We all love lists—”The Top 10 Things to Do Before You Start Your College List”; “The Top 5 Terms to Know Before You Apply to a College”; “The Top 3 Interview Tips For Your College Interview,” and more.
But before you start making lists and crossing off each item, there is ONE thing you should really do before searching for colleges: Make sure you understand the financial aspects of the college process.
Terms to Know When You’re Searching for Colleges
It won’t be long before you realize there are acronyms flying around on websites and on college forms. FAFSA (Free Application for Federal Student Aid), SAT and ACT (standardized tests), EA and ED (Early Action and Early Decision) and more. But it’s crucial that you understand the key financial terms used and how they will affect what you pay for college.
- EFC (soon to be called SAI Student Aid Index) – Expected Family Contribution – This is the amount of money the government believes that a family should be able to pay for college based on the information provided on the FAFSA. It may not be what you can afford to pay but it’s the figure that colleges will use when awarding financial aid to your student.
- COA – Cost of Attendance – The COA is the average cost to attend for one academic year (fall through spring). It includes tuition and fees, books and supplies, room and board, transportation, and personal expenses. The college subtracts your EFC from the COA to calculate your need for financial aid.
- Net price – Your net price is a college’s sticker price for tuition and fees minus the grants, scholarships, and education tax benefits you receive. The net price you pay for a college is specific to you because it’s based on your personal circumstances and the college’s financial aid policies.
Statistics to Know When You’re Searching for Colleges
For many students, college is an emotional decision—the look of the school, the feeling they get when they visit, or even a college with a strong football program. But you should never overlook the financial investment. Numbers aren’t everything but consider these important statistics when you and your student are looking at schools.
- Percentage of financial need met—If your student needs financial aid to attend college, these statistics are important. How much aid a college awards to its students is reported and tabulated each year. If your student needs financial aid, a college with a low percentage of merit aid might be eliminated from your list.
- Average indebtedness—Even if a student graduates, it’s no guarantee they will secure a job; at least not one that will pay enough to cover too much student loan debt. If the average student indebtedness is high at any college, and your student needs financial aid, this college might not make the final list.
- Graduation rates—When you research the college, look up their graduation rates. How long does the average student take to graduate? Graduation rates are reported two ways, as the percentage of full-time students who graduate in four years and the percentage who graduate in six years. The longer a student takes to graduate, the more expensive the degree.
Financial Aid Data to Know When You’re Searching for Colleges
There are two types of aid awarded to students: need-based aid and merit-based aid. Colleges award aid based on the figures provided on the FAFSA.
- Need-based aid—Federal student aid is need-based. That means it doesn’t discriminate by any factor apart from financial need. Eligibility is based solely on the assets and income of the prospective student and his or her family. Factors such as test scores or GPA have no bearing on need-based aid.
- Merit-based aid—Merit-based aid includes a variety of talents and interests: academic, artistic, athletic, and more. Scholarships are the most common type of merit-based aid which may come from the school itself or from outside sources. A student with extensive assets and income is just as entitled to a merit-based award as a student with limited assets and income. For more information on scholarships, you can read these two articles: Strategies for Finding Local Scholarships and Can You Prevent Scholarship Displacement.
Understand the Student Loan Process
There are two types of student loans you can use to pay for college: federal loans and private loans. Federal loans consist of student loans, subsidized and unsubsidized, and parent loans.
Federal loan interest rates can sometimes be lower than private loans (but NOT always!), and offer options for deferment and forbearance after graduation. If you make the choice to borrow from a private lender, understand your options and compare lenders.
It is key to know all the Critical Information on How Student Loans Work.
Understand the Financial Aid Process
If your student needs help paying for college, the financial aid award letter is just as important as the letter of acceptance from the college. It will arrive either with the offer of admission or shortly after your student receives their offer.
Within the award letter you will find the cost of attending the college, what you will be expected to pay and any financial assistance the college is offering to bridge the gap between what you are expected to pay and the cost of attendance.
Colleges use these awards to lure students to accept their offer of admission and often to discourage students from accepting. Familiarizing yourself with the components of the award letter and terms like “gapping” and “frontloading” really helps in Understanding the Financial Aid Appeal Process.
Steps to Use Road2College’s College Insights to Build Your College List
If you’re building a college list, find out which ones offer the most generous merit aid with our College Insights tool. College Insights gathers the most useful information from the Common Data Set and allows you and your family to quickly make comparisons across data points from multiple schools.
You do not need to do anything special if you’re using College Insights for the first time, but we recommend these steps:
- Create a free account and set up your student profile.
- Do a search of colleges based on a specific characteristic, such as whether they offer merit aid or if standardized testing is required.
- To see more than the sample list provided, upgrade to a paid account.
Try a broad search of colleges, especially if you are looking for colleges that can offer their student merit. By casting a wide net, such as all colleges where student GPA and test scores are at or above a college’s 75th percentile, you can see more schools. Then, sort by the average merit amount to narrow down schools that offer the most aid.
College Insights is most helpful in helping families do a “reverse look-up” where they can enter their student’s academic stats and any requirements for location, school size, and major. Once entered, College Insights provides a list of schools that meet that requirement and where the student has a likelihood of also receiving merit scholarships.
Whether you are finding out the affordability of a given list of programs, your child’s chances at admission, or simply figuring out if the college graduates most of its students in four years, College Insights can greatly simplify the process.
Without College Insights, a family needs to find and review each college’s CDS on their own, but you wouldn’t be able to filter, sort, and compare colleges as quickly.
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