Introduction

The single most important thing a new college student or parent of a new college student can do to prepare financially is to make a budget. Making a budget requires knowing two things: 1) how much is college going to cost? and 2) how much money do I have to cover these costs? Our section titled How Much is this Going to Cost? can help you answer the first question. Every school will have different finaid requirements and costs will vary. Our Cost of Attendance worksheet will help you start putting some real costs together and start you on your way to a sound financial aid plan.

Money For College: The Big Picture

If you're like most Americans, you probably don't have enough stored away under the mattress to simply write a check for your college bill. In fact, a recent survey by Sallie Mae found that 61% of all parents of incoming college freshmen said that they didn't begin initial discussions about the best way to pay for college until after the child entered high school. The survey also found that 82% of all respondents surveyed in 2007 believed that a college education is worth the cost, although fewer than half (42%) believed that college is affordable. But you'll be glad to know that help IS available. Most college students receive some form of financial assistance. (Sometimes, it's good to know that you're not alone.) Following is the percentage of undergraduate students receiving aid in the 2007-2008 academic year:

  • Two-Year Public Colleges 47.68%
  • Four-Year Public Colleges and Universities 71.9%
  • Four-Year Private Colleges and Universities 81.7%
  • Private, for Profit (Proprietary) Institutions 98%
  • Total (All Institutional Types) 65.6%

Does this surprise you? Actually, the situation is only getting worse, as the cost of higher education continues to skyrocket. For 2010-2011 the College Board says that the average tuition and fees for an in-state student at a four-year, public institution are $7,605 ($16,140 including room/board). For a private, four-year college: $27,293 ($36,993 including room/board). And for a public, two-year institution, average tuition is $2,713. Despite these figures, polls continue to show that around 85% of college students and recent graduates believe that the cost of college is worth it.

Pell Grants

On average, college tuition increases by 8% per year. That translates into college tuition doubling every 9 years! The good news is that few families actually pay the "sticker price." Once you deduct grants, scholarships and loans from the bottom-line, most families are left with a very manageable net cost.

Over $199 billion in financial aid was distributed to undergraduate students in academic year 2009 - 2010; the majority coming from either loans or institutional grants. The application process can be intimidating, but knowledge is power. The other sections of this site will equip you with the information you need to make better decisions regarding the financing of your college career.


How Much is This Going to Cost?

Good question. The total of college costs should be one of the primary questions any new college-bound student knows before they enroll in their first class. There are thousands of post- secondary institutions in the United States and each one will have their own unique set of costs, as well as their own set of criteria for awarding aid for college . Four-year, public colleges will cost more than 2-year, community colleges and a private, 4-year college will cost the most of all. You have to judge each one on its own merit.

There are a lot of factors in determining your college choice: area of study, location, private vs. public, small classrooms vs. large...the list could go on and on. Price is certainly one of the biggest. The average 4-year public institution costs roughly $14,333 per year when you factor in expenses like room and board, books, transportation and supplies. Some expenses are beyond your control, but good planning and budgeting can make a big difference to the bottom-line.

College costs are broken down into two groups: direct costs and indirect costs. Direct costs are typically those costs paid directly to the school like tuition, fees and on-campus housing. Indirect costs are those not paid directly to the school but still associated with your attendance. Examples of indirect costs would be off-campus housing, books, transportation and personal expenses like laundry, phone service, and entertainment. Very often, the indirect costs are more substantial than the expenses derived directly from the school. Therefore, it's important to consider ALL costs before you stick a price tag on a particular school.

Cost of Attendance Worsksheet

Consider the following Cost of Attendance Worksheet when putting your college financial plan together. To help you determine some of these costs, refer to your prospective college's website or admission brochure. Most will break down expenses similar to what is shown below.


Cost of Attendance Worksheet:

Tuition: ________________________
+
Additional Fees: ________________________
+
Books and Supplies: ________________________
+
Room and Board: ________________________
+
Transportation: ________________________
+
Other/Miscellaneous: ________________________
=
Cost of Attendance: ________________________


It's a good idea to calculate the cost of attendance at each prospective school. While school A may have higher tuition than school B, school B could have more affordable housing. Also, if you are planning to live off-campus, consider the housing prices in the area surrounding the school. The city's Chamber of Commerce can provide you with apartment listings and renters insurance prices. If a school is in an urban area, housing prices could be much higher than a school in a rural part of the state. You simply want to compare apples to apples if you are trying to put a price tag on several different schools.

Now that you have determined the costs associated with attending, let's see what money you and your family have to contribute. It's best to be honest here. You don't want to over-estimate and leave yourself a short down the line. This amount is officially referred to as the Expected Family Contribution or EFC. Remember this term. You'll hear it again.


Cost of Attendance Worksheet:

Tuition: ________________________
+
Additional Fees: ________________________
+
Books and Supplies: ________________________
+
Room and Board: ________________________
+
Transportation: ________________________
+
Other/Miscellaneous: ________________________
=
Cost of Attendance: ________________________
-
EFC: ________________________
=
Financial Need:


Once you have subtracted your EFC from the Cost of Attendance, you are left with your Financial Need. This is the amount of money that you will need in the form of financial assistance from the school or your rich grandmother. Assuming you don't have a rich grandmother, let's see how you're going to pay this balance.

First, you have to "apply" for aid with your school in order to get the assistance you need. This is going to require a little work on your par t...but don't worry ...it's painless, free and, who knows, it could lead to some significant money coming your way! Don't assume your prospective school is going to automatically determine your financial aid package for you and subtract that from the amount you owe. But if you happen to know what your school is offering, please continue with the worksheet below. If you need help understanding what aid is available to you and how to get it, please refer to the sections titled Types of Aid Available and FAFSA - The Heart of the Aid Process. Once you have this information available, be sure to come back and complete the rest of the worksheet.


Cost of Attendance Worksheet:

Tuition: ________________________
+
Additional Fees: ________________________
+
Books and Supplies: ________________________
+
Room and Board: ________________________
+
Transportation: ________________________
+
Other/Miscellaneous: ________________________
=
Cost of Attendance: ________________________
-
EFC: ________________________
=
Financial Need: ________________________
-
Scholarships: ________________________
-
Work-Study: ________________________
-
Perkins Loan: ________________________
-
Subsidized Stafford Loan: __________________
-
Unsubsidized Stafford Loan: __________________
-
PLUS Loan: ________________________
-
Private Loans: ________________________
-
Other Aid: ________________________
=
Unmet Financial Need: __________________


Your Unmet Financial Need is exactly that - ...the amount of college costs that is unmet by your EFC and/or your aid package. Many schools will be able to produce a package that brings your Unmet Financial Need down to zero. That's great!...but be careful. You must pay attention to the types of aid that makeup of the total package. How much of it consists of grants and scholarships that don't have to be repaid? How much consists of loans that must be repaid? If Work-Study is listed, you won't receive that amount until you've worked for it.

Your school's financial assistance package (or award letter) represents their best offer based on your financial situation at the time of application. While you may disagree with their offer, don't think of this like buying a home or a car. Most schools will not negotiate. But they will talk to you and reconsider things if your financial situation has changed. Every school has the authority to use "professional judgment" to reassess their decision. Simply be honest and don't threaten. Aid administrators have heard it all. More often than not, an agreeable resolution can be found.

What Determines How Much I Can Get?

How much college money will I get is at the top of nearly every incoming college student's mind. There's no easy answer to that that can be given on a website. A basic principle that exists among all college aid offices is that the student and/or his/her family is expected to pay "something." What that "something" is, can be quite different from your interpretation. Not only can this amount differ between you and the school, but it might be different between the multiple schools to which you are applying! Each school has its own unique set of circumstances and characteristics (e.g. tuition, housing, lab fees, private vs. public, etc.) that affect a student's eligibility and/or need. Really, the Pell Grant is the only assistance program that should not differ from school to school. So it's impossible to tell anyone exactly how much aid to expect, since so much depends upon where a student winds up going to school.

Various Factors

Because each school is unique, it stands to reason that each school's aid package will be unique. Take for instance a private college where tuition, alone, is $10,000/year. It's very possible that a prospective applicant to this school might get a number of loan offerings and an institutional scholarship. Private colleges realize their cost of attendance is much higher than a public university and have to actively engage in something called "tuition discounting" to bring their overall cost to a manageable/attractive amount. Tuition discounting, simply stated, is the practice of reducing a student's cost of attendance by replacing a portion of their tuition with money provided by the institution or other outside entities (endowments, philanthropic groups, etc.). This practice is mentioned in reference to private colleges, because of their relative high cost. It also exists at public colleges and universities, too. In this example, the same student, who applies at a traditional four-year university where tuition is much cheaper, might not be offered anything but loans.

The point being, when it comes to constructing a student's aid package (especially merit-based scholarships), the list of factors in how much assistance they'll be offered can be extremely long. Date of application, test scores, scholarship interview, religious affiliation, financial situation...you get the picture. All of these things could mean something different to every school you're applying. Try to concentrate on the things you have control over...pay careful attention to deadlines, prepare well for SAT and ACT exams, be creative and unique in your scholarship essays. These things can and WILL make a difference.

As we just stated, the EFC comes from the FAFSA. Our section titled FAFSA - The Heart of the Financial Aid Process goes into greater detail about what goes into completing the application. The FAFSA must be completed in order to be considered for most federal and some institutional aid programs. It's a good idea for every prospective undergraduate school student to complete the FAFSA in the January preceding their first term of enrollment. The FAFSA is available online at www.fafsa.ed.gov or in paper form at most colleges and high schools. (If your first term of enrollment is a summer term, check with your school to get the correct year's application).

The FAFSA is free and relatively simple to complete. You would be well-advised to have yours and your family's federal tax returns done before you begin completing your FAFSA. It is not necessary as you are allowed to "estimate" information that is requested on the FAFSA. Just know, you will likely be asked to provide a copy of your completed tax return later. If there are substantial differences between what was originally reported and what the tax return shows, it will probably affect your EFC once the corrections are made.

Last Updated: 07/28/2014