Financial Aid Paying for College

9 Financial Aid Questions to Ask Before Choosing a College

Written by CB Experts

Most students look at a variety of factors in choosing a college to which they will apply. Do they cater to my major? I’m interested in distance education; do they offer online programs? These are just a few factors that come into play. Yet most students, and their families, ignore one of the most important factors; how each college evaluates who receives financial aid.

Here we present 9 questions that students should ask before choosing a college. If these questions are asked there should be fewer surprises when financial aid awards come out with the award letters.

Question 1- What percent of my need does the college meet?

When the students complete the FAFSA an expected family contribution (EFC) will be determined. This EFC is based on a standard formula used by the federal government to determine what each family should have to pay considering that family’s income and assets. Many highly selective colleges also require a form known as the PROFILE form. The colleges who use the PROFILE use that form to determine what your family can pay for college.

Your EFC is the same regardless of the cost of the college. Your need is the cost of the college you are looking at minus your EFC. For example, if you are looking at a college that costs $20,000 a year and your EFC is $5,000, your need at that college is $15,000. If you are looking at a college that costs $40,000 a year your EFC is still $5,000. Your need at this college is $35,000.

Some colleges will meet 100% of your need. So what does it mean if a college says they will meet 100% of your need? It means that once the FAFSA or PROFILE form has determined how much you can pay for college, the college will pay 100% of the rest of the bill.

Colleges will typically meet the need you have using a combination of grants, loans and work study. Most colleges will award work study and loans first and if there is a need after that, the remaining need will be supplied by grants. The colleges will typically have a standard loan and work study amount that they award and you should ask about what these numbers are when investigating the college.

Let’s see an example of a financial aid award from a college that provides 100% of need with a student who has an EFC of $10,000.

Total cost of college $40,000

Expected family contribution $10,000

Need $30,000

Financial aid award

  • Work study $ 2,000
  • Loans $ 4,000
  • Grants $24,000

At a college that meets 100% of your need you pay only your EFC of $10,000.

But what happens if the college doesn’t meet 100% of need?

Many less selective colleges don’t pay the total amount of need that their students have. Let’s use the example of our imaginary college from above only this time assume that the school only provides 90% of need.

Total cost of college $40,000

Family’s expected contribution $10,000

Need $30,000

This college only provides 90% of the $30,000 need or $27,000. Thus, a family’s out of pocket expenses are the $10,000 EFC plus an additional $3,000 for a total cost of $13,000.


This example makes it easy to see why a school that meets 100% of need is often a better financial aid “deal” than a school that doesn’t meet all of the family’s need.

Many of the most expensive private colleges meet 100% of the student’s need while cheaper public colleges usually meet less than 100% of the need. This means that for many students it can be cheaper to go to an expensive private college than to attend a cheaper state school. Until you know what percent of need the college meets, don’t eliminate a college from consideration just because it is expensive.

Question 2- Does the college have merit based aid?

Merit based aid is provided by some colleges for students near the top of the application pool or who have some particular talent. Music and athletic scholarships are examples of merit based aid. This type of aid is given regardless of the financial need determined by the FAFSA.

Most selective colleges in the country give little or no merit based aid to its students. A student with strong academic credentials or a particular talent may consider looking at less selective colleges in the hope of qualifying for merit based aid.

  • Here are some questions you should ask if the college provides merit based aid.
  • How many merit awards are available?
  • What is the value of the merit awards available?
  • What are the qualifications to receive one of these merit awards?

Even families that don’t qualify for need based aid may qualify for merit based aid. If your student can qualify for a merit based award you won’t need to pay the full stated cost of the college even if you can afford to pay the full cost of the college.

Question 3- How is financial aid determined after the first year?

Some colleges have a policy of providing strong financial aid for the first year and then substantially reducing the available aid in subsequent years. You should ask each college in which you are interested how they determine financial aid after the first year and what the average loan is after the first year. While it is typical that the amount of loans will increase each year if the increase is substantial, you will want to take that into consideration.

Question 4- What is the average loan amount at graduation of those students who have loans?

This question will give you the best indication of the amount of loans that this college requires compared to other colleges in which you may be interested. There is a large variation in the amount of loans required by different colleges. Some colleges are eliminating loans altogether while some colleges require most of the funding for the student to come from loans. Although most students will have some loans when they graduate, you don’t want this amount to be any more than necessary.

Question 5- What is the college’s policy regarding outside scholarships?

Most colleges will subtract money received from outside scholarships from your financial aid package. Some colleges will reduce the loan portion of financial aid by the amount of the outside scholarship. By reducing the loans you need to take out, you benefit from the outside scholarship. However, other colleges will reduce the grant portion of the financial aid award. There is no benefit to the student if the college reduces the grant aid.

Question 6- What is the college’s packaging policy?

Most colleges give a financial aid package that includes grant money, loans and work study. But each college combines this money differently. Specifically you want to know:

  • What percentage of an aid package from your college is grant vs.self-help (loans, work study)?

The greater amount of grants versus loans and work study, the better for the student. To get a general estimate of the amount of aid given as grant vs loans and work study, check out particular colleges at the CollegeBoard website. There you can search for the colleges in which you are interested and under the cost and financial aid section find the average of the financial aid distribution. But before doing, this look at the next question because the figures given are only an average unless the college doesn’t use preferential packaging.

  • Does the college have a preferential packaging policy?

Preferential packaging occurs when a college gives a student they particularly want to enroll a better financial aid package than another student who is less desirable. This may occur because the preferred student is stronger academically or the student may have a particular talent that the college wants such as musical or athletic talent. Note that this is different than merit scholarships that the college may give. Preferential packaging works as a merit scholarship but is not disclosed as such and is used by even those colleges that don’t use merit scholarships. A student may benefit from preferential packaging if their grades and test scores place them near the top of the application pool or if they have a talent that the college needs that particular year.

Question 7- What is the college’s four year graduation rate?

What difference does a college’s four year graduation rate make? This is an important question that many people never consider. Another way to phrase this is, how many years of college am I going to have to pay for? If the college has a high four year graduation rate, you will most likely only have to pay for four years of college. However, if the college graduates most students in six years then you can plan on paying for six years of college, not four.

Question 8-What is the college’s endowment per student?

A college’s endowment is the amount of money that the college has available in investments to support the mission of the college. You want to know what the endowment is per student because larger colleges may have more funds available but those funds have to support more students and resources. You can only compare endowments if you look at the endowment per student.

The amount of the endowment can be important because the greater the endowment generally the greater resources the college has to invest in all aspects of college life including financial aid. Not all colleges with large endowments per student place a lot of money in financial aid but more often than not there is a correlation between endowment per student and available financial aid.

Question 9- If the college uses the PROFILE form as well as the FAFSA form, which form is used for aid from the college?

The FAFSA and the PROFILE form each give an expected family contribution, but the amount of the contribution differs from each form because different factors are considered on each form. For most families the PROFILE will provide a higher EFC because the equity in the family home is considered in the PROFILE calculations. However, in about 30% of families, the PROFILE numbers will be less than the EFC numbers from the FAFSA. Some colleges that use the PROFILE form will use the PROFILE numbers for all grants and scholarships from the college regardless of which form provides the higher EFC. However, some colleges that use the PROFILE will only use the PROFILE numbers if the EFC from the PROFILE is higher than the FAFSA. If the FAFSA is higher, they will use the higher numbers. To see which approach is more beneficial for each family you need to have an estimate of which form will give the lower EFC. One of the better calculators to calculate your EFC is found at the CollegeBoard site.

Use this calculator to determine whether your family is better off with a college that uses the FAFSA numbers or one that uses the PROFILE numbers. Of course, you still need to keep in mind all of the other issues related to the granting of financial aid discussed above.


By asking these questions of the colleges you are considering, you have more information about how that college determines financial aid awards. Having more information allows you to make a more informed decision as to which colleges to apply to. guest author Todd Johnson, a lawyer and college consultant, is the principal college admission consultant for College Admissions Partners. He can be reached through the website College Admissions Partners.



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CB Experts

Content created by retired College Admissions consultants.