It used to be that getting into college was about finding the “best” schools available and then giving them a shot. Now we all lie awake at night wondering,

How will I pay for college? 

When I was a high-achieving high school senior, I visited a few schools, wrote a couple essays, and then placed a handful of FedEx envelopes into the drop box by midnight on December 31st-- and probably not much before that. My family was large enough and had a small enough income that between my parents’ savvy planning and my earnings, I could attend a top-flight school and graduate with just a little bit of debt (and just the “good” kind-- federal loans).

Not so anymore: College costs have skyrocketed.

We wonder when the cost of an in-state public school soared well above $100,000 for four years. We scour message boards and buy stacks of books to understand how we can save enough money to send three kids to school at costs of up to $80,000 per year-- and climbing-- for out-of-state and private schools. We take seminars to learn how to prepare for the FAFSA and CSS profile, which will take into account family income beginning in January of the student’s sophomore year of high school. And we ask ourselves what happened between our generation and our kids’.

The grandparents are always telling us not to make too much money because it will cut into our financial aid. 

If you are at an extremely low income level, that could be true. The reality for the vast majority of families is that they make too much money to qualify for much, if any, financial aid, but not enough to afford to pay the sticker price of a college education without significant debt. Again, speak to your financial advisor to understand this issue fully. 

Should I put money in a 529 college savings account? Will my family be penalized if my kid earns “too much” at her summer job?

Keep in mind that income thresholds and savings for students may have a lesser effect on financial aid than you anticipate because of how student income is counted in the federal formula relative to how parental income is calculated. Again, speak to a financial advisor for clarification.

Do I give up my chances to get merit aid if I apply Early Decision? 

When you apply early decision to a US college, you are making an offer in contract, and if the college “accepts” your offer, you have a binding contract. A large part of the reason colleges offer merit aid is to attract students-- to increase their yield. When you apply early decision, you have in large part eliminated this incentive, giving up your negotiating power on merit aid. Can you still get merit aid when you apply early decision? Sure. Is it likely? Do your research on particular schools. Note that this does not relate to financial aid awards for schools that meet demonstrated need. 

So, how do we actually pay for college? 

1. Determine your annual budget per kid per year of college based on cash flow and savings. 

2. Decide whether your family is comfortable taking out any loans beyond the federal loans provided to those families that qualify. 

3. Ascertain whether you are at an income level where you would qualify for financial aid at the schools in which you are interested. You can run this through the College Board’s net price calculator, the cost calculator at an individual school’s financial aid site, and by confirming with the school’s financial aid office itself.

4. If you do qualify for significant financial aid, be sure to familiarize yourself with which schools meet all financial need and which do not.

   CTK Pro Tip: You may find that your expected family contribution at a school is calculated to be X, but when you receive your financial award letter, the school is not covering costs to make up the difference between what you can pay and what it costs to attend. In colloquial terms, the school has “gapped” you. Unless the school states explicitly that it “meets financial need” you should be prepared for this possibility.

5. If you do not qualify for financial aid but can’t pay full price, find schools where the list price is in line with your budget or where your kid has high enough stats to qualify for merit aid at schools known to offer merit aid.

I’ve created a free resource for my readers that compiles information about financial aid and merit aid at numerous schools. This resources includes lists of 

• Colleges that offer no merit aid, 

• Colleges that meet financial need for all students, 

• Colleges that cover all attendance costs for families below a specified income level, 

• Colleges that provide explicit guidance about how much merit aid students will receive (GPA and test score charts)

• Other colleges that offer significant merit aid, and 

• Additional resources for scholarships and low-cost colleges.