“By and large, colleges aren’t doing a good enough job explaining to applicants how admissions choices stem from their policy,” says Rebecca Zwick in her New York Times op-ed piece, Why Applying to College is So Confusing. “While most colleges list some of the factors they consider in admission—such as leadership and involvement in extracurricular activities—they need to go further to explain how applicant characteristics are assessed and weighted.”
In her essay, Zwick attempts to shed light on the college admissions process, paying close attention to institutional mission. Because each university will have a different mission—for example, the mission of Berklee College of Music will drastically differ from that of Rensselaer Polytechnic Institute—each school’s specific admissions policies and procedures, in building the student community, will reflect that unique institutional goal.
However, for more general liberal arts colleges or big state schools, and for applicants who are undecided on their major, the admissions process is not spelled out so succinctly. In these cases, how can you, as students and parents, find a college that fits you? How can you successfully navigate the confusing college application process—and even get a competitive edge?
At Edmit, we appreciate how stressful the college application process can be, but we found one glaring omission in Zwick’s argument—finances. College mission, the ideal student, what makes a successful application essay—these are all somewhat nebulous and subjective criteria. So instead of approaching your college search with the mission of finding the perfect college, why not approach the process first as a well-informed consumer?
Read on to get an overview of what you should know before starting the college search.
The consumer approach to college starts with price and affordability, looking at how much you can afford (e.g., financial fit) above all other factors. It’s using net-price calculators and understanding your expected family contribution, as well as what the total price will be to get your four-year degree. Once you know which schools you can afford, you can then look into cultural fit.
When you start the college application process with a consumer-first approach, don’t just think about your time at school. Take the long view, considering your career goals and how long it will take to pay off any student loan debt you may accrue. After college, do you want to live in a city or rural area? Do you want to travel, raise a family, or start your own business? Think about your college financial obligations in terms of your goals, and the flexibility you will need to pursue those goals.
By leading with finances and diversifying your options, you can help reduce stress and take some of the confusion out of figuring out where to apply to college. If you’re finding yourself overwhelmed with the college application process, take a deep breath and crunch the numbers. Knowledge is power: The more you understand your present situation, the better you can prepare for the future.
Figuring out Which College You Can Afford
College affordability is a big question to tackle. It requires a detailed understanding of your current finances, and more than a little bit of predicting the future. But determining what you can afford to pay is a vital part of the process, and it will help you shape your college search, create your list, apply for financial aid, and have the best return on your investment.
Every family has a different financial situation, but there are a few key factors to keep in mind: Which universities align with your family’s budget? Which schools have good financial aid packages, covering scholarships, grants, and discounts? Can you avoid hefty student loan debt?
Your goal in answering these questions is to find a school that is a good financial fit.
The College Decision-Making Process: Understanding College Financial Fit
A college financial fit refers to schools where the cost of attendance aligns with a family’s finances, allocated higher education budget, and the school’s financial aid package. Finding a good fit ensures that you will pay a minimal amount of college expenses through student loans, personal savings, or other personal assets.
Which Colleges are a Good Financial Fit?
To determine financial fit, compare your higher education budget with the cost of attending a particular college. Your first step is to consider your family’s unique circumstances. Look at your finances, including any money set aside for college, like a child college fund (e.g., 529 plans), as well as your expected family income over the next four years. Do you expect your finances to fluctuate over the coming four years? Do you anticipate any major financial events in the near future, such as a real estate sale, stock market gain or loss, or retirement? Will the student be expected to get a part-time job to offset the college cost? Will you have more than one student in college at the same time? If so, how will this impact your need-based aid and other financial aid awards? (If you’re not sure, a given school’s financial aid office can get into the specifics with you.) In answering these questions, you’re attempting to construct as realistic a picture as possible of your finances, so you won’t have any surprises later—and won’t have to take on more student loan debt than you can afford. As you apply to schools and receive your financial aid packages, you will be able to factor in the “free money” you get in scholarships, grants, and discounts and use this information to make your final choice.
How Much Should We Borrow to Pay for College?
The amount you should borrow for college will depend on the college affordability and financial fit calculations specific to your family’s finances. Additionally, student loan types, amounts, and loan servicers will vary for both the students themselves and for parents. Should you go with federal student loan programs, or with private loans? Which repayment plans make sense for your plans after graduation? The personalized answer requires a critical look at available finances now, coupled with a realistic plan for future career, earnings, and repayment capabilities.
What’s Our Debt Tolerance?
Debt tolerance, also known as financial risk tolerance, is the amount of debt you can take on without jeopardizing your ability to make payments or compromising your credit score (and a healthy financial future). Calculating your debt tolerance requires knowing your debt-to-income ratio (e.g., your monthly debt payments divided by your monthly gross income). Experts recommend having a debt-to-income ratio no higher than 43 percent.
On The Balance, financial advisor Jodi Okun recommends borrowing only what you need to cover the cost of college, and once that’s determined, carefully selecting the type of student loan and sticking to a strict budget.
So, as you’re determining your debt tolerance, look at your finances, the colleges you are interested in, and how each school will impact your debt-to-income ratio, both now and in the coming years. Based on your expected contributions and student loan debt amounts, which schools fit your budget?
As NPR’s Planet Money notes, you’ll see two prices at any college: the sticker price and the net price. Sticker price, also sometimes called list price or published price, shows what colleges charge before financial aid (grants, scholarships, need-based aid, merit aid) is factored in.
If you’ve been to any big box store or supermarket and looked at price tags, you might have seen a suggested retail price listed in a small font below an item’s listed price. College sticker price is essentially the equivalent of that suggested retail price. For colleges and universities, this is the full price value of their higher education “product” (for lack of a better term). And just like in a retail environment, most students don’t pay full price to go to college. They pay a net price.
What is the Meaning of Net Price?
The net price is the price the student actually pays, once scholarships, grants, and other discounts are taken into account. It’s the sticker price minus any financial aid that the student does not have to pay back.
Because each family’s financial situation is different, it’s likely that each student may pay a different net price based on their unique financial aid package. Additionally, because a family’s finances may change from year to year, and tuition may go up each year a student is enrolled, the net price will likely change from year to year.
Will I Have to Pay the Sticker Price?
If you’re like most higher ed students in the U.S., probably not. There are many ways to chip away at the sticker price, and colleges don’t expect most of their students to pay in full. If you think you’ll qualify for financial assistance, there’s a good chance you’ll receive some need-based financial aid.
If you have stellar academic performance and/or athletic and extracurricular achievements, you may also qualify for merit-based financial aid awards (more on this below). These types of scholarships can be awarded from a specific school, as well as from local institutions such as religious organizations, nonprofits, trade associations, civic groups, and businesses.
How Do You Calculate the Net Cost of College?
Once you know your higher education budget, visit the websites of the colleges and universities that interest you and check out their net price calculators. (The U.S. Department of Education also has a centralized college net price calculator where you can search for specific schools directly.) U.S. News and World Report notes that some colleges may use a different term, such as personal cost estimator or student financial aid estimator. It’s essentially the same thing as a net price calculator.
Note that these calculators only provide estimates to start, and specific award levels will vary by student need. Additionally, many net price calculators only take financial need into account and won’t necessarily factor in merit aid. (It varies on a case-by-case basis by calculator; check with the college or university financial aid office if you’re not sure.) Treat net price calculators as a starting point: these estimates will give you baselines you can use to start your specific, personalized research. Based on your college net price research, you should get an early sense of which schools are a financial fit with your budget. From there, you can narrow your list to the schools you’ll apply to.
There are a lot of different schools out there, but they fall into a few broad categories. To understand your options, you have to understand a few key terms.
College vs. University
Americans often use the words “college” and “university” to mean the same thing, with “college” being a catch-all term to cover all subjects related to higher education. While there can be lots of overlap between colleges and universities, there are a few distinctions.
In the United States, the term “college” can refer to:
The term “university” refers to:
Overseas, the term “university” is used similarly to how Americans use “college” (e.g., “At university, I studied physics”).
Public vs. Private
The defining difference between public and private institutions is how they are funded. Public schools are funded mainly by state governments, while private colleges are supported primarily by their own endowment funds and students’ tuition fees. Both can also receive donations from individual donors. Because public schools receive state funding, they have to adhere to various laws regarding religious affiliation, accreditation, and financial aid. Along with their different funding sources, public and private schools have different costs, financial aid offerings, accreditation, religious affiliation, size, degree and extracurricular offerings, and prestige.
How to Find a College or University
There are nearly 5,000 colleges to choose from in the U.S., and there are many factors to consider at any given college or university, so it’s important to determine what matters most to you. As you begin your college search, keep your budget in mind, and pay attention to a school’s tuition and financial aid offerings as well as academic offerings, campus size, and other important features.
When starting your preliminary college fit research, set up a spreadsheet or chart with the following guidelines:
By answering these questions, you’ll get a preliminary sense of which colleges will be a good fit. Once you’ve identified your top fit schools, you can then schedule in-person visits for a campus tour and interviews with college admissions counselors, and select the schools you want to apply to (and your top-choice colleges among that list).
>>MORE: the best college research tools
There are four types of financial aid for college students: grants, scholarships, student loans, and work-study programs. Depending on your family finances, financial need, academic record, extracurriculars, and demographics, you may be able to apply for all four types of financial aid.
Grants and Scholarships
According to the U.S. Department of Education, grants and scholarships are “free money”—money allocated for higher education expenses that does not need to be repaid. Grants and scholarships can come from federal or state governments, businesses, religious groups, civic associations, and nonprofit organizations, or directly from one’s two- or four-year college or university. Grants and scholarships can be one-time gifts or can recur over the duration of one’s education, and many are awarded on a competitive basis.
Scholarship money, most often, must be earned. They can typically be awarded based on two different factors. In one scholarship type, you might have to meet specific criteria, such as being part of a certain demographic, religion, or medical minority. Another option is merit-based, meaning you have reached some notable achievement in academics, arts, athletics, or some other sector. Many merit-based scholarships require that you maintain some level of academic standing to retain the scholarship. More on that later.
Who offers scholarships?
“Institutional scholarships” are offered by colleges and universities for their own prospective or currently enrolled students. This money can come from the institution’s endowment returns, annual gifts and general funds.
Every school will have different requirements for accessing their scholarship money. Some might require a certain level of academic achievement in high school (i.e., 4.0 GPA). Other schools, like Columbia University’s School of General Studies, might encourage every prospective and current student to apply for institutional scholarships regardless of academic history.
“Private scholarships” could come from many places: a company, religious organization, community group, philanthropic donor, you name it. Many will be available to any undergraduate students pursuing a bachelor's degree at a four-year college. Others will be for those pursuing a specific major or area of study. Prospective graduate students aiming for a master's degree will also have scholarship opportunities.
There are many scholarships that you will not be eligible for, so plan to review eligibility requirements before committing any time and energy to putting together a scholarship application. Private scholarships tend to be more competitive and offer smaller amounts of money than institutional scholarships.
>>MORE: All About Scholarships
Student loans are funds allocated for higher education expenses and will need to be repaid, with interest, after graduation. There are two types of student loans: federal and private. Federal student loans, administered by the U.S. Department of Education, fall into four areas:
Private student loans are awarded by private institutions, such as local banks, national banks, and credit unions, and they must be used for education expenses.
Historically, federal student loans have lower fixed interest rates than private student loans - but this is not always the case. Additionally, federal student loan servicers may have more flexibility regarding repayment plans, including deferment and income-based repayment plans, compared to private student loan lenders.
The federal work-study program funds part-time jobs at participating colleges and universities around the country, enabling students to earn a pre-set amount of money each semester to put toward education and living expenses. Ideally, work-study jobs are intended to provide on-the-job work experience that relates to the student’s major, although each student’s work-study experience will vary based on campus need, job openings, and hiring practices. Federal work-study jobs are available to both part-time and full-time undergraduate, graduate, and professional students who demonstrate financial need.
Depending on the type of financial aid you receive, you may be able to use your financial aid award to pay for most higher education expenses, including tuition, room, meal plan, textbooks, administrative fees, and/or fees for on-campus activities (e.g., clubs, intramurals, athletics, etc.). Be sure to read the fine print for any financial aid package you receive to ensure it’s eligible to spend where you’d like to allocate it.
Need-Based vs. Merit-Based Financial Aid
There is one more thing you should know about financial aid as you start to research colleges: the difference between need-based and merit-based aid. Your family's financial situation will determine which you are eligible for.
Need-based financial aid refers to financial aid funding that’s awarded to a student based on their financial profile, and can include grants, scholarships, student loans, and work-study jobs. If a dependent student and their parents don’t have the financial means to pay for a given college, they may qualify for need-based financial aid. With the exception of the Iraq and Afghanistan Service Grants, most federal aid is need-based aid, with the federal government determining eligibility solely from a given family’s finances.
Merit-based financial aid typically comes in the form of grants or scholarships, often requires an application and/or selection via committee, and typically rewards a student’s accomplishments and talents, particularly in the areas of academics, athletics, arts, and volunteer or charitable works. Some merit-based aid may consider financial need in eligibility criteria; others will take a need-blind approach.
Aid from the colleges can be both need-based and merit-based.
How to Apply for Financial Aid
If you’re interested in receiving federal financial aid, you will fill out the Free Application for Federal Student Aid (FAFSA). Individual schools use the FAFSA to determine your financial aid package, including both grants and loans in the distribution of each award. Students typically fill out the FAFSA during their senior year of high school, but contact the financial aid office at the schools you’re interested in attending for specific eligibility criteria, typical financial aid award types and amounts, and application deadlines. Some schools also require students to fill out the CSS/PROFILE, which offers a more detailed look at a student’s financial situation.
Spend some time discussing what will make a good financial fit for you and how you'll go about researching colleges. With a sense of the types of financial aid that will be available, and how college pricing works, you will be ready to zero in on a college list.