Stuck in the Middle: How to Manage Financial Aid “No Man’s Land”
Other families are on the other extreme – with very low income and assets, they will receive a lot of need-based aid.
But what if you’re in the middle?
If you are a middle-class family from a generally well-off area of the country, but you’re not wealthy, it’s likely your Expected Family Contribution (EFC) will be higher than you expect.
You may also be outside the range of need-based aid. In addition, you probably have a lot of responsibilities that make it hard to find extra money to pay for college expenses.
In general, these families – which are a large percentage of America – struggle to pay for college.
They often find themselves facing gaps between what they can afford and the cost of college.
If you’re in this “no man’s land,” you need a solid strategy.
How Do Middle-Class Families Afford College?
There are some things a middle-class family can do to hopefully lessen the sting of paying for college.
A lot of that includes proper planning and research. And having those “money talks” with your kids can help as well.
Here are some suggestions…
Determine Your Budget
Before your child begins to apply for schools, decide what your budget is for college.
Money You Have Available
Start by looking at how much money you have saved, including college savings by you and other relatives. Are there 529 accounts? Investments meant to fund school? Do you have non-retirement savings that can help pay for college? Also – how much can your student save between now and when school starts?
Next, look at how much you have in your monthly budget that could go for college expenses. Do you get an annual bonus that you could use for college needs? Don’t forget to estimate how much your child might earn working during the summers. They can also work part-time during school, but you may want to leave space for a work-study that will help pay tuition.
“Here’s what we did— if you have a 529 or any other college account split the $$ in there by 4 or 5 years depending on your student’s plan. Assume you may get zero financial aid (if you do, great). Assume you can take the $5500 loan.
“Add $5500 loan and one year if the split 529/savings account (if you have it)— add together. Then figure out what if anything you can do out of pocket. Add that in there. Then start looking for schools where you can get merit money to cover the gap amount.
“I know kids that got $5k merit money at a $22k school and I know kids who got $25k merit from a $60k school. It’s all relative. We did up an excel spreadsheet for the three schools my son applied to and was accepted to. Several of the columns in it dealt with money. Another thing to consider is school costs going up! Son decided to go to the least expensive school, had a fifth year add on master program, had a price lock-in for five years and gave him merit money.”
Figure Out How Much You’re Expected to Pay
Use the FAFSA4Caster to find out what your Expected Family Contribution (EFC) is likely to be. It may cause some sticker shock.
Many families that are stuck in the middle have a relatively high EFC, and may not qualify for anything other than federal student loans and work-study.
Finally, use the Net Price Calculators (NPC) on target schools to determine the real costs of attendance. Compare that to your savings and income. You can also decide how much debt your family is comfortable with to close the gap.
From there, you’ll have a realistic idea whether you can afford a school. Create a short list based on this information, and let your child know that these are the schools they can choose from.
One family in our Paying For College 101 Facebook group approached their student this way:
For us our daughter could apply to schools where our net price should be $x and under. Everyone has a different $x they are willing to spend.
I ran net price calculators on the weekend like a crazy person & kept the info on a sheet. This gave our daughter an idea of where the schools she was interested in fell.
Is FAFSA a Waste of Time?
In addition, some schools won’t offer merit aid unless they see the FAFSA. I know, that’s odd, but it’s true. You also gain access to unsubsidized student loans through the FAFSA, which have a lower interest rate than most private loans.
Set Your Student Up for Merit Aid
The next step is to set your student up for as much merit aid as possible. What’s their GPA? How does their SAT or ACT look? Both of these numbers are crucial when it comes to standing out.
From there, think about your student from the college’s perspective. What is interesting or unique about him or her? Are there unique talents? An unusual major?
Are they a female going into a male-dominated program? Do they have leadership experience?
Compile all of this information and keep it handy. It will be useful as you focus on finding colleges that offer the most merit aid.
Finally, consider focusing applications on schools where your student would be in the top tier of the freshman class.
Many high-performing students are tempted to turn up their nose at a less-competitive school, but that’s exactly where the most merit is likely to be.
Consider Your Student’s Non-Negotiables
Many students will have specific things they are looking for as they search for a college. The most important of these is the college major.
You want to choose a school that’s as strong as possible in your student’s chosen major.
After that, your child may have strong feelings about school size, location, or available activities. Some students simply don’t do well at large schools, while others would struggle in a small setting.
Make sure these elements are considered during the application process.
Keep your communication with your student strong. You can also help them understand the college application process and why there are limits on what school options they have.
Be careful during this part of the process – you only want your child to eliminate schools based on true must-haves.
Preferences matter, but they should be considered last.
College visits to your short list of schools can help your student sort out whether they feel comfortable with a particular campus.
If they want to attend school far away, make sure to factor travel costs into your college budget.
Find the Right College
At this point, you’ve done a lot of work and you haven’t even selected any colleges for your student to apply to. However, that’s great – it means that the colleges your family focuses on will be the right ones.
Focus on schools where the Average Net Price is lower than your EFC if you don’t expect to get any need-based aid.
This means you won’t need your full family contribution in order for your student to attend.
You can find Average Net Price on the government’s College Navigator site. Run a search based on the criteria you came up with in Step 3.
Export the results to Excel and sort by Average Net Price.
For schools that catch your eye, run the Net Price Calculator on the school’s website to see what the results are for your situation.
Keep in mind that some of these include merit aid and some don’t.
Once you have a short list of schools, use the information from Step 2 to ensure that your student has a good chance of getting merit aid from the school that will help cover costs.
Collegedata.com can help you find out the school’s average GPA and percentage of students receiving merit aid.
Or – make it much easier by simply getting our College Insights tool.
Once you find a great school, be sure to apply quickly.
As one of the parents in our group pointed out,
Aside from all the information you can get, once you choose the best for you, apply early (on time), because the money for merit is not unlimited.
Making it Through No-Man’s Land
Being stuck in the middle financially is very frustrating. When it comes to paying for college, it seems the schools expect you to have far more extra cash laying around than is reasonable.
Still, you can make it through.
By focusing your college search on schools your family and student can afford, you’ve already taken a big step forward.
From there, find schools that are generous with merit aid and position your student to be attractive to them.
Finally, make sure your student is comfortable with the choice. Many times, once they get on campus, they realize they love it.
And, not having crushing debt after graduation is even more incredible!
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