How a Financial Aid Award Letter Can Fool You

Low EFC

How a Financial Aid Award Letter Can Fool You

Low EFC

So many people I encounter believe that having multiple kids in college at the same time will lower their EFC.

And in turn, a low EFC will be a “benefit.”

I’ve got four kids studying at the same time.

One would think I was golden.

Hooray!!!

But, as the old song goes…”it ain’t necessarily so.”

EFC with multiple kids in college

How to Interpret a Financial Aid Award Letter

The image above is the financial aid package for a college that was initially my daughter’s favorite (at that time).

The good news is that it showed that with four kids in college, for the first time ever, we became Pell Grant eligible.

[Since Expected Family Contribution (or EFC) remains relatively constant, an EFC of 10000 with one child in college (for example), becomes about 5000 each when there are two in college at the same time.

Any EFC at or below 5576 is eligible for a Pell Grant.]

So having multiple kids in college at the same time has an upside.

But that’s where the good news ends in this cautionary tale.

Please learn from my mistake. 

This college sent her emails, an application fee waiver, beautiful brochures, and an invitation to win an additional scholarship–if she would simply attend an open house and submit an essay.

They didn’t specify how much the additional scholarship would be, but since it was only a day-trip away from home, and everything we’d seen online and in their brochures seemed perfect, we went. 

And it was perfect. 

They have a dormitory set in what could literally be called a castle, nestled among rolling hills.

In a safe neighborhood.

With easy access to the city.

They would accept all her dual-enrollment credits, too.

So despite the Net Price Calculator estimate showing out-of-pocket costs six times her EFC, I foolishly took her to the open house.

Predictably, she fell in love with it.

Her teenage girl’s heart became set on that beautiful college with the opportunity to live in a beautiful castle. (No, I’m not kidding.)

As you can see, this aid offer is like…ice water. We read the mail after dinner, and my daughter went straight upstairs to her room, admirably holding it together.

But she was crestfallen and disappointed.

We didn’t even have to tell her that this offer was…inadequate.

What Is Considered to Be a Good Financial Aid Package?

Thankfully, she already had other offers that (after taking the maximum Stafford loans) expected a reasonable amount of parental contributions.

(Which, for the record, isn’t much. Not with three other kids in college plus two still at home, at a stage in our lives when we need to be maxing out our retirement savings and paying off the house.) 

This is a heads up about the importance of looking critically and carefully at what each aid package is actually offering you.

A total of $29,500 in scholarships and grants per year sounds great, however, if the remaining amount left to pay is just way more than you can afford, it’s not.

Be on guard about getting reeled in by incredibly persuasive marketing. And above all, do not make an emotional, guilt-laden decision when it comes to choosing a college.

Even I (someone who ought to know better) felt an incredibly strong temptation to: remortgage our house, borrow from our 401k, and take Parent PLUS loans just to give my daughter (whom I love more than life itself) four years in a dream school.

But I didn’t. 

Because I refused to double down on a mistake I made in the first place.

Which was taking her to see a college that (barring a miracle) we wouldn’t be able to afford.

She ended up touring a similar college a few weeks later that she came to love. (And they invited her to interview for one of their full-ride scholarships covering tuition and room and board!)

But even without the full ride, the other college’s initial financial aid package covered her tuition with merit scholarships.

This was much closer to affordable than that expensive “castle-college.”

[Want to compare your financial aid offer with offers from students at the same school? Check our Compare College Offers tool.]

When Should You Run the Net Price Calculator?

Which leaves three take home points to this saga: 

  1. Even if your EFC is low, don’t get too happy about it. Because it darned-sure doesn’t mean most colleges will provide enough grant or scholarship money to bring the net price anywhere near your EFC. Most will simply offer you loans to cover the gap between the remaining costs and what you can actually afford. 
  2. If your EFC is high (like ours used to be), don’t blindly choose a school that will cost you almost everything you’ve got, or can get, simply because your kid got in with a “Presidential Scholarship.” If the net price leaves you on the hook paying 1/3 of your take-home pay just to afford it, keep looking. 
  3. Run the net price calculator on schools before you visit. Preferably before you even apply. If the remaining costs will be more than double your EFC, even after your student takes out the full $5500 in Stafford Loans, and if you don’t have enough saved to cover the gap, then respectfully accept that you’re looking at a school that will be just too expensive for you.

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