The College Search Family Caught in the Middle

The college search family caught in the middle – Can’t afford the sticker price of college, but too wealthy for financial aid.

This is the type of college search family I focus on most on mykidscollegechoice.com.

Characteristics of the College Search Family Caught in the Middle

1. Has some college savings set aside, but not enough to pay for four years of tuition plus room and board
2. Typical family income is in the range of $150,000 – $300,000 , but this could be higher or lower depending on individual family circumstances
3. Has many other financial obligations that will make it hard to cash flow the full cost of college with monthly payments
4. One student in college at a time, or maybe a year of overlap with two kids in college
5. When running a tool like the fafsa4caster, Expected Family Contribution is around $50,000 or higher

We read the articles that say, “Don’t pay attention to college sticker price!” but when we use a college’s Net Price Calculator that only includes financial aid and not merit-based aid, it doesn’t show any aid.

Recently, I tried a new tool, MyinTuition. It is like a simplified Net Price Calculator that you can use for multiple colleges to see what kind of deal they may provide your student. Currently there are only 14 participating colleges and they are all super-competitive: Amherst, Bowdoin, Carleton, Colorado College, Columbia University, Dartmouth, Mount Holyoke, Pomona, Rice, UVA, Vassar, Washington and Lee, Wellesley, Wesleyan and Williams. Of these  schools, only Bowdoin, Carleton, Colorado College, Mount Holyoke, Rice, UVA, Washington and Lee, and Wesleyan provide merit-based aid. The other 5 schools only offer need-based aid.

For the financial characteristics I plugged in, most of these schools didn’t want to provide any aid other than a student loan. Some offered very small grants or need-based scholarships, but keep in mind that most of these schools have sticker prices of $65,000 – $70,000 per year with room and board included.

One major family characteristic that will impact the amount of need-based aid you are offered at colleges like these is how many students you have in college at the same time. If you have two kids in college at the same time, it will typically cut your Expected Family Contribution in half for each child.  The thing to remember here is that it only applies for the years where you have two kids in college at the same time. So you may pay $30,000 for each child the year you have two in at the same time, but $60,000 per year when there is only one student left in college.

Tips for the College Search Family Caught in the Middle

1. Merit-based aid will be your best option for bringing down the sticker price of college.  The amount of merit aid your student will be eligible will be based at least in part on his or her high school GPA and ACT or SAT scores.
2. Assuming you won’t qualify for need-based aid, and without any merit aid, your in-state public colleges will be the most affordable 4-year colleges (based on sticker price).
3. In most cases, it’s still worth filing the FAFSA even if Net Price Calculators show you won’t be offered any need-based aid.  You just never know what a school is actually going to offer (both in need-based and merit-based aid) until you receive their Financial Aid Award Letter.
4. Some schools don’t bring out the merit-based scholarships until after you have filed the FAFSA.
5. At the very least, filing the FAFSA will give you access to federal Unsubsidized Direct Loans ($5,500 available to freshmen).  These usually carry a lower interest rate than any other student loans.  Even if you don’t plan to take out loans, it may be worth having this in your back pocket just in case.
6. Be careful not to let your student fall in love with a school you won’t be able to afford or don’t know how you will pay for.
7. Determine your position on taking out loans to afford a college and who would be responsible for paying any loans back – parents or student?

Next week, I will share some thoughts on how to avoid getting too far down the path with schools you won’t be able to afford.  I think there is a better way to search when you are a college search family caught in the middle.