Financial aid can mean a lot of things, so we asked Certified Financial Planner Ann Garcia to dive into the nuances of the term, from free money like outside scholarships to federal loans and college work-study. Watch Ann’s full presentation on the different types of financial aid followed by specific topics submitted by families.
*Parts of the transcripts in this article have been edited for readability or an excerpt of the longer recording has been published.
Financial aid — the what, where and how
Despite having “champagne tastes with beer budgets,” Ann’s two children graduated from college debt-free with the help of scholarship money — and a financially savvy mom. In this presentation, Ann breaks down the different types of financial aid, who provides what, and the tools available to help your family plan.
Tips for applying for outside scholarships
Ann: If you are applying to colleges where you are not eligible for the scholarships they offer, specifically students who are applying to highly selective colleges — the Ivy Leagues, the Ivy Plus and whatnot that do not offer merit scholarships — and who are not eligible for need-based aid, you really want to focus on the outside scholarships because that’s where you’re going to get money.
Like I said, look close to home, look at your college and career center. Each of these scholarships has an application. So, if you think of the amount of effort it takes to do an application, look for ones that are at least $1,000 and that have the opportunity to renew them because a $250 scholarship takes about the same amount of effort as a $5,000 scholarship. Rather than applying for a bunch of small scholarships, you might be better off just getting an after-school job. It’s about the same amount of work, and you are guaranteed to get money from the job.
Figuring out institutional aid
Ann: What I would suggest is this: Early in your kid’s high school career, look up your in-state schools and what they offer for scholarships and on what basis they are awarded. Some colleges offer merit scholarships on the basis of unweighted GPA, and others offer it based on weighted GPA.
Looking at scholarships that are automatically awarded and on what basis can help you manage your child’s academic curriculum (and their GPA) so that you are hitting those targets. That’s one good way to keep in mind, Here’s our baseline cost for a four-year residential college experience.
If there are private schools that a lot of students at your high school are going to, chances are, those colleges offer good scholarships.
If there are private schools that a lot of students at your high school are going to, chances are, those colleges offer good scholarships. That’s usually why lots of people are going to them. They’re affordable.
Two good websites to look at — College Data and College Navigator — use slightly different datasets. I think College Data is much easier to use. It’s an easy way to just look up a college and say, Do they offer need-based aid? Do they offer merit aid?
A starting point I should have mentioned is there’s a tool on the Federal Student Aid website (StudentAid.gov) called the Student Aid Estimator. You can punch in your data there, and it will give you an estimate of what your Student Aid Index will be. You can take that number to say, What financial aid am I eligible for?
If your Student Aid Index is higher than the cost of college, you are not eligible for need-based financial aid. If it’s lower than the cost of college, then you are eligible for need-based financial aid. Many families are eligible at some schools and not at others.
You might have a Student Aid Index of $40,000. That means you will not get need-based aid at public schools, but you would at private schools. So, once you know what type of scholarship you are eligible for, and many students are eligible for both, you can start looking on College Data at the colleges you’re interested in. Just look up the school, go to the financials tab, and it tells you what types of scholarships those colleges award.
That’s a lot easier than doing 82 different net price calculators.
I know when my daughter was applying — because she applied to a lot of private colleges — we did College Data, we did net price calculators, and a lot of colleges we just crossed off the list.
College planning in high school
Freshman year
Ann: The most important thing to remember is planning for college is equal parts financial planning and parenting. You can have the greatest financial plan for college, but if you’re not doing the parenting that goes along with it, it really doesn’t matter because your kid is making their own plans with their friends that have nothing to do with that financial plan of yours.
Freshman year of high school is a great time to start looking seriously at your college budget. That’s: What do we have in savings? If we divide that by four, how many dollars a year is that? What can we pay out of pocket every year?
Maybe you’re eligible for the American Opportunity Tax Credit. That’s another $2,500 a year. Scrape together all the dollars that you think you can, and that’s your college budget.
Now, the great news is there is a college available at literally every price point. So, whatever your budget is, don’t throw up your hands and say, Oh, sorry. No college for you. Because there are good options out there whatever the price point is.
The sooner you start looking at your budget, the more time you have to adjust, like increasing your savings rate or making more dollars available through spending less. It can also be adjusting your expectations and getting used to the idea that your kid is going to have great choices. They’re not going to have unlimited choices.
That’s the financial piece of it. Figure out what your budget is and what that’s going to look like four years down the road.
Sophomore year
Ann: In sophomore year, keep refining your budget. Make sure your kid is tracking towards the merit scholarships at your in-state schools. I think having [financial] conversations from the perspective of goals rather than limitations is the right way to do it.
And so, what that means is not, You can only apply to in-state colleges because that’s all we can afford. It’s, It’s important to us that you graduate from college debt-free. We have resources available to do it. We know you can do that at our in-state schools. There are probably lots of other great opportunities out there that you can find, and we will support you in looking for them.
Sophomore year is a great time to start looking at outside scholarships because many of them do want you applying earlier in your high school career. Others don’t want you to apply just yet, but you’ll want to know what the requirements are so you can actually meet them. For example, there are lots of scholarships for women pursuing STEM careers, but you have to have taken a certain number of STEM courses while in high school in order to apply for them. Or you need certain letters of recommendation, so make sure you’re building relationships with those teachers.
Junior year
Ann: Go visit a bunch of your local colleges. Your kid will be honest about what they like and don’t like, so that can be a good way to refine your search before you invest a whole bunch of money traveling somewhere to look at colleges. Colleges that look similar on paper look really different in person.
For example, I’m in Portland, so we have Lewis & Clark and Willamette close by. I took my niece to see both of them. At Lewis & Clark, somebody asked if there was a Greek system. They said, “No. We’re a small campus. We believe that our activities should be inclusive, not exclusive, so we don’t have a Greek system. We have plenty of other ways for you to get engaged.”
We went to Willamette, and somebody asked the same question. Their answer was, “Yes. We do. We’re a small college, but we don’t want people to feel like they’re missing out on any of the things that are available at a big college.”
Also in junior year, start thinking about what teachers you’re going to ask for letters of recommendation and start looking at the Common App essay prompts. They are largely the same from year to year. The more you can start doing ahead of time, the less you’re leaving for senior year.
Also, start thinking about the best-fit school for you. It’s maybe not the top-ranked school.
Also, start thinking about the best-fit school for you. It’s maybe not the top-ranked school.
There was a great research study done a few years ago called the Gallup-Purdue Index. They surveyed adults who were successful to try to tie it back to what about their college experience made them successful. They found it had nothing to do with what college they went to and everything to do with how they went to college and what experiences they had. It was about things like finding mentors, feeling like faculty cared about them, having opportunities to apply classroom learning to a job or an internship, participating in extracurriculars.
Senior year
Ann: Fall of senior year is when you do your applications, so that can be really busy. It’s helpful to have the [college] list solidified before you get started, again, so you can be present as much as possible during senior year.
Do the net price calculator before you file any of the paperwork so you’re not applying to colleges you’re going to have to say no to because you can’t afford them.
Make sure you’re tracking academically towards the scholarships you should be eligible for. And take the [standardized] tests. There is absolutely no harm from taking the tests, but there’s plenty of benefit that can come from taking the tests.
Catching up senior year
Ann: It’s never too late to start planning for college. It’s also never too early. If you are the parent of a senior, and you haven’t done any of this stuff yet, I think the number one thing is look at your budget and have a conversation with your kid about your budget because that should be informing where they’re applying to.
The other thing you can do right now is load the colleges that you’re interested in into the Common App if you’re a senior. That’ll show you a couple of things. One is all the documents that you need to prepare. Two is all the essays that you need to write.
Just to give you a sense of the essays if you haven’t looked at this yet: My daughter applied to ten schools. Two of them were public schools, and she had to write more than 24 essays for those ten college applications. So, once you load everything into the Common App, you may say, “Hey. There’s no way we can get all this done. How do we prioritize these?”
