This is a guest post by Elizabeth Hartley.
College tuition has increased almost 500% over the last twenty years, causing many families to conclude that a college degree is out of reach. While the sticker shock can be intimidating at first, there are many ways to approach the process strategically and intentionally so that the student ends up with options that are optimal and affordable. The first step in knowing how to tackle college funding is to understand the various “buckets” of money available to students: the Need Bucket and Merit Bucket. Colleges usually have funds available in each of these categories and can pull from one or both when putting together a student’s aid package. Knowing which colleges offer the most generous aid and which bucket they favor is critical when choosing the colleges to pursue for admission.
Prevailing thought among most families is that state schools will be more affordable than private schools because the state schools claim lower tuition than private schools, which may have a sticker price that is twice as high. However, in many instances families will find that their out-of-pocket costs are far less at the private schools, once all merit and need-based aid is factored in. When consulting with a student and his/her parents, I advise that the student start by applying to one or two state schools, just to cover the bases in case no merit or need-based funds are offered. After that, I encourage them to apply to private schools for which they may be eligible for merit scholarships or generous need-based funds. Ultimately, most students end up applying to five to ten schools.
TheMerit Bucket represents funds that come out of the university’s own pockets (endowment) and that are used to recruit students of great academic merit, as determined by exceptional SAT or ACT scores, high class rank or GPA, or exceptional community service or talents in music or the arts. Merit funds are truly based on the student’s merits, not typically factoring in financial need. These scholarships are used as incentives to recruit top students to enroll.
Students can position themselves for these merit scholarships by building a resume throughout high school that shows their passion and commitment to their chosen subjects and interests, community service projects, clubs, arts, etc. Colleges especially favor students who have also demonstrated leadership in their chosen areas of interest. Athletic scholarships are also a form of merit scholarships, but since the process of securing an athletic scholarship is an entirely different process than all other merit scholarships, they are not included as part of this discussion.
Overall, academic merit scholarships are typically offered to students who exceed the average freshman profile with respect to SAT/ACT scores and grade point averages for a given school. Private colleges and universities typically have more generous programs for allocating academic merit scholarships than state schools do. Unlike most state schools, private schools often conduct formal scholarship competitions on campus for students to vie for scholarships, ranging from small merit awards up to full rides that cover tuition, room and board, books, fees, study abroad, and even a laptop. While state colleges and universities certainly have some merit scholarship funds available to offer, those funds are doled out at the discretion of the admissions staff or administration, without an on-campus competition and interviews. Due to the overwhelming number of applicants, a comprehensive merit scholarship competition on campus would be impractical and a logistical nightmare for a large state school.
Even though the methods by which the merit awards are given out can differ between the state schools and private schools, their motives remain the same: to bring in outstanding students. By recruiting above average students, colleges will see increases in their typical freshman profile.
The Need Bucket represents a collection of funds available to students based on the family income and assets. Need-based aid includes federal grants of free money, student loans from federal or private sources, on-campus employment, and even grant money provided out of the school’s own private endowment. Need-based aid is less under the control of the student and has more to do with the family’s income and tax information. Families can maximize how much money they get from this bucket by filing FAFSA promptly each year (as soon after January 1 as possible) at www.fafsa.ed.gov and by candidly sharing any extra financial concerns with the financial aid office of their college. Often, when colleges know more about extenuating family circumstances, they will do more to help.
Very competitive schools such as Harvard, Princeton, Yale, etc. do not typically offer merit scholarships because they believe all of their students are so exceptional that all students would deserve merit scholarships. Those Ivy League schools do not need to use scholarship money to recruit the best and brightest students since they already get those applicants. Instead, the top-ranked schools favor giving exceptionally generous financial aid based solely on financial need. Families who do not qualify for federal grants based on need may still find themselves recipients of generous need-based aid from the selective private schools. For example, a family with an annual income of $60,000 per year may find that they do not qualify for any need-based grants from the government or state school. However, if that same student were admitted to Princeton, he/she would immediately qualify for a Princeton grant that covers full tuition and room and board. Even families with incomes of $120,000 automatically receive school grants to full tuition and 18% of room and board.
It is not just the Ivies that offer such generous need-based aid.Williams, Amherst, Vassar, Columbia, Vanderbilt, Duke and Davidson are just a few schools that also generously cover a family’s need. For example, Davidson College, just outside Charlotte, North Carolina, is a top-ranked school that has committed to making attendance affordable to all students. Once a student is admitted, the family files the Free Application for Federal Student Aid (FAFSA). The government uses that application to generate a Student Aid Report (SAR). That report shows a figure called the family’s Expected Family Contribution (EFC), a dollar amount that the government says the family could afford to spend to educate that student. While Davidson’s total cost of attendance (tuition, room, board, etc.) is about $50,000 per year, Davidson charges a family only the amount of their EFC and covers all remaining funds through a grant from the Davidson Trust. No loans are ever included in a student’s aid package. As a result, a student who may go into heavy debt to pay $20,000 to attend a state school could find himself paying little to nothing to graduate debt-free from a selective private school that has a much higher sticker price.
Many of my former clients, who would have gone into substantial debt to attend a local state school, are attending schools such as Yale, Harvard, Stanford, Georgetown, Columbia, Duke, and Davidson for free or for very little cost. The trick to this strategy is simply positioning to be a good candidate for admission. Once admitted, the funding process is typically straightforward. To position for admissions, students must seek out ways to set themselves apart academically and in other areas such as leadership, the arts, community service, and pursuit of their passions. Many of these schools offer admission to less than 10% of their applicants each year, so it is wise for Ivy-hopefuls to cast their net wide by applying to many schools, remembering to have a safety school or two in the mix.
Since my own daughter was a senior this past school year, I am often questioned regarding how her college process went.I welcome the question, because her case exemplifies the points detailed in this article. Even though she was not the valedictorian or a gifted athlete, she excelled in her passion of writing, became editor of the newspaper and literary magazine, earned numerous national writing awards, and learned to master the SAT early on. As a result, she ended up with four full-ride offers to nationally ranked private universities, totaling over $700,000. Of all of her options, we would have ended up paying far more to send her to Clemson University (her state school option), even with about $10,000/year scholarship funds, than we would have spent to send her to her other top choices. Once again, the $50,000/year private schools ended up being far more affordable than the state school, costing half as much.
So, the final message is that families must understand that financial aid can be based on financial need, academic merit,or exceptional talent in the arts or athletics. Families need to bear in mind that they may qualify for need-based aid from the most expensive private schools even though they do not qualify for need-based aid by government standards. Once the financial aid office makes an offer to the family, which includes all need-based and merit-based offers, a family can respond to the financial aid office with additional information that may be factored in to lessen their out-of-pocket expenses. Since there are so many factors at play with respect to the final amount a family will pay for college, it is wise to strategically pursue a variety of options, including state and private institutions, and to make a commitment only after all of the offers are on the table. With hard work and well-informed strategies, students can still get an outstanding education at an affordable price.
Elizabeth Hartley, owner of Scholarship Gold Consulting, funded her entire undergraduate and graduate school education through full merit scholarships and now judges for many privately awarded scholarships in the Southeast.She works with private clients, homeschool associations, foundations, and numerous schools to help students maximize their options for college admissions and funding. To receive her free monthly E-Newsletter or to request that she teach a workshop series in your area, visit www.scholarshipgold.com.
Copyright 2012, used with permission. All rights reserved by author. Originally appeared in the December 2012 issue of The Old Schoolhouse® Magazine, the family education magazine. Read the magazine free at www.TOSMagazine.com or read it on the go and download the free apps at www.TOSApps.com to read the magazine on your mobile devices.