I. FINANCIAL AID BASICS
As I said above, the purpose of this website is to help families save on college, not save for college. Indeed, the Great Recession turned into the Continuous Recession for many American families, and none of us has saved as much as we wanted for our children's educations. But we're all in the same boat. So relax, throw your regrets over the side, and realize this. The college financial aid system in America is not based on guilt, it's based on generosity. Also, the colleges in that system aren't competing for us parents, they're competing for our kids. So, whether we're depressed by guilt - or even thrilled with self-righteousness - means absolutely nothing to the colleges competing for our kids. Those colleges compete for our kids with their campuses, their faculties, and their programs, but they also compete with their financial aid. And our job as parents is to let them do so, to not let our feelings stand in the way of that competition, but to facilitate that competition for the benefit of our kids. In fact, I think you will realize while reading this site that interesting and effective students are in great demand, and your most efficient college savings plan is helping your own children become more interesting and effective students.
Now, before we get too deeply into our topic, let's make sure we cover the basics. When I started helping my son with his college search eight years ago, I found that almost everything I thought I knew about college financial aid was the opposite of reality. The truth was usually counter-intuitive, the opposite of what I expected. So, here's a list of what I wish I'd known about college financial aid eight years ago when I started helping my son:
A. Although the published cost of privately-funded colleges will usually be much higher than the published cost of publicly-funded schools, especially for those in your home state, the financial aid offered by private schools to middle and lower income American families will frequently more than cover the difference. So, be prepared for good news, and don't be surprised if private colleges are your family's most affordable college alternatives.
B. There are two primary types of financial aid, need-based aid and merit-based aid. Financial aid departments at colleges determine the amount of need-based aid, and they typically base their decisions on a financial aid application filed with them by the students - really by their parents - as supported by the federal government's Free Application for Federal Student Aid, or FAFSA.
C. The FAFSA itself gives no aid. Instead, families input their financial data into the FAFSA, and the FAFSA's final product is the Expected Family Contribution, or EFC, for that family. That's the amount that our federal government estimates that parents and the student can contribute annually toward that student's education. Although the EFC is supposed to include both the parents' and the student's contributions, the estimated amount of student earnings in the commonly used FAFSA Federal Methodology is so low, $100 per year, that parents should think of their EFC's as the estimate of their contribution only.
D. The actual FAFSA is formal, it isn't anonymous, and it allows only a limited number of modifications before it gets strange, so I recommend starting with one of the easy EFC Estimators included in some college NPC programs. Some of these EFC Estimators are inaccurate, but the stand-alone EFC Estimator on the University of Washington's NPC page is reasonably accurate as well as easy to use. My current favorite among embedded EFC Estimators is the one included within the NPC of the University of California at Berkeley. I've found it to be very accurate, and it requires no effort beyond completing Berkeley's NPC. We'll use both the Berkeley program to get you estimates of your EFCs in our Bookends page.
E. To give you an idea of EFC amounts for various income levels, here's a table that I prepared in early 2015 showing EFC estimates for nine hypothetical families with incomes from $40,000 to $200,000 per year. I did the data in this table for a press release covering an error in the FAFSA - it was corrected soon afterwards - and I used the College Board's very accurate EFC Estimator for my research. A link to that program is included in the table.
As I said above, the purpose of this website is to help families save on college, not save for college. Indeed, the Great Recession turned into the Continuous Recession for many American families, and none of us has saved as much as we wanted for our children's educations. But we're all in the same boat. So relax, throw your regrets over the side, and realize this. The college financial aid system in America is not based on guilt, it's based on generosity. Also, the colleges in that system aren't competing for us parents, they're competing for our kids. So, whether we're depressed by guilt - or even thrilled with self-righteousness - means absolutely nothing to the colleges competing for our kids. Those colleges compete for our kids with their campuses, their faculties, and their programs, but they also compete with their financial aid. And our job as parents is to let them do so, to not let our feelings stand in the way of that competition, but to facilitate that competition for the benefit of our kids. In fact, I think you will realize while reading this site that interesting and effective students are in great demand, and your most efficient college savings plan is helping your own children become more interesting and effective students.
Now, before we get too deeply into our topic, let's make sure we cover the basics. When I started helping my son with his college search eight years ago, I found that almost everything I thought I knew about college financial aid was the opposite of reality. The truth was usually counter-intuitive, the opposite of what I expected. So, here's a list of what I wish I'd known about college financial aid eight years ago when I started helping my son:
A. Although the published cost of privately-funded colleges will usually be much higher than the published cost of publicly-funded schools, especially for those in your home state, the financial aid offered by private schools to middle and lower income American families will frequently more than cover the difference. So, be prepared for good news, and don't be surprised if private colleges are your family's most affordable college alternatives.
B. There are two primary types of financial aid, need-based aid and merit-based aid. Financial aid departments at colleges determine the amount of need-based aid, and they typically base their decisions on a financial aid application filed with them by the students - really by their parents - as supported by the federal government's Free Application for Federal Student Aid, or FAFSA.
C. The FAFSA itself gives no aid. Instead, families input their financial data into the FAFSA, and the FAFSA's final product is the Expected Family Contribution, or EFC, for that family. That's the amount that our federal government estimates that parents and the student can contribute annually toward that student's education. Although the EFC is supposed to include both the parents' and the student's contributions, the estimated amount of student earnings in the commonly used FAFSA Federal Methodology is so low, $100 per year, that parents should think of their EFC's as the estimate of their contribution only.
D. The actual FAFSA is formal, it isn't anonymous, and it allows only a limited number of modifications before it gets strange, so I recommend starting with one of the easy EFC Estimators included in some college NPC programs. Some of these EFC Estimators are inaccurate, but the stand-alone EFC Estimator on the University of Washington's NPC page is reasonably accurate as well as easy to use. My current favorite among embedded EFC Estimators is the one included within the NPC of the University of California at Berkeley. I've found it to be very accurate, and it requires no effort beyond completing Berkeley's NPC. We'll use both the Berkeley program to get you estimates of your EFCs in our Bookends page.
E. To give you an idea of EFC amounts for various income levels, here's a table that I prepared in early 2015 showing EFC estimates for nine hypothetical families with incomes from $40,000 to $200,000 per year. I did the data in this table for a press release covering an error in the FAFSA - it was corrected soon afterwards - and I used the College Board's very accurate EFC Estimator for my research. A link to that program is included in the table.
| 2015_efc_examples_.pdf |
Your actual EFC will depend on your personal financial information, but you can see from that table that EFC goes up as the parents' income goes up, both as a dollar amount and as a percentage. Some of you are also probably wondering why families earning $200,000 per year bother with the FAFSA at all. You may be asking, "Don't they just pay the 'sticker price'?" Well, that depends on the school. Some of the most generous schools still cover significant costs like Room & Board at an income of $200,000 while, at the other end of the income spectrum, some schools offer none of their own aid to students from families earning $40,000. It just depends on the school.
F. Unlike need-based aid, the admissions and academic departments of colleges determine the amount of any merit-based aid they offer their students, if that college offers any merit-based aid at all. Merit-based aid is not dependent on need, and it will be the same amount for all students demonstrating the same merit, whether they are from higher or lower income families. Merit-based aid at the colleges offering it can be as significant as need-based aid, and - as with need-based scholarships - full ride merit-based scholarships are not that unusual.
G. Net Price Calculators on college websites provide 97% accurate estimates of both the need- and most of the merit-based aid that will be offered to those students by that school if they are accepted for admission. So, NPC's are the best way to develop a list of schools that will be affordable for you, but NPC results are not real financial aid applications, and they are not actual aid offers. Students and parents need to file formal financial aid applications at each school after the students have actually applied for admission. This is usually done in January or February.
H. The vast majority of college financial aid comes from the colleges themselves through their admission and financial aid departments. It does not come from outside scholarships. In fact, colleges typically deduct outside aid from the amount of need-based aid they offer their students, and this makes a lot of sense. Outside aid reduces need, which will typically reduce need-based aid at the colleges by the same amount as the outside aid.
I. Well-meaning community service organizations and businesses, however, continue to offer lots and lots of small-dollar outside scholarships, not knowing that they will be deducted from the colleges' regular aid packages. Realistically, the only students who should apply for them are students who don't really need them.
J. Published college aid ratings are usually based on the average aid-per-student at the schools, making those ratings automatically suspect, and they will usually be inaccurate for your students. Do your own NPC's to get data that will be accurate for your students at your target schools, and don't rely on published financial aid ratings.
K. You will find that almost all colleges claim to offer generous financial aid, and about a third of them really do. The actual variance in the amount of financial aid offered by American colleges is absolutely huge, even among similar schools, organized in similar ways, doing similar things. Differences of $30,000 per year in Remaining Balances, my Mom-Dad-or-Borrow amount, are not unusual at all.
L. Some colleges are "need-blind" and some are "need-aware." This means that some schools have enough resources to not consider whether a student can afford the school, while some schools have to factor in the student's ability to pay in their admissions decisions. But I have found that the amount of individual financial aid offers are unaffected by the schools' policies in this regard, and that policy won't matter to accepted applicants at all. Because once you're in, you're in.
M. I have never found an accurate list of "no-loan colleges", but I don't think it matters. In fact, I've found that it's not unusual for loan-inclusive schools to make no-loan financial aid offers to students, meaning offers that are generous enough to not require any student or parent loans. So, what matters isn't whether a college is or claims to be a no-loan school, what matters is whether that school makes your student a no-loan offer.
N. What I consider a no-loan offer, by the way, is one where the Remaining Balance, my Mom-Dad-or-Borrow amount, is not greater than that family's Expected Family Contribution, and you will see plenty of examples in my Expected Loan Compilations on my Results page of this site.
F. Unlike need-based aid, the admissions and academic departments of colleges determine the amount of any merit-based aid they offer their students, if that college offers any merit-based aid at all. Merit-based aid is not dependent on need, and it will be the same amount for all students demonstrating the same merit, whether they are from higher or lower income families. Merit-based aid at the colleges offering it can be as significant as need-based aid, and - as with need-based scholarships - full ride merit-based scholarships are not that unusual.
G. Net Price Calculators on college websites provide 97% accurate estimates of both the need- and most of the merit-based aid that will be offered to those students by that school if they are accepted for admission. So, NPC's are the best way to develop a list of schools that will be affordable for you, but NPC results are not real financial aid applications, and they are not actual aid offers. Students and parents need to file formal financial aid applications at each school after the students have actually applied for admission. This is usually done in January or February.
H. The vast majority of college financial aid comes from the colleges themselves through their admission and financial aid departments. It does not come from outside scholarships. In fact, colleges typically deduct outside aid from the amount of need-based aid they offer their students, and this makes a lot of sense. Outside aid reduces need, which will typically reduce need-based aid at the colleges by the same amount as the outside aid.
I. Well-meaning community service organizations and businesses, however, continue to offer lots and lots of small-dollar outside scholarships, not knowing that they will be deducted from the colleges' regular aid packages. Realistically, the only students who should apply for them are students who don't really need them.
J. Published college aid ratings are usually based on the average aid-per-student at the schools, making those ratings automatically suspect, and they will usually be inaccurate for your students. Do your own NPC's to get data that will be accurate for your students at your target schools, and don't rely on published financial aid ratings.
K. You will find that almost all colleges claim to offer generous financial aid, and about a third of them really do. The actual variance in the amount of financial aid offered by American colleges is absolutely huge, even among similar schools, organized in similar ways, doing similar things. Differences of $30,000 per year in Remaining Balances, my Mom-Dad-or-Borrow amount, are not unusual at all.
L. Some colleges are "need-blind" and some are "need-aware." This means that some schools have enough resources to not consider whether a student can afford the school, while some schools have to factor in the student's ability to pay in their admissions decisions. But I have found that the amount of individual financial aid offers are unaffected by the schools' policies in this regard, and that policy won't matter to accepted applicants at all. Because once you're in, you're in.
M. I have never found an accurate list of "no-loan colleges", but I don't think it matters. In fact, I've found that it's not unusual for loan-inclusive schools to make no-loan financial aid offers to students, meaning offers that are generous enough to not require any student or parent loans. So, what matters isn't whether a college is or claims to be a no-loan school, what matters is whether that school makes your student a no-loan offer.
N. What I consider a no-loan offer, by the way, is one where the Remaining Balance, my Mom-Dad-or-Borrow amount, is not greater than that family's Expected Family Contribution, and you will see plenty of examples in my Expected Loan Compilations on my Results page of this site.
II. NPC BASICS
A. In General
Over the last five years I have completed hundreds and hundreds of Net Price Calculator analyses, so I'd like to offer a few general comments about NPC's before you start your own:
1. They're meant to be used. NPC's are free for a reason. Congress wanted education consumers like us to have the same access to comparative market data that other consumers have. So use them freely and enjoy them.
2. They're easy to find. Every college websites has a search box, usually located in the upper right-hand corner of its home page. Just type "net price calculator" in the box, and you will be routed to its NPC. Some colleges call their NPC's "financial aid estimators", but you can still get to them by typing "net price calculator" in the search box.
3. They're easy to use. All you need to get started is your tax return from last year and not much else. You will be asked questions about your student and your finances, but the questions are straightforward, and there is usually a "help bubble" you can click if you have any questions. Your first NPC will take you about 20 minutes, but you can reduce that to seven or eight minutes with practice.
4. They don't break. NPC's are programs that are resident in someone else's computer that you will access via your computer. So relax and realize that, no matter how badly you goof up your data entry on your first few tries, you can't break their program. All you have to do is to go back and start over.
5. No NPC's share your personal data. None of them are linked to government agencies, none of them will ask for your SSN's or Tax ID's, and none of them have an outside-accessible memory.
By the way, the lack of NPC memory causes the only pain in this process. There are a number of contractors providing NPC programs, and almost none of them offers a method of saving your input data. This means that you will be inputting the same data a number of times for different schools. The only exception I've found is the NPC program offered by the College Board. That program is used by about 20% of American colleges, and here is a list of all of CB's participating schools:
http://studentnpc.collegeboard.org/participating-schools
You can click on any school in that list and you will go directly to the school's NPC program without any further searching. If you then set up a user name and password with CB, you can save your input data. The, at most of the listed schools, you can then click on any other school and your data will be automatically filled in, reducing your completion time to a few minutes per school and making the CB system the most convenient one available.
Once you've completed an NPC using any of the available programs, you will want to record your results on a table. Here's a blank PDF version of the one I use for my research, and there's a Word version of it at the bottom of every page in this website.
A. In General
Over the last five years I have completed hundreds and hundreds of Net Price Calculator analyses, so I'd like to offer a few general comments about NPC's before you start your own:
1. They're meant to be used. NPC's are free for a reason. Congress wanted education consumers like us to have the same access to comparative market data that other consumers have. So use them freely and enjoy them.
2. They're easy to find. Every college websites has a search box, usually located in the upper right-hand corner of its home page. Just type "net price calculator" in the box, and you will be routed to its NPC. Some colleges call their NPC's "financial aid estimators", but you can still get to them by typing "net price calculator" in the search box.
3. They're easy to use. All you need to get started is your tax return from last year and not much else. You will be asked questions about your student and your finances, but the questions are straightforward, and there is usually a "help bubble" you can click if you have any questions. Your first NPC will take you about 20 minutes, but you can reduce that to seven or eight minutes with practice.
4. They don't break. NPC's are programs that are resident in someone else's computer that you will access via your computer. So relax and realize that, no matter how badly you goof up your data entry on your first few tries, you can't break their program. All you have to do is to go back and start over.
5. No NPC's share your personal data. None of them are linked to government agencies, none of them will ask for your SSN's or Tax ID's, and none of them have an outside-accessible memory.
By the way, the lack of NPC memory causes the only pain in this process. There are a number of contractors providing NPC programs, and almost none of them offers a method of saving your input data. This means that you will be inputting the same data a number of times for different schools. The only exception I've found is the NPC program offered by the College Board. That program is used by about 20% of American colleges, and here is a list of all of CB's participating schools:
http://studentnpc.collegeboard.org/participating-schools
You can click on any school in that list and you will go directly to the school's NPC program without any further searching. If you then set up a user name and password with CB, you can save your input data. The, at most of the listed schools, you can then click on any other school and your data will be automatically filled in, reducing your completion time to a few minutes per school and making the CB system the most convenient one available.
Once you've completed an NPC using any of the available programs, you will want to record your results on a table. Here's a blank PDF version of the one I use for my research, and there's a Word version of it at the bottom of every page in this website.
| acg_apples-to-apples_stabilized_net_cost_template.pdf |
III. APPLES-TO-APPLES
Net Price Calculator programs are wonderful tools, but they have four minor problems that limited their accuracy and their usefulness. Here are the problems and my solutions:
A. The estimates colleges use for "soft costs", meaning those costs not fixed by the school, vary widely from school to school while those costs themselves should be pretty much the same everywhere. So, I developed estimates for them that I apply to every school: $1,150 per year for "Books & Supplies" and $1,350 per year - meaning $150 per month - for "Personal Expenses."
B. The "Travel Costs" listed in NPC results also vary widely from school to school, even for schools in the same city, and some well known colleges don't show any amount at all. So, I use a standard value of $1,000 for "Travel Costs" in all my Examples and in my Apples-to-Apples template. It's a good starting value for comparisons, and $1,000 has been the actual cost of four one-way tickets between Seattle and Boston for our kids each year. Later, if you want to make your comparisons more exact, actual travel costs from your area are easy to find online.
C. NPC programs typically show loans as financial aid, but I don't. I only show cash grants in the "Total Grants" column, and I never show loans as financial aid. Loans really aren't financial aid, they are an expensive way to defer the payment of a present cost to a future time. And, since some colleges are loan-free, and some other schools make such generous financial aid offers that loans aren't required, listing loans in Total Grants would make your financial aid comparisons invalid. In addition, if you actually need loans to pay your costs at a school, the same loan programs are available pretty much everywhere. And each family will make its own decision on whether loans are necessary to pay its Remaining Balance at a particular school.
D. Colleges expect work-capable students to work, but the amounts shown for "Student Work" in their NPC's vary widely. I chose $5,000 per year for my typical value. It represents $1,000 per month for a 25 hour per week summer job and $1,000 per semester for an 8 hour per week Work Study job with both jobs paying $10 per hour.
I call my system "Apples-to-Apples," and it acts like an automotive shock absorber, taking the bounce out of the ride, by eliminating the unnecessary irregularity in estimated costs among college NPC's. This allows students and parents to make valid comparisons between schools, especially among more generous schools
Here again is a PDF version of my Apples-to-Apples template. It's simple, it's easy to use, and nothing has been left out. Print it, fill in the blanks from the NPC's that you complete, and you are on your way to finding the most affordable colleges for your family. As always, a downloadable Word version is at the bottom of every page in this website.
Net Price Calculator programs are wonderful tools, but they have four minor problems that limited their accuracy and their usefulness. Here are the problems and my solutions:
A. The estimates colleges use for "soft costs", meaning those costs not fixed by the school, vary widely from school to school while those costs themselves should be pretty much the same everywhere. So, I developed estimates for them that I apply to every school: $1,150 per year for "Books & Supplies" and $1,350 per year - meaning $150 per month - for "Personal Expenses."
B. The "Travel Costs" listed in NPC results also vary widely from school to school, even for schools in the same city, and some well known colleges don't show any amount at all. So, I use a standard value of $1,000 for "Travel Costs" in all my Examples and in my Apples-to-Apples template. It's a good starting value for comparisons, and $1,000 has been the actual cost of four one-way tickets between Seattle and Boston for our kids each year. Later, if you want to make your comparisons more exact, actual travel costs from your area are easy to find online.
C. NPC programs typically show loans as financial aid, but I don't. I only show cash grants in the "Total Grants" column, and I never show loans as financial aid. Loans really aren't financial aid, they are an expensive way to defer the payment of a present cost to a future time. And, since some colleges are loan-free, and some other schools make such generous financial aid offers that loans aren't required, listing loans in Total Grants would make your financial aid comparisons invalid. In addition, if you actually need loans to pay your costs at a school, the same loan programs are available pretty much everywhere. And each family will make its own decision on whether loans are necessary to pay its Remaining Balance at a particular school.
D. Colleges expect work-capable students to work, but the amounts shown for "Student Work" in their NPC's vary widely. I chose $5,000 per year for my typical value. It represents $1,000 per month for a 25 hour per week summer job and $1,000 per semester for an 8 hour per week Work Study job with both jobs paying $10 per hour.
I call my system "Apples-to-Apples," and it acts like an automotive shock absorber, taking the bounce out of the ride, by eliminating the unnecessary irregularity in estimated costs among college NPC's. This allows students and parents to make valid comparisons between schools, especially among more generous schools
Here again is a PDF version of my Apples-to-Apples template. It's simple, it's easy to use, and nothing has been left out. Print it, fill in the blanks from the NPC's that you complete, and you are on your way to finding the most affordable colleges for your family. As always, a downloadable Word version is at the bottom of every page in this website.
| acg_apples-to-apples_stabilized_net_cost_template.pdf |
IV. MY NPC MATH
The math I use to analyze college costs and financial aid in my own research and in the Examples I publish is intentionally simple. I use the colleges' Net Price Calculator programs to determine what the schools will charge for Tuition & Fees and Room & Board along with the amount of Total Grants they will offer students from my sample families. Then I plug those numbers into the Apples-to-Apples template which already includes all the other costs for typical students along with a standard amount for Student Work. Finally, I complete each analysis with a calculator, working from left to right, using just addition and subtraction. And you will use the same technique to find your most affordable colleges.
It's really just like a baseball scoreboard, something most of us have seen. The simplest baseball scoreboards have eleven columns. The first column shows the name of the team, and the middle nine columns show the number of runs scored by that team in each of the nine innings. The scorekeeper adds up the numbers in the middle nine columns to get the final score, shown in the eleventh column. But what really matters at the end of the game are the names of the teams, shown in the left-hand column, and the final scores for each team shown in the right-hand column. The inning-by-inning scores only matter because they add up to the final scores.
It's the same with my Apples-to-Apples template. What really matters are the names of the colleges, shown in the left-hand column, and the Remaining Balances - the leftover amount for the parents to pay or for the student or parents to borrow - shown in the right-hand column. The nine middle columns are only relevant because they combine to equal the Remaining Balances. That's the reason the names of the schools and their Remaining Balances are in bold type in the Examples you'll see throughout this site.
That's also the reason that the multi-page Compilations on the Examples page only have headings on the first page. But don't think about that one now. You won't get to the Compilations for another ten minutes, and by that time you'll be such experts you won't even notice.
The math I use to analyze college costs and financial aid in my own research and in the Examples I publish is intentionally simple. I use the colleges' Net Price Calculator programs to determine what the schools will charge for Tuition & Fees and Room & Board along with the amount of Total Grants they will offer students from my sample families. Then I plug those numbers into the Apples-to-Apples template which already includes all the other costs for typical students along with a standard amount for Student Work. Finally, I complete each analysis with a calculator, working from left to right, using just addition and subtraction. And you will use the same technique to find your most affordable colleges.
It's really just like a baseball scoreboard, something most of us have seen. The simplest baseball scoreboards have eleven columns. The first column shows the name of the team, and the middle nine columns show the number of runs scored by that team in each of the nine innings. The scorekeeper adds up the numbers in the middle nine columns to get the final score, shown in the eleventh column. But what really matters at the end of the game are the names of the teams, shown in the left-hand column, and the final scores for each team shown in the right-hand column. The inning-by-inning scores only matter because they add up to the final scores.
It's the same with my Apples-to-Apples template. What really matters are the names of the colleges, shown in the left-hand column, and the Remaining Balances - the leftover amount for the parents to pay or for the student or parents to borrow - shown in the right-hand column. The nine middle columns are only relevant because they combine to equal the Remaining Balances. That's the reason the names of the schools and their Remaining Balances are in bold type in the Examples you'll see throughout this site.
That's also the reason that the multi-page Compilations on the Examples page only have headings on the first page. But don't think about that one now. You won't get to the Compilations for another ten minutes, and by that time you'll be such experts you won't even notice.
Copyright 2020, Mark Warns, All Rights Reserved
Here again are Word versions of my Apple-to-Apples templates for your own college costs and expected loans along with a Word version of my blank data input pages that you can download for use by your own family:
| acg_apples-to-apples_stabilized_net_cost_template.docx |
| acg_apples-to-apples_expected_annual_loan_template.docx |
| acg_2019-2020_family_npc_input_data.docx |