How has the college funding process changed since I was a student?
College isn’t like it was when you and I went, or when your parents went; at least, the paying for it part isn’t.
| What it used to be like: | What it’s like now: |
| There was a sticker price. | There is a sticker price. |
| The cost of college went up generally with inflation (this was more true when your parents were going to college than when you were going to college, but it was still better than the situation is today). | The cost of college has gone up at ~2x the rate of inflation. |
| Colleges offered merit based financial aid (scholarships). There were several full ride merit (non-athletic) scholarships available at most schools. | Colleges offer far less merit based financial aid per person. They have game theoried out the math, and decided they get a better overall student profile if they offer four 1/4 ride scholarships. |
| The need based financial aid was work-study (on-campus jobs), and scholarships. | The need based financial aid is almost exclusively in the forms of work-study (on-campus jobs), and loans. |
| The formula for need based aid wasn’t too complicated. | The formula for the Federal version of the Expected Family Contribution is pages of complexity of factors. Some schools choose a more complicated methodology, the Institutional method. And a small group of schools individualize their methodology, the Consensus method. |
| Merit scholarships (private or through the institution) reduced the student’s bill. Therefore high school students often had an unofficial second job their senior year of applying for scholarships. | Merit scholarships count in the college’s portion of contribution, whether institutionally funded or that the student obtained through outside sources. It no longer makes sense to spend hours applying for private merit scholarships, only to have the college scarf them up. |
| Some scholarships were 1st or 1-2nd years only, but many were 4 year scholarships. | Many scholarships are 1st year only. This may not be obvious in your acceptance letter. |
| Financial aid letters were straight forward, offering scholarships and work-studies. | Financial aid letters offer a mix of scholarships, work-studies, and loans. Many parents find the wording and presentation of financial aid letters confusing, and do not understand how much in loans their student or they will end up with. |
| Schools were generally on the same acceptance timelines, giving you time to compare financial aid packages. | Early Decision applications mean commitments have to be made before financial aid packages are offered, and therefore before financial aid packages can be compared. |
| Colleges expected the student and parents to use the money earned while in college, and scholarships, to pay for college. | Colleges expect the student and parents to use money saved, money earned while in the college years, and money earned after college, to pay for college. |
| The insane levels of college advertisement snail mail slowed down and eventually stopped, after the student started college. | The college advertisement emails never seem to stop, a drain on your mental bandwidth. |
What can one do to get a handle on these changes?
First, before you and your college-bound student get your hearts set on a college, meet with someone who can give you an apples-to-apples estimate of what a potential range of interesting colleges could cost for your family’s specific situation. They have software that can decrypt for you in moments what would take you hours of digging (PER college!), even assuming you knew what you were looking for.
Specifically, you want to have that first consultation series any time in your student’s 9th grade year or later. The earlier the better, from a preparation stand point. This is because earnings and asset location matter greatly in the current Expected Family Contribution calculation, and advanced warning allows you to organize those most strategically.
You may well want another series of consultations late in your student’s junior year, before your student get serious about their school visits and standardized testing, or early in your student’s senior year after they know their standardized test results and before they send their applications, to narrow in on which handful of schools to actually apply for. It will cost you several hundred dollars or more per consultation series, but the trade off can easily be thousands to hundreds of thousands of dollars in unplanned loans saved.
Another good site to look at early is https://studentaid.gov/ , the Federal website on college funding and student loans. And of course, check out my articles about college. You’ll also have to go to the studentaid.gov website in order to complete your FAFSA form as part of applying for financial aid.
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