NEW YORK (MainStreet) — When my high-school senior began applying to colleges this school year, a flood of dollar signs hit me in the face: dollars for school, dollars for loans and dollars for supporting him when he may have to move back home to pay off the debt.
While there remain “excellent opportunities at lower-priced public four- and two-year colleges,” as Ronald G. Ehrenberg of the Cornell Higher Education Research Institute told me, the truth is that if your teen, like mine, aspires to go to a top-tier school, visiting a school website with calculator in hand may induce sticker-shock as you realize earning a Bachelor’s could easily cost a quarter of a million dollars. Schools like Sarah Lawrence, the University of Chicago, Columbia University or Washington University in St. Louis—the four most expensive schools in the country according to Forbes—can already top $60,000 a year and are sure to cost more by the time your graduate leaves with diploma in hand.
And after burning through this mountain of cash, a scan of the Quick Facts page at the Center for College Affordability reveals 8 out of every 10 graduates move back home after college; its helpful graphic triggers nightmares of an ever-expanding brood of kids who will turn your calm retirement home into a rowdy frat pad. Golden years? Empty Nest? It’s looking more like I’ll be an involuntary landlord who moonlights at Home Depot. For. Ev. Er.
But take a deep breath. College pricing has gone the way of cell phones and tickets for Broadway shows. Remember the phone that cost $500 but you got it for $50 with a coupon and a two-year commitment plan? The half-price tickets you got for the Spiderman musical? The “price” of college is like a target no one is aiming for. What really matters is the “net price.”
The “net price” equals the college sticker price minus scholarships, grants and other financial aid. You can visit any school’s website and find a “net price calculator,” a required tool since Congress amended the Higher Education Act in 2011. Net price calculators, according to Ehrenberg, can give families a good sense of what they will actually pay. But at some nonprofit institutions, he says, “said policies are less transparent and the calculators may less useful.”
Thus the incentive behind the new White House College Scorecard that President Obama launched right after the State of the Union. “Taxpayers can’t keep on subsidizing higher and higher and higher costs for higher education,” he said. “Colleges must do their part to keep costs down, and it’s our job to make sure that they do.” This handy website tool even has a cool average cost indicator designed to resemble a car speedometer so you can tell your child, “You can’t go to that one… it looks like we’ll be speeding!”
To avoid driving over the cliff, I turned to Jonathan Robe of the Center for College Affordability and Productivity for his score on the Scorecard. “It is difficult for many to use, and it's hard to tell how much information it really does convey in a useful manner,” he said. And while he’s sympathetic to calls for more consumer information in higher education, he's not hopeful for any grand-scale reform.
“I'm skeptical it will bring about the revolutionary change in higher education that many policy analysts say it will,” Robe said.
He’s probably right. But by using the Scorecard, a variety of Net Price Calculators, and the CollegeBoard’s “Trends In College Pricing” report, I soon discovered that the average net price of full-time college is actually closer to $20,000 a year…or more than 50% off the premium price! Who could pass up such a deal? By now you, and I, are salivating to get this discount, and the full-price sticker-shock has served its purpose: to keep us from noticing that at even 50% off, we’re still likely paying more than double what it cost for our own degrees. So forging ahead, you may naively wonder, “Can I get this big discount if my kid is smart, talented or athletic?” Answer: probably not.
While traditional scholarships still exist for exceptional talent, athletic skill or academics, this old definition of “scholarship” has become “merit aid,” and all of the Ivy League and public universities now only give awards based on “need.” Receiving merit aid will only reduce your determined “need” at these schools, thus putting you back at square one.
“Students are far more likely to receive need-based aid than merit-based aid,” Robe said. “Some schools may try to push need-based aid under the umbrella of ‘scholarships,’ because some students and families--particularly ones that identify as ‘middle class’--may shy away from need-based aid because of the connotation that recipients are poor.”
But the reality is, if you want the best price at these schools, you will not only need to be poor, you will have to prove you are poor. And since you probably feel poor enough to “need” half-off, you might be curious—who will determine your level of need-based aid? Hint: It’s not you.
Nope. You can also forget that selfish notion of hanging onto your money instead of paying for your (legally adult) child’s education, because it’s no longer a choice. It is expected. Thus the Expected Family Contribution, a.k.a. the EFC.
The EFC is sort of the net price specifically tailored to you and your finances. Several web-based calculators will give you a rough idea of your EFC, but to find out your true EFC you’ll need to abandon all hope of privacy and fill out the FAFSA. The FAFSA is the Free Application for Federal Student Aid administered by the U.S. Department of Education, which gives out $150 billion dollars of college aid a year. This application is entirely online and can be linked to automatically enter your tax return information via the IRS Data Retrieval Tool, saving you both time and hacker paranoia.
Between wading through the acronym soup of the EFC and FAFSA, you’ll also need to fill out the CSS, a.k.a., the College Scholarship Service Profile administered by the nonprofit CollegeBoard. The CSS/Financial Aid Profile helps determine all non-federal aid and is for colleges that feel the FAFSA is not invasive enough. On this form, you’ll include additional assets, such as the value of your home. In addition, many individual financial aid offices require even more forms. And you thought cashing in your rebate at Staples was complicated!
Once you’ve completed the FAFSA, the CSS, the extra forms required by the college(s) your child applied to and then received your financial aid offer along with the acceptance letter… you’re all set, right? Sorry. You’ll need to reapply every year, because financial aid is not a Groupon.
“But families should realize that the typical private institution gives back over 40% of its tuition revenue in the form of grant aid,” Ehrenberg said. “And most institutions will at least consider altering their said offer if a family has a better offer from a competitor. So apply to a variety of places and don’t be bashful about negotiating.”
Ah-ha! Just like the flea market—when discounts and coupons don’t pan out, there is always haggling. So don’t be shocked when you look at the sticker price of your child’s dream school. We may have no idea where our son will end up, but with three out of four students awarded some kind of financial aid, even at Sarah Lawrence the odds are we’ll get a discount.