For families embarking on college planning, paying for college is often the most dread-inducing topic, yet it is rarely discussed in meetings with school counselors or at high school college nights. It can be hard for parents to get factual information about financial aid eligibility—and myths and rumors abound.
The financial aid equation will be different for every family, so it is important to utilize available tools to estimate eligibility. The best tools to use at the beginning of the college planning process are EFC Calculators that produce an estimate of a family’s Expected Family Contribution.
- Use the FAFSA4caster to find your Federal Methodology EFC for most public colleges and universities.
- Use the FinAid! Calculator to estimate your Institutional Methodology EFC for many private colleges.
Now, let’s bust some of the many myths that are circulating and leading to poor preparation or flawed decisions among families with college-bound students!
MYTH #1
If I save for my child’s college costs, it will take away from the financial aid she will be offered.
THE BUST: It’s always best to save as much for college as possible. It’s never too late to save for college! Don’t underestimate how much to save; use the CollegeBoard College Cost Calculator:
- 4 Years at a private college = $280,000
- 6 Years at in-state public university = $150,000
Saving will increase college options and it will decrease the need for college loans. Savings in the parents’ names will not greatly impact financial aid awards. 529 College Savings Plans are considered a parent asset.
MYTH #2
There’s nothing I can do ahead of time about my child’s eligibility for financial aid in college.
THE BUST: Early financial planning can make a big difference.
Financial choices you make now can affect the amount of financial aid your student is awarded by colleges. Financial aid calculations are based on prior-prior year tax returns (Sophomore/Junior year).
- Keep ordinary investment accounts in the parents’ names because money in the student’s name will detract most from aid awards.
- Consider moving assets or taking unusual income before January of your student’s sophomore year.
- Take windfalls or IRA withdrawals.
- Transfer assets held in the child’s name to parents.
MYTH #3
If my student applies for financial aid, he won’t get in.
THE BUST: Families need to differentiate between need-blind and need-aware schools.
- Many selective colleges and universities are need-blind, so ability to pay will not impact the admissions decision.
- Of the schools that are need-blind, about 70 also meet 100% of demonstrated need.
- And of those, about 20 have no-loan policies.
- However, many schools that are need-blind in the regular admissions cycle become need-aware when accepting students off the wait list.
- Students without financial need may get a boost from need-aware schools.
MYTH #4
It’s best if I don’t get involved with my student’s choices of where to apply; I’ll worry about affordability later.
THE BUST: Financial fit should be an important factor in developing your student’s college list.
- Involve your student in discussions about family finances and let her know what you can afford.
- Don’t break your child’s heart – don’t wait until she is accepted to Amherst to realize you can’t afford to send her.
- Many middle-class families are not eligible for aid, but cannot afford to write a $70K check each year.
- Decide now if merit aid is necessary; if so, research the colleges that offer generous merit aid without regard to financial need.
- Remember that student loans will be the student’s responsibility to repay; students need to participate in the decision to borrow.
MYTH #5
I make over $180K so my child won’t be eligible for need-based financial aid, but I can’t afford tuition at a private college.
THE BUST: Many top quality private and public schools offer merit aid as a tuition discount to attract students who will boost their profiles. Identify schools that offer generous merit aid. Use the College Match search tool or use Jeff Levy’s annually updated merit aid spreadsheet.
- Look at the school’s history.
- What percentage of students received merit awards?
- What was the average award?
- Apply to schools where your GPA and test scores are in the top 25% of the incoming freshman class.
The largest merit scholarships typically go to students with grades and test scores far above the average for enrolled students.
MYTH #6
My friend’s son got a full-ride athletic scholarship to attend Harvard.
THE BUST: Harvard, like the other Ivy League schools, does not offer merit scholarships of any kind (not academic, athletic, art, etc.).
- Around 40 of the most highly selective colleges have generous need-based financial aid but do not offer scholarships.
- These schools use 100% of their aid budget to attract and enroll students with financial need.
- Students from families earning upwards of $200,000 may qualify for need-based grants at Ivy League and other generous private colleges.
- The most selective schools do NOT recruit students via academic scholarships.
MYTH #7
I’m going to pay for my child’s college with private scholarships.
THE BUST: Only about 5% of available funding for college is from private scholarships.
- If your student qualifies for financial aid, any private scholarships will reduce the school’s grant aid, not your Expected Family Contribution.
- National scholarships have long odds but big payouts and most are need-based.
- Many are targeted at specific populations such as girls interested in engineering or aspiring Latino writers.
- Many obscure scholarships are marketing tools – be sure the organization is reputable and the scholarship is real.
- Beware scams and companies that charge a fee to find scholarships for you.
- Do your research and choose wisely: parents and students can sink a lot of time into scholarship applications and come up empty-handed.
