The headline tuition and housing fees for a college is almost never what you will need to pay unless your family’s income is so high that you would not qualify for any financial aid at all. How much financial aid a student receives to pay for the costs of attending college will depend on:

• Parental income and assets where the higher the level of parental income and wealth, the less financial aid there will be for the student, and

• College financial resources and how each college chooses to allocate these resources to students with financial need. Some colleges are more generous than others. Harvard for example, funds all of the costs of attendance for students with annual family income less than $65,000, while students at Yale with annual family incomes less than $65,000 pay less than $3,000 a year to cover their costs of attendance.

Unless your family has very substantial income and/or assets, it is prudent to check the financial aid situation college by college. Not every college is generous with financial aid, and you need to know that upfront. If your student sets his heart on a college that offers you a lousy financial aid package, you are left with only bad options. You either have to tell your student he cannot attend that college and disappoint him or you are forced to take on extra debt or you have to sacrifice your discretionary spending to cover those unexpected additional college costs.

What is financial aid?

Financial aid can be given out to students with financial need in several forms:

• Need Based Grants and Scholarships given by the college to the student and which the student does not need to repay.

• Federal Loans that are either offered to as part of the financial aid offer or these loans can be applied for to help pay for your college expenses. Federal loans have flexible repayment terms and are generally cheaper than student loans made by private lenders. There are 4 types of Federal loans:

  • Direct Subsidized Loans which when combined with Direct Unsubsidized Loans range between $5,500 and $12,500 per year,

  • Direct Unsubsidized Loans which when combined with Direct Subsidized Loans range between $5,500 and $12,500 per year,

  • Direct PLUS Loans available to parents of undergraduate students. Eligibility is not based on financial need, but a credit check is required, and

  • Direct Consolidation Loans that are available to consolidate all Federal loans and made repayable to a single servicer.

• Pell Grants given to students with exceptional financial need, and which do not need to be repaid. The maximum Pell Grant award for 2022/2023 is $6,895.

So, how do you find out how much financial aid you can get from a college?

Use the Net Price Calculator

Every college has a Net Price Calculator (NPC) or Net Cost Calculator (NCC) embedded in the Financial Aid section of their website. The Calculator is designed to provide an estimate of how much financial aid a student is likely to receive from that college if they were to be accepted for admission.

The Calculator requires basic financial information from the student’s family including information about parents’ income, taxes paid, parents’ and students’ assets, number of family members and number of kids in college. Based on the information provided, the Calculator will estimate what amount the family will be expected to pay and what amount will be provided in financial aid.

The more accurate the information that you input into the Calculator, the better the estimate you will get on the financial aid available to you from the college.

You need to repeat the process with every college on your list because the amount of grants and scholarships available vary from college to college. An estimate from one college will not be good when applied to another college.

Do not be Shy about Asking your Parents for Information on their Income and Assets

The quality of the estimate you get from the Calculator will only be as good as the information you feed into it. If you do not want a nasty surprise after you receive your acceptance letter, you need to make sure before you apply that your family can afford to pay for whatever amount that will not be covered by financial aid.

If you know ahead of time that there may be problems for your family to pay the difference, you can start a conversation with the college’s financial aid office whether they have flexibility to stretch and accommodate your financial needs. If they can help you out, then you can apply with confidence, but if they cannot help you as much as you need, then you and your parents need to consider a Direct PLUS Loan or a private student loan which will be more expensive. If none of these options work, then you should re-consider applying to that college and look for another college with more generous financial aid.

Filing FAFSA (Free Application for Federal Student Aid)

Once you have figured out that you can afford the cost of attendance at the college, you will still need to submit the FAFSA form to officially apply for financial aid.

Even though FAFSA itself sets a deadline for June 30, the colleges set much earlier deadlines usually by January or February as they need time to calculate how much grant money can be awarded to all their applicants.

Filing your FAFSA form on time is crucial your receiving the financial aid you need to pay for the costs of attending college.

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