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Don’t Depend on Financial Aid Packages for College Selection

Written by CB Experts

Most students and their parents are waiting for word from the colleges where they have been accepted about what kind of financial aid packages they will receive. The bottom line fact is they will hear only about 4 weeks before they have to make the biggest decision of their lives.

In a time when incomes are stagnant but tuition rates are raising there is a lot to consider for what parents and students should pay to finance a college education. Another factor to consider is that although college degrees protect students’ life-long earnings, students are leaving colleges with a lot of college debt at a time when employment opportunities are not stellar.

Need-based financial aid, too, is calculated against a family’s previous year’s earnings. Because that information can not be filed until January or later, financial aid calculations come late. On top of that, colleges vary in how they distribute their financial aid funds. For example, parents’ home equity is generally not figured as an asset, but some colleges do award need-based packages on that figure. Also the government’s requirement for colleges to provide cost calculators do not figure in all variables such as merit aid.

We recommend that parents and students decide ahead of time and before financial aid packages come in what they can afford. In others words, financial aid should not be the deciding factor but only a help in the final cost of a college. We recommend that upper-middle class families not assume they can afford education today. Also a student’s debt should not be any larger than one third what a graduate expects her salary to be upon graduation. Top choice colleges are great, but their price tag may be way too much—yes, even with financial aid. Perhaps it is time to look at community colleges or a public institution.

The best aid students can have is merit scholarships, which are based on the student’s academic record. For this reason anyone applying to college should be in the top quarter of the applicant profile to qualify for such aid. Beyond that, what the parents can afford and what the student can see fit to take out in debt should be the other two factors. Check out our articles Financial Aid and Financial Planning on CollegeBasics’ main site.

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CB Experts

Content created by retired College Admissions consultants.