How to Choose the Right College

Most families start searching for colleges based on students’ academic level, career goals, sports teams, parent expectations, and most likely their financial situation. Other families are blinded by the financial picture and think that their local community college is the only option because that’s the cheapest option. While all of these considerations are important, there might be a better approach. We’re going to cover how you can think about it below.

Before diving in, as you’re thinking about college in the future you may want to start preparing now. Contributing whatever you can afford each month to a 529 plan now can give your child many more options when attending college in the future. Plus, if you don’t use the funds you may be able to roll it over to a Roth IRA. Get started with your 529 plan.

This article is a guest post, provided by our friend, Rynda Wilk at College Aid Pro.

How to Shop for the Right College

Shopping for college can be likened to buying a car. Here is an example. Person 1, let’s call her Ella, has always dreamed of owning a sports car. She gets her first job, immediately goes shopping for that dream car, and drives home a brand new Nissan 350Z. It checks all the boxes for her. She couldn’t pay cash, of course, but she had a small down payment and got a loan for the rest.

Ella is on cloud 9! Three months later, she’s not quite sure why, but she is running out of money before the end of every month and getting further behind on some bills. She drives her car to work every morning and feels less excited by the driving experience.

Ella considered what was important to her in the moment when buying her car, but didn’t consider the longer-term repercussions of taking on a financial responsibility that she couldn’t afford. After a year of owning the car, she is deep in credit card debt, completely stressed out, and hates her car. 

You don’t want to be Ella when thinking about college. It’s important to consider your finances first and then fit the other puzzle pieces into the picture.

Here is another example. Person 2, Jake, always dreamed of owning a sports car too. When he gets his first job, he buys a well-maintained but used 2010 Hyundai Genesis. He had enough cash to pay for half and got a small loan for the rest.

He enjoys driving his new car back and forth to work but always feels a little nervous about long drives. Once he bought the Genesis though, he decided to hang onto it for as long as possible because the transaction costs of switching cars are costly. Plus, he didn’t have time to go car shopping with his new job.

You don’t want to be a Jake either. Remember to consider the finances first then find the optimal fit.

So, how does this relate to shopping for college? Many families don’t think about finances first. They wait until the end of the college planning journey to talk about money because without professional help it can be extremely difficult to understand at earlier stages in the process. It’s time to change that with these five steps.

1. Understand How Financial Aid Works

Financial aid consists of need-based aid and merit-based aid.  Need-based aid provides money based solely on financial need. Forms of need-based aid include grants, the federal work-study program, and loans.

Merit-based aid is offered to students based on their academic performance and achievements, usually in the form of scholarships. In order to figure out how much a college costs, you need to know how your financial and academic information factor into your “out the door” price. While each college has its own way of determining how they offer aid, there are steps you can take to gain clarity on this process.

Figure out your EFC (Expected Family Contribution); the amount of money that colleges estimate you can afford to pay out of pocket. Calculate your EFC using the Federal Methodology. Use the FAFSA estimator to get your EFC as defined by the US Department of Education and find out if you will qualify for federal student aid other than loans. This is especially helpful when applying at schools that use the FAFSA as their only financial aid form applicants. 

You can also estimate your EFC using the Institutional Methodology. Some schools use the CSS Profile to determine need. How schools use provided information to come up with an EFC can vary, but, in general, the CSS Profile is much more comprehensive than the FAFSA. Many families, especially those with a lot of home equity, and two household families may find that their Institutional EFC is higher than their Federal EFC.

How does this information helpful when you are researching? Let’s say you have calculated your EFC using the FAFSA to be $10,000 per year. You look at a private school that offers need-based aid to about 75% of admitted students and meets 75% of needs with grants. The school’s sticker price is $50,000.

Your need would be calculated as the sticker price less your EFC ($50,000 – $10,000=$40,000). Since 75% of $40,000 is $30,000, you would expect to get the aid of about $30,000 from this school, leaving you with $20,000 to cover with scholarships, loans, or savings.

If this were a public school and you were applying as an out-of-state student, you would not expect to get any need-based grants as most public universities only give this kind of aid to in-state students. 

The other half of the financial aid story is merit aid. Many schools, especially private schools, offer nice merit-based scholarships. Contrary to popular belief, you don’t have to be a genius to get merit aid. Look at the average GPA and test scores for each school.

For schools that offer merit aid, if you are in the top 25% of the student body based on those academic measurements, there is a decent chance you may be offered a merit scholarship. Some schools offer automatic scholarships if you meet certain academic criteria. 

Ivy league schools and some other top-tier colleges famously do not offer merit scholarships. If you plan to apply to the Ivies, know that the only aid you may be offered will be need-based. 

2. Build Your Budget

How much money will you bring to the table to pay for college? You may have more sources than you think. To find out, add together the following:

• Money saved specifically for college such as in a 529 savings account. (Include ongoing contributions that will be deposited in these accounts through the end of senior year in college.)
• Money promised from a friend or family member
• Money that will be saved from the family’s monthly cash flow when you leave for college. (Think lower grocery bill, discontinued extracurricular activities, etc)

Next, consider how much you are willing to borrow. Deciding this upfront helps avoid the desire to borrow too much when you’re accepted to a school that doesn’t meet your financial needs. Use this scale as an easy guide to determine your borrowing comfort:

• Ideal: No borrowing
• Great: Borrowing $27,000 or less (about the amount you can borrow in federal student loans)
• Good: Borrowing less than or equal to the amount of your expected first-year salary
• Caution: Borrowing more than you will likely make the first year out of college

Which level are you comfortable with? Add that to your college budget.

3. Shop For Schools Within Your Budget

With the financial parameters set and a list of your other important criteria, you are ready to shop. Each school has a Net Price Calculator (NPC) on its website to help you understand how much it costs to attend that school. These calculators don’t always provide an up-to-date or reliable estimate. The more questions you have to answer, the more likely it is to give you a better estimate, but remember, it’s only an estimate.

Because there are so many school options this can feel overwhelming. Use a website that takes your personal finances AND academics into account to give you a more accurate cost estimate. College Aid Pro’s database can be a great tool for this. Sign up for a free account and use the search tool to find schools that fit your budget AND meet your other needs. Otherwise, narrow down your choices by self-identifying into one of the following groups to get some suggestions:

High Need, High Academics

Your EFC is much lower than the sticker price. You have a very high academic standing when considering GPA and ACT/SAT scores.

• Consider applying to Ivy League colleges, they may meet most, if not all, of your needs.
• Find schools that give automatic scholarships based on your academics.
• Apply to in-state schools – Not only is the tuition usually reasonable, but if you can attend while living at home, but you’ll also save on room and board. Take advantage of state-sponsored scholarships and reciprocity agreements to schools in nearby states.
• Seek out private schools offering a lot of need-based aid, merit aid or both.

High Need, Average Academics

Your EFC is much lower than the sticker price. Your GPA and test scores are average or below average.

• You may still qualify for automatic scholarships.
• Apply to in-state schools – Not only is the tuition usually reasonable, if you can attend while living at home, but you’ll also save on room and board. Look at state-sponsored scholarships and reciprocity agreements to schools in nearby states. Also, consider 2+2 programs allowing you to transfer to an in-state institution upon successful completion of an associate’s program at the local community college.
• Seek out private schools offering a lot of need-based aid and don’t rule out merit aid at private schools.

Low Need, High Academics

Your EFC is not that much lower than the sticker price. You have very high test scores and GPA.

• Only apply at Ivy League schools if you can pay full price.
• Find schools that give automatic scholarships based on your academics.
• Apply in-state to schools that provide the best academic and personal fit.
• Look for private schools that offer the most merit-based scholarships.

Low Need Average Academics

Your EFC is not much lower than the full sticker price. You have an average or below-average academic record.

• You may still qualify for automatic scholarships.
• Apply to in-state schools. Consider 2+2 programs allowing you to transfer to an in-state institution upon successful completion of an associate’s program at the local community college. Check out available state-sponsored scholarships and reciprocity agreements to schools in nearby states. 
• Don’t rule out merit aid at some private schools. If your test scores and GPA are in the top 25% of the student body and the school gives out a lot of merit scholarships, you may qualify.

4. Apply and Appeal

The schools you apply to should fit within your college budget while also meeting your academic and personal needs. Be sure to complete the FAFSA and any other financial aid forms required by the schools on your list. 

Once you receive acceptance letters and financial aid awards, it’s time to compare your options and decide if it makes sense to appeal for a better offer. Most schools have a set process for receiving appeals – start by checking the website for instructions. If you have any of the following scenarios, you may have a case for appeal.

• Your financial situation has deteriorated in some way
• You have something to add to your application information that would make you a better candidate for merit aid
• The financial aid application didn’t represent your true financial picture
• A competing school offered you a better package

When crafting an appeal letter:

• Have the student make the request
• Show enthusiasm for attending the college
• Provide evidence to support your appeal whenever possible
• Keep the letter positive and professional, but also honest and genuine
• Try to keep it short, preferably one page

5. Make Your Selection

At the end of the day, the school that best meets your financial, academic, and personal needs should probably be your winner. If none of your options will work within your budget, it’s time to expand your options and consider other strategies like attending community college for a couple of years, applying for private scholarships, joining the military, taking a gap year, going to school internationally, and the list goes on. 

With an open mind, you will find a path to reach your career goals. Putting finances first will ensure you don’t regret your choices after graduation. Even if you have to go with your second or third choice because of cost, you may be trading a handful of years of compromise in exchange for a lifetime of comparable financial ease. Your 30-year-old self will thank you.

The Bottom Line

Finding the right college isn’t always easy but if you have a sound process and are able to stay focused on what works for you then you can find the perfect college that you can also afford. It’s important to make a budget and exhaust all of your avenues to help pay for school before giving up and settling for one you don’t want. Saving for college now can make all the difference in being able to send your kid to the college of their dreams later.

Frequently Asked Questions (FAQs)

When do you have to decide on a college?

Each college that accepts you will give you its own deadline as to when you need to accept and notify them of your intention to attend. Most colleges select May 1st of the year you’ll be attending (in the fall). That date may vary and it could be different if you have been awarded a scholarship that you need to accept.

When should you start looking at colleges?

It’s never too early to start looking at colleges that you may want to attend. It’s recommended that high school juniors start exploring colleges and making their list so that they can apply on time and maximize their potential of being admitted.

Can I accept more than one college offer?

Yes, you technically can but you’ll likely have to put down a deposit at both schools. You’ll also be taking up a spot at any college you don’t end up attending that could go to someone else. This isn’t recommended but it is certainly a possibility.