Financial aid

Financial aid, generally speaking, consists of two kinds: merit aid and need-based aid. Merit-aid scholarships are awarded for a student’s talents or accomplishments—ones that the school values. Need-based aid is awarded based on the ability of the student (and their family) to pay.

Merit aid/scholarships

When most people talk about scholarships, they’re talking about merit aid. Scholarships are "free" money for college, meaning you don't have to pay it back. Scholarships come from a variety of sources, including the colleges themselves, the government, corporations, individuals, religious groups, and non-profits. Merit aid is primarily based on the talents or accomplishments of the applicant; they might be academic, athletic, musical, dramatic, or any number of other things.

Some colleges intentionally obscure their merit-aid information and some are very open about merit scholarship formulas. Some schools will include merit-aid information in the Common Data Set (search “<name of school> common data set”).

How do students get merit aid?

Lots of people (parents, usually) spend huge amounts of time searching for scholarships, and lots of students spend huge amounts of time applying for those scholarships. Those awards usually range from $500 to $1000, sometimes more. 

But … is this the best way?

Most experienced parents will say no. The big awards come directly from the colleges themselves. Yes, there are large private scholarships, like the Coca-Cola Scholarship, which awards 250 scholarships of $10,000 or $20,000 … from an applicant pool of over 100,000.

Compare that to scholarships my kids were offered that came directly from their safeties: a full-tuition offer for my son, totaling about $24,000 per year, and $18,000 per year from a different safety, while my daughter received offers of $19,000 and $23,000 per year from her two safeties. Two of those awards were higher than the top Coca-Cola scholarship, and my kids didn’t even have to apply for them; the schools awarded them based on their applications.

If you search for and receive scholarships from outside sources, often those awards don’t “stack.” What that means is that the school sees that you’ve received money to attend from an outside source, lessening your financial burden. So they say, “Great. We don’t have to bear the cost of having that student attend.” The end result? They reduce the amount of money they’ll offer you in need-based aid. All that effort you spent searching for scholarships … and your end payment is the same. Short answer: don’t waste your time on outside scholarships.

What’s the trick to getting big merit aid? 

Be a student the college wants. This doesn’t mean that a student should mold themselves to fit what they think is the college’s perfect student. Instead, it means that the student should pick schools that value who that student already is. Love Russian? Pick schools that have a strong Russian department. Hate math? Don’t pick schools that are math heavy. The fact that my kids got big merit awards says less about who they are and more about how well we picked our safeties.

If the schools the student applies to are ones that fit their strengths and are their safeties, there’s a good chance they’ll receive aid if the school awards merit aid (not all schools do).  (For more info on safety schools, see “Safety,” “match,” and “reach.”)

So you’ve gotten some merit aid at one of your safety schools. Do you choose that or the “better” full-priced one?

There’s no right answer to this one. This dilemma is mostly an issue for the middle-income bracket. For families in the lowest income brackets, many schools will provide significant need-based aid, making their college cost free or reasonable. For families in the highest income bracket, they won’t be offered need-based aid anyway. Here are some questions to ask:

  • Is the offered merit aid good for all four years?
  • What are the rules for keeping it? It might mean maintaining a high GPA or living on campus all four years.
  • How much need-based aid do you think you'll get?
  • Do you want to be the cream of the crop on campus or just an average student?

Need-based aid

Need-based aid is awarded based on your ability (or inability!) to pay for college. Most schools use the FAFSA and CSS (for private schools). Texas state schools use just the FAFSA.

Need-based aid can consist of different things, some of which you need to pay back and some of which you don’t:

  • Grants are gifts and don’t need to be repaid. 
  • Student loans incur interest and have to be repaid. The federal government works to make student loan interest rates affordable, and many student loans do not need to be repaid until after graduation.
  • Parent loans are loans that the parents take out and pay back.
  • Work-study is a job that the student holds while earning a degree.

What’s the FAFSA?

It’s a form used to get federal aid for college. 

The Free Application for Federal Student Aid (FAFSA) is the form that families fill out to apply for federal aid by way of grants, loans, and work-study for college students; it’s administered through the U.S. Department of Education. It’s a fairly easy form to fill out.

You can get a preview of whether the FAFSA is likely to qualify you for federal grants by using the FAFSA4caster on the Department of Education website.

Even if the FAFSA4caster indicates that your family’s income and assets put you out of the range for grants, it’s still worth filling out the FAFSA. That’s because most colleges, state scholarship agencies, and foundations use the FAFSA to decide who gets money and how much. Also, filing a FAFSA automatically qualifies you for low-cost federal student loans of at least $5,500 a year.

For a PDF of this year's instructions for the FAFSA, look here.

What’s the CSS PROFILE?

It’s a form used to get need-based aid from private schools. 

The CSS PROFILE (College Scholarship Service Profile) is an application distributed by the College Board primarily designed to give private member institutions of the College Board—basically, most private schools—a closer look into the finances of a student and family. Along with the FAFSA, the CSS PROFILE is the most common financial aid application that students in the United States fill out.

It’s a pain to fill out because it’s much more detailed than the FAFSA.

The CSS is not free. The first college the application is sent to costs $25; each college after that is $16.

Generally, colleges with early acceptance programs use the CSS PROFILE to make preliminary financial aid decisions because the FAFSA is not available until after January 1. (See “When to apply” for info on Early Action and Early Decision.) Schools may then make adjustments to their financial aid awards.

What’s “Expected Family Contribution”?

The Expected Family Contribution (EFC) is what schools think your family can afford to pay. It’s a number that determines students’ eligibility for federal student aid. The EFC formulas use the financial information students provide on the FAFSA. The EFC is subtracted from students’ cost of attendance (COA) to determine their need for the following federal student financial assistance offered by the U.S. Department of Education:

  • Federal Pell Grants
  • Subsidized Stafford Loans through the William D. Ford Federal Direct Loan Program
  • Federal Supplemental Educational Opportunity Grants (FSEOG)
  • Federal Perkins Loans
  • Federal Work-Study (FWS)

See more on how EFC is calculated here.

NOTE: EFCs can vary wildly from one school to the next. They're notorious for being unrealistic about what's affordable for most families.

What’s the Net Price Calculator?

Every school is required to have a net price calculator. The calculator allows prospective students to enter their information to find out what students like them paid to attend the institution in the previous year, after taking grants and scholarships into account. 

“Net price” is the cost to the student. It’s the amount that a student pays to go to a school in a single academic year AFTER subtracting scholarships and grants the student receives. Scholarships and grants are aid that a student doesn’t pay back.

NOTE: The calculator can be off wildly. Many schools think families can afford far more than they’re actually able to, so keep that in mind.

Find calculators here. Also search “<name of school> net price calculator.”

Once we receive the financial aid package, can we negotiate?

Some people have success with getting more aid, if they approach the school honestly.

You can provide the schools with updated information about events that affect your ability to pay (e.g., a death in the family, a recent job loss, etc.). Don’t haggle with schools, comparing another school’s offer (that’ll be seen as rude); however, if they ask to see the other school’s package, show it to them. TIP: Don't try to get more aid because your family had to pay $30,000 for chemotherapy ... for your pet cat.

Here are some things to consider. Then you'll have some idea of whether you're asking for a "big wiggle" or a "little wiggle" room and how hard it might be to make your case.

  • If you’re applying to an out-of-state school, ask if they can offer in-state tuition (applies only to state schools). This works best if they really want you.
  • If it’s a CSS PROFILE school, consider that the CSS may say you can afford considerably more than the FAFSA does (or vice versa). Ask if they can adjust the lower one to match the higher one.
  • Is the school “hot"? If they lose your student, are there ten more kids waiting to take their place? You can find acceptance rates in the school’s Common Data Set, if the school publishes one.
  • Is the school “rich"? You can find endowment, financial aid, and other info on IPEDS.
  • Have solid data to back up your case. What expenses do you have that weren't on the FAFSA? Was this year's tax data unusual in some way compared to that of previous years? What didn't they know about your family when making the original offer?
  • Know your bottom line. Is there a price that you're not willing to go beyond for this school? 
  • Call early. Once the school gives out all the money, it’s gone. This is particularly true for schools with rolling admission.