We hope the school year is off to a great start! Whether your high school junior or senior is learning in-person or remotely, they’ve most likely started the college search process. There are a lot of assumptions made when it comes to searching for colleges. It is important to approach the process from a financial aspect, which includes understanding your expected family contribution, how it impacts your eligibility for need-based aid and what each college looks like from an aid viewpoint, including both need-based and merit. Here is a step-by-step outline to help guide you through the college search process to find schools that are potentially the right financial fit.
1. Calculate your expected family contribution (EFC) — Your EFC is a measure of your family's financial strength and is calculated according to a formula established by law. It takes into account your family's taxed and untaxed income, assets, and benefits and uses your tax returns from two years prior and assets as of the day you file the FAFSA and/or CSS Profile. You can use the College Board’s EFC calculator to estimate both your federal and institutional methodology EFCs. This will give you an idea of what you are expected to pay toward college based on your family’s income and assets. You can then use this information to estimate potential aid from schools (see step 3). You can also analyze your EFC to see if there are any ways to potentially reduce it. For this part, you will need to consult with your financial advisor and tax advisor. See collegeboard.org and search “EFC Calculator”.
2. Use College Navigator to search for schools — To compile a comprehensive list of schools based on your student’s criteria (geographic location, selectivity, SAT scores, private vs. public, majors offered, etc) visit College Navigator at nces.ed.gov/collegenavigator. You can export the search results to an Excel spreadsheet and use it as a way to keep all of the information organized for schools you’re comparing. College Navigator provides a wealth of information for each school such as net price, graduation rates, transfer out rates, percentage of students admitted, test score ranges and more. In addition, you can supplement your research using the College Board’s website and reddit.com/r/applyingtocollege.
3. Use Your EFC to estimate need-based aid — I mentioned before about using your EFC to analyze potential aid from schools. This is something you should do before your student even applies to any schools. Most often, the college search/selection process is driven by the student with little regard to financial considerations, and this can be the cause of a second round of stress once the acceptance letters roll in. Once your student has a preliminary list of schools, you should research the total cost and estimated aid they can expect to receive. There are two ways to do this:
a. You can find this information, if reported by the school, on the College Board’s website under each school’s “Paying” and “Financial Aid by the Numbers” tabs. For example, Saint Joseph’s University’s total cost of attendance (room+board and tuition+fees) for the 2020-2021 school year is $62,780, and on average, they meet 82% of need with averages of 73% being met by scholarships and grants and 27% by loans. If a family’s EFC was $15,000, their total need is roughly $47,780, and St. Joe’s meets roughly 82% of that need. If your student is eligible for need-based aid (i.e., your EFC is less than the cost of attendance), then you want to look for schools that meet a high percentage of need.
b. You can also use each school’s net price calculator. The net price calculator will ask for more in-depth information such as GPA, class rank, test scores, financials etc. If the school’s net price calculator page displays a generic calculator clipart image, this is not a good calculator. The more accurate calculators will give more specific output, even merit aid info.
c. Keep in mind that with need-aware schools, the financial aid office and admissions office work together, and any aid offers are based on the student’s profile and offered by the admissions office. For need blind schools, the offices work separately. Aid is based on the family’s need and is independent of admissions.
Since I mentioned merit aid, it is very important to research it for each school. Don't just assume that every school will offer your student merit scholarships. On average, private colleges give out $15,000 of merit aid (without need) per student and public colleges only give out $4,300*. There are also many schools that are shifting away from merit aid so they can offer more need-based aid. In addition, some test optional schools still offer merit aid. To view a list of test optional schools, visit fairtest.org.
Every student and family financial situation is different, and we can assist you with the above items and more. We can tailor our college planning services to your needs and look forward to being a part of your student’s college success story!
T. Eric Reich, CIMA, CFP, CLU, ChFC is president and founder of Reich Asset Management and can be reached at 609-486-5073 or firstname.lastname@example.org.
Securities offered through Kestra Investment Services LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management LLC is not affiliated with Kestra IS or Kestra AS. Neither Kestra IS nor Kestra AS provides legal or tax advice. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services LLC or Kestra Advisory Services LLC.