Your child receives the offer to their dream school…and then you get the bill.
Don’t let this moment ruin the moment: when creating a college list, include your budget and college costs in your criteria. Here are the most common questions we get about paying for college.
Before Applying: “How much will I have to pay?”
Q: Colleges post their total costs on their websites. Do you think I will have to pay more?
A: YES! We generally advise adding about 2,000 more to any amount published.
You will see billable costs in “Total Costs” for:
Tuition
Fees
Books and supplies
On-campus room and board
Unpublished costs might include:
Off-Campus Room & Board
Personal Expenses
Travel Costs (Uber, Gas, Airfare)
Sorority/Fraternity Fees
Check out this resource!
Average Annual Costs Per School (please note this only provides in-state info for public colleges)
Q: How do colleges determine what I am able to pay?
A: They formulate your estimated ability to pay based on the results of your “prior-prior” federal income tax returns.
Use these calculators for a rough estimate of what they will decide:
Student Aid Index (SAI). Used by colleges to determine your eligibility for Federal Financial AId.
2024-25 Student Aid Index (SAI) Calculator – College Money Method
Expected Family Contribution: The college’s estimate of student need is the Total Cost of Attendance (COA) minus Expected Family Contribution (EFC)**
College Board Expected Family Contribution Calculator
COA-EFC=STUDENT NEED
What you need for the Net Price Calculator that determines what you will be expected to pay
Tax returns from two years before anticipated start of college
The student’s current high school transcript
ACT/SAT scores if available
Total amount of extra medical expenses you paid the year of the tax return
College list based on schools that seem to be a good “fit”academically and emotionally
Time! Make a 45-minute meeting to do this research with your young adult -- make an “appointment” together :) Be prepared to answer questions about your income.
Senior Year: “What are our next steps in this process?
Q: After completing the SAI, it looks like we will be expected to pay the whole cost. Why would I bother applying for Federal Loans?
A: Good reasons to apply:
If you do not apply for aid freshman year, there may be a delay in future years when seeking aid, so if you rely on your employment income for paying for college and that income is jeopardized for any reason, you can protect yourself by submitting the application(s) the first year your student applies so that the college or university has you in their system.
The federal student loan is in the student’s name. This means that paying it back can help the student establish a good credit rating.
If you want your student to contribute to their own educational costs, paying this loan back is one way to do so.
If you have more than one child at home, the threshold for need-based income might be lower.
Your student intends on going onto graduate school - you are in this for the long haul.
Q: But won’t it help my student’s eligibility for admissions if I pay full?
A: If a college is “need-aware,” it takes the student’s ability to pay into consideration. However, whether a student can pay full will not be more important than their academic abilities and other factors. When it comes to private colleges, some people say that being able to pay will help admissibility, but this is not proven nor documented.
Q: What steps do I need to take to be considered for financial aid or loans?
A: While many colleges automatically consider students for academic (“merit”) awards, two applications may be used by colleges during the application process:
The Federal Application for Student Financial Aid (FASFA) is used to determine federal funding eligibility. FASFA*
Used by certain private colleges only, the College Scholarship Service Profile (CSS) is used to determine institutional (college) award eligibility. CSS Profile (Opens October 1, 2023)
These applications require your tax returns from two years before the student graduates. (Example: For students graduating in 2025, they will look at 2023 income.)
Senior Year: “I’ve been accepted! Now what?”
The financial aid award package
Q: What are the additional funds my student might receive to offset the costs?
A: If you have completed and submitted the FASFA and CSS applications based on the college’s deadline requirements, and your student has been accepted, you will receive a financial aid and award package letter that will arrive between two weeks to two months after they have been accepted.
Possible Funding Sources the package will include:
Federal Student & Parent Plus Loans with yearly limits to max amounts and that must be repaid starting at 6 months after graduation.
“Subsidized” is when government pays the interest
“Unsubsidized” is when student has to pay interest
Interest rates are lower and principal can be paid at any point
Grants -- This need -based aid does not have to be paid back unless student leaves college before graduating.
Scholarships/”Merit Aid” - These financial awards from the college are usually based on academic performance.
Q: How are scholarships awarded?
A: Several Ways:
MERIT awards from the colleges do not typically take need into consideration. They are offered based on GPA, academic performance, and SAT/ACT scores and are a way to incentivize students to attend their school.
Here is our favorite source to see which colleges offer merit and how much they typically offer: College's Average Non-Need Aid Amounts
Please note:
Many scholarships require the student to maintain a certain GPA.
Some college scholarships have to be applied for separately and have varying due dates.
Scholarships are offered outside of college through organizations such as The Rotary Club. The best way to vet these lists is to go to your high school counselor.
Q: What will be my return on investment for this college?
A: The return on investment is determined by the major, but here are some resources with data on post graduation income:
Full ROI Table | Flourish - Search engine based on the ROI of majors at every school.
The Take-Aways
College is a long-term investment. Paying for college can be stressful and put your retirement savings and income at risk when you use the “we-will-figure-it-out” approach.
To avoid this stress and disappointment, determine what you are willing to pay and do your best to predict what the college will cost as you build the college list.
Communicate early on with your child about what you can and are willing to pay for their college experience.
Once you have received an awards package, take your time weighing your options and don’t be afraid to negotiate….After all, colleges are businesses.
