear: First of all, most of the financial aid comes directly from colleges. Second of all, not all college financial aid packages are created equally.
For example, let’s assume that College A and College B both cost $65,000.00 per year. Let’s also assume that both colleges are “need blind” schools that promise to supply financial aid to bridge the difference between what they have determined a family can pay for college (the expected family contribution) and the actual cost of attending the college.
Let’s say that this difference, the financial need, is $40,000 per year. Both College A and College B have committed to providing financial aid to fill that gap. However, how the college meets this financial need makes a big difference in the long run. College A might give $30,000 as a grant and $10,000 as a loan. College B might give $22,000 as a grant and $18,000 as a loan. After four years, if the student attends College B, he will have a loan balance that is $32,000 greater than the one he would have ended up with if he had attended College A.
Of course money should not be the only criterion for choosing a school but, for some families, it may be a deciding factor. For all families, it’s an undeniably important factor that should at least be considered. If your family simply doesn’t qualify for financial aid because the family income and assets are too high, then you will need to seek merit based scholarships either from the schools or from private sources that are not dependent on financial need. However, if you do have a demonstrated expected financial need, then it pays to apply to a bunch of colleges that provide a greater percentage of the financial need as “grant” money which doesn’t have to be repaid.
With a little digging, you can do some potentially very profitable “sleuthing.” Finding out which colleges give a greater average grant per student and/or which schools give a greater percentage of the total financial need package as grant may mean a much more affordable college education!
For example, let’s assume that College A and College B both cost $65,000.00 per year. Let’s also assume that both colleges are “need blind” schools that promise to supply financial aid to bridge the difference between what they have determined a family can pay for college (the expected family contribution) and the actual cost of attending the college.
Let’s say that this difference, the financial need, is $40,000 per year. Both College A and College B have committed to providing financial aid to fill that gap. However, how the college meets this financial need makes a big difference in the long run. College A might give $30,000 as a grant and $10,000 as a loan. College B might give $22,000 as a grant and $18,000 as a loan. After four years, if the student attends College B, he will have a loan balance that is $32,000 greater than the one he would have ended up with if he had attended College A.
Of course money should not be the only criterion for choosing a school but, for some families, it may be a deciding factor. For all families, it’s an undeniably important factor that should at least be considered. If your family simply doesn’t qualify for financial aid because the family income and assets are too high, then you will need to seek merit based scholarships either from the schools or from private sources that are not dependent on financial need. However, if you do have a demonstrated expected financial need, then it pays to apply to a bunch of colleges that provide a greater percentage of the financial need as “grant” money which doesn’t have to be repaid.
With a little digging, you can do some potentially very profitable “sleuthing.” Finding out which colleges give a greater average grant per student and/or which schools give a greater percentage of the total financial need package as grant may mean a much more affordable college education!
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