4 Ways to Save Now on Taxes and Education
December 4, 2018
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How to Select Colleges That Cost You Less

Follow Your EFC To Your Target Colleges

This article originally appeared on Road2College website.

If you are still with me after Part 1 and Part 2 of this series, pat yourself on the back. Parts 1 and 2 are full of details that may have made your head spin, and are akin to a College Finance Training Bootcamp. You’ve already made it through the tough part. In Part 3, we put the pieces together and show you a proven strategy for getting a great college education while minimizing your costs.

But first, let’s put some context behind paying for college and how we got to where we are today.

The Way it Used to Be

When the Baby Boomers and even Gen X went to college, applying to college was simple:  You applied to a handful of colleges (safety schools, reach schools, and some in between) and enrolled in the best school you got into. It was so easy! Any loans you incurred were manageable, and nobody got hurt financially.

Unfortunately, many parents today still think college is the same way it was back when they went to college. Their students work hard, take AP classes, participate in extracurricular activities, and perform so much community service it would make Mother Teresa blush. They apply to elite schools and get accepted, only to get an inadequate financial aid package. The parents are then trapped….it’s Spring of their student’s senior year, and they either have to take on crushing parent (and student) debt or break their student’s heart and tell them they can’t go to their dream school.

What Comes First, the College or the Aid?

To avoid this situation today, families must approach and analyze the college purchase like any other major purchase. They need a budget. Regardless, they typically take one of two differing approaches:

Approach 1 (Traditional)  – You’ve already picked your colleges, and now you are trying to figure out how to maximize aid and minimize your net cost at each school. You approach college as others did in the 70’s and 80’s.

Approach 2 (Godfather):It’s not personal. It’s strictly business.” You keep an open mind about your college selection and do not fall in love with a school before you know if you can afford it.  Your goal is to attend a school that is a good fit for you, get a great education where you can graduate in 4 years with a marketable degree, and get lots of financial aid and incur minimal to no student loan debt.

From a financial security standpoint, it is OK to use the Traditional Approach with respect to some schools, buy only if you are also using the Godfather approach.  After all, if finances are not unlimited, you must realize you are making a financial purchase which will range from over $100,000 (4 year Cost of Attendance (COA) at in-state public school) to $200,000 (4 year COA at private school). With costs this high, you should first make sure you can afford to make this purchase, just as you would if you were making any other purchase (condo, townhouse, etc) in the same amount. You also need to communicate with your student before they apply their dream colleges (Traditional Approach) that those schools will be off limits if the aid received is not adequate.

But College is Worth the Debt, Isn’t it?

Sometimes. If the debt is reasonable and does not exceed the student’s post-graduate starting salary, that is a reasonable amount of debt. Despite what those in your social circles may be telling you, smart kids that attend a more selective college do not earn higher earnings than those that don’t attend a very selective college. Economic studies, including those done by Dale and Krueger show that there is no difference in earnings 5 years post-graduation between those with equivalent high school SATs who attend a more selective school vs one that is not as selective. (First generation students and minorities are exceptions to this rule.) As an example, if 2 students with 1450 SATs apply to engineering school at University of Penn but only one is accepted, Dale and Krueger discovered that 5 years after graduation the student that did not get accepted to Penn and got their engineering degree at (say) University of Pittsburgh was making the same amount as the Penn grad. Please read Frank Bruni’s eye-opening book “Where you go is not who you’ll be” for a more complete discussion of criteria you should be using to select a college.

So let’s get started in the analysis to determine the most effective strategy for you.

Step 1 – Calculate EFC

Calculating and minimizing your EFC for both FAFSA and CSS Profile is a critical first step in your effort to save on the cost of college.  My favorite calculator is the College Board’s calculator, because it calculates EFC under both methods. The FAFSA4Caster is also a popular way to estimate EFC. Don’t forget to leverage the ideas we covered in Part 2 to minimize your EFC!

Step 2 – Where do you stand?

Once you have your EFC, compare it to the COA of the types of colleges you are considering. You will likely fall into one of these 3 categories, but you have options in each:

  1. The Good – Your EFC is lower than most in-state public colleges.
  2. The Bad – Your EFC exceeds most private schools.
  3. The Ugly – Your EFC is lower than private schools but higher than public colleges.

So where do you find the COA and other admissions and financial aid info for your target schools? My go-to source is Collegedata.com. If you have a few target schools, key them in and see where their COA stands relative to your EFC.

Using College Match

While there are many ways to search for your target schools, my favorite tool is Collegedata’s College Match. Here, you can search for schools by over 15 different criteria, including geography (individual states or regions), major, size of student body, 4 year graduation rate, percentage of financial need met, and percent of students receiving merit aid. Do not initially put too many filters into your search and do not get too specific on your selected major, as you may inadvertently eliminate an attractive school. Initially, you will want to capture the schools that meet your most important criteria, and then filter them out one by one if you are sure they are not a good fit.

For example, schools that have what you might think to be an excessively high cost of attendance are also the types of schools that might meet 90% or more of need. Don’t eliminate schools with high sticker prices up front, as a $70,000 per year school that meets 90% of need might be less expensive than a $40,000 state school that meets 50% of need. Also, don’t select “Operations Management & Supervision” as your major, as that is too narrow. Select the broader category of “Business Administration, Management, and Operations” instead.

Step 3 – Strategy for The Good, The Bad, and The Ugly

“The Good” Strategy: EFC is Lower than In-State Schools

Congratulations. If you are in this category you have the most flexibility of the three options, but your net cost of college will depend on the academic strength of your student.

If your student is a high academic achiever, he or she will be a very attractive candidate and colleges will award a lot of aid to attract him or her. With a very low EFC and high academic achievement, search for schools in College Match that meet a high percentage of need (start at ~85%, then drop lower if necessary) and have a 4 year graduation rate over 50%. As a distant secondary consideration, if these schools also offer merit aid, and your student’s SAT/ACT and GPA are in the top 25% of the incoming freshman class, you are well on your way to minimizing your cost of college. (See “EFC Exceeds Most Private Schools” below to see if your student is in top 25%).

If your student is not a top achiever, you still have options. Most schools that meet 85% or more of need are private schools that are listed in College Match as “Most” or “Very” Difficult to get accepted into. If your student isn’t in this category, search instead in College Match for “Moderately” or “Minimally” Difficult Schools and gradually lower the “percentage of need met” until you get enough colleges in your results. Be careful here. Make sure that these less selective schools have 4-year graduation rates over 50% by setting the Graduation Rate pulldown box appropriately.

Finally, don’t forget about your in-state public schools. In general, they are not as generous and won’t likely meet a high percentage of need, but their COA is much lower to start with, so your net cost may be lower at your state school compared to a private school.  Be wary of out-of-state public schools, as they tend to be priced similar to a private school but offer little merit or needs-based aid.

“The Bad” Strategy – EFC Exceeds Most Private Schools

If your EFC is exceptionally high, you will pay sticker price unless you get merit based aid. Many parents make the mistake and assume that their bright honor students will get a scholarship (merit based aid) no matter where they apply, and are in shock when they get their financial aid package that includes no aid at all. Elite schools like the Ivys, Northwestern, Amherst, Cal Tech, Stanford, and Notre Dame do not offer merit aid because they can attract top students without “paying” them to attend. (These schools are terrific with needs based aid, however).

If you don’t want to pay sticker price, and your student is academically strong, deploy the Godfather strategy and consider some of the “lesser-known” schools (e.g., Furman, George Washington, University of Miami) which offer merit aid to over 50% of students. These schools are trying to compete for the same students looking at Notre Dame and Boston College, but realize that high school students (and parents) may need a financial enticement to attend. In College Match, select the appropriate “Entrance Difficulty” filter by clicking on the “?” next to the “Entrance Difficulty” label. Also, select schools that offer merit aid to at least 20% of students in the merit aid pulldown, and check the box “Include only students without financial need.”

Once you have the list of schools from the above search, check the “Admissions” tab for each school on the list to see if your student’s SAT/ACT/GPA is in the Top 25%. (Since the range reported is 25% -75%, the higher number shows the cutoff for the top 25%.) If your student’s credentials are in that top 25%, you likely will get (at least) the average merit aid award at that school. Go to the Money Matters tab, and under the Profiles of Financial Aid – Freshmen section, look at the last line which is for Merit Based Gift. If your student’s academic numbers are well above that 75% percentile, you may get more than the average reported on CollegeData.

If a student in a high EFC family has average grades or lower, look again at your in-state public schools. If you are paying sticker, paying $25,000 per year leaves your family with an extra $180,000 over 4 years over that “prestigious” $70,000 per year private college. That would make a nice graduation gift, wouldn’t it?

“The Ugly” Strategy

The “Ugly” strategy is named as such because you need to deploy a little of the Good and the Bad strategies. It’s messy and ugly, and there is no quick and easy approach, but you need to develop the approach based on the COA of the schools you are targeting.

For the expensive private schools you are looking at, search for schools that meet a high percentage of need and who also offer some merit aid. On College Match, set the appropriate Financial Need Met percentage, and also set the pull-down on Merit Aid to at least 20% but do not click the box to “Include Only Students Without Financial Need.”  If the list is not showing many schools, delete the merit aid requirement and shoot to maximize needs-based aid.

For the schools where your EFC exceeds the COA, your only financial aid play is to search for merit aid (see “The Bad” strategy above). If your search comes up empty, you may want to focus on your in-state public schools if their COA is low enough for you to afford.

Multiple College Students?

The discussion to this point assumes you have only one student in college at a time. If you have 2 or 3 students in college at the same time, your strategy may need to be adjusted. Under the FAFSA, you split your EFC by the number of dependents in college at the same time. If a younger sister will also be in college during your oldest student’s Junior and Senior years, a $30,000 EFC becomes $15,000 for each student. If you blindly followed the advice above, you would deploy “The Ugly” strategy for 2 years, then “The Good” strategy for the last 2 years. But since you don’t want to plan on switching colleges 2 years in, your analysis of the net cost of attending a private school would include determining if the additional aid from the lower EFC in the student’s Junior-Senior years would make it worthwhile to pay a little more the first 2 years. You have to run the numbers, as there is no clear answer.


The college selection process is no picnic, and has become excessively complicated over the years due to the rising cost of college. Unlike days of old, significant planning must be done before you even apply if your goal is to minimize the net cost of college. Keep in mind that regardless of the degree or the school attended, there are very few happy endings when the student graduates with debt over $100,000 and has to start making $1,000+ monthly student loan payments. By estimating your EFC and net cost of college before your student applies, you can eliminate those schools that will put your student’s future and your retirement in financial jeopardy.  Too much work or don’t have the time to do this? Get some outside help from a college financial expert who is a fiduciary.