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One Family’s Financial Lessons From the College Hunt

Learn from their experience to avoid making costly mistakes


During my daughter’s sophomore and junior high school years, I read a fleet of financial planning books to prepare for college costs. But even though we tried to plan ahead, we weren’t prepared for the sticker shock of our daughter’s college choices when last spring’s financial aid letters started arriving. Most parents aren’t.

I also discovered I didn’t fully understand some of the concepts I’d read about, and I’d fallen hard for some wishful thinking.

Here’s what I wish I’d understood more fully:

The Expected Family Contribution Your EFC — you’ll hear this acronym a lot during college application season — is the magic number the federal government generates when you fill out the Free Application for Federal Student Aid (FAFSA). Even if you think your family won’t qualify for federal aid (loans, work study, Pell grant) you should know the dollar amount the feds expect you to contribute to your child’s education.

College planners say the EFC is the single most important number to know. It’s also the most misunderstood. You can predict it early via the College Board’s EFC calculator. This calculator will also calculate your “institutional EFC” for private colleges. But use it as a guideline, not the final word.

Many selective colleges don’t offer merit scholarships, and even if you qualify for need-based aid, they may not offer enough.

We knew our federal EFC well in advance, but still got caught up in hoping we wouldn’t have to pay it in full.

Institutional EFCs If your child plans to apply to selective private colleges — say, Carlton or Tufts — you’ll need to fill out another financial aid form called the CSS Profile. These colleges generate their own EFCs, which could be higher than your federal EFC, because they use more detailed information, such as home equity, to calculate what they think you should pay.

They also consider things like medical expenses and debt, so you might look needier. But don’t count on it.

One private college expected us to pay $13,000 more per year than our federal EFC. The best way to predict costs is to use a college’s online “net price calculator” to predict costs at that particular college (more in a moment).

The possibility of paying more If your child is the first off to college, isn’t a top student and/or your EFC hovers around or below the cost of an in-state public university (like ours does), you could wind up paying more than you expect.

Many colleges simply don’t offer enough financial aid to cover need (need is defined as Cost of Attendance minus EFC). That’s called “gapping.” Some private colleges do meet need, but even so, their need-based package will include loans with the grants and scholarships. The ones that promise not to offer loans are very hard to get into.

I didn’t fully understand that our need would be topped off with loans and work study until I talked to a college adviser. Somehow, I’d hoped my daughter’s top private college choice, a well-endowed school, would come back with a package of grants and scholarships only and maybe even cover a bit of our EFC. No such luck, and it’s folly to expect it.

Your EFC is yours to pay, and you’ll likely get stuck with more — unless you’re able to choose a college that costs less than your EFC.

The importance of talking finances early Unless you’re a family ready to write a blank check, it’s important to have a clue about your finances and how you’ll pay college fees (assuming you’re contributing). Refinance? Savings? Loans? Work like a dog? Be sure to account for any current costs you’ll recoup when your child moves out, such as club sports fees, music lessons and even groceries. You might have more than you think.

Also, discuss what you expect your child to contribute. In fact, if your funds are very limited, kids deserve to know that early — like by 9th grade — so they can come up with a plan of their own, such as trying to earn top grades for scholarships.

Getting boxed in by expensive choices Lots of kids love applying to brand-name colleges, but those schools are expensive (plus you have to get accepted!). Many selective colleges don’t offer merit scholarships, or only small ones, and even if you qualify for need-based aid, they may not offer enough. Out-of-state flagships are pricey, too.

We had almost no influence over our determined daughter’s choices, but insisted she apply to an in-state university and to a school that’s a member of the Western Interstate Commission for Higher Education, whose schools provide financial assistance for students. She did so grudgingly.

The importance of choosing affordable colleges To me, this is the most mysterious part of this college business — and it’s overwhelming — but it’s as critical as knowing your EFC.

If you’re an affluent family who doesn’t want to pay full freight and your child has top grades, she will need to apply to colleges offering good merit aid; these won’t be selective colleges.

If you’re less affluent, you can look at private colleges that offer need-based aid.

If you’ve got a B student with so-so test scores, you’ll have different considerations.

Don’t throw darts at random colleges hoping they come back with great offers. That’s a recipe for a heartbreaking senior spring.

Even if your child’s test scores and grades aren’t known yet, you can input a high GPA or SAT score into a college site’s net price calculator to see what kind of aid the college would offer with them. (But do consider whether such grades and scores are realistic for your child; additional pressure doesn’t help the stressful application process.)

When I ran the calculator last year for one of my daughter’s colleges known for good merit aid, it indicated the top scholarship for her grades ($23,000), but offered no need-based aid. That should have been a red flag about the final award letter, but I thought for sure the college would offer need-based aid too — that wishful thinking trap. It offered $350.

Useful Books and Websites

If your head is spinning with terminology here, you’re not alone. There’s a lot to predicting college costs, and as my friends and I have discovered, hoping for the best isn’t a useful strategy.

My favorite resources to get started are three books and two websites. The books are Right College, Right Price by Frank Palmasani; The Financial Aid Handbook by Carol Stack and Ruth Vedvik and The College Solution by Lynn O’Shaughnessy. The websites are The College Solution and College Navigator.

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