Did You Know Your Student Can Attend Private College For Public Prices?

A student can often attend a private college for no more expense to the family than a public university! You have to understand how financial aid eligibility calculations are made. There are two types of financial aid; need-based and non-need-based, or "merit." Merit assistance is normally based on the student’s qualifications or talents, be it in sports, academics or music, for example. To receive need-based assistance you have to establish "need."

"Need" is established when the total cost of attendance (Tuition/fees + Room/board) for one year's education at a particular school exceeds the student's Expected Family Contribution (EFC), whether determined by federal or institutional methodology. It is treated almost like a deductible. For example: college X costs $14,000 a year and the student's EFC is $9,000. The difference ($5,000) is established need. However, if the student's EFC was $15,000 ($1,000 more than the cost of the school), no need is established.

Need will vary based on the cost of the college or university in question and fluctuate given federal or institutional methodology for determining the EFC. Again, the major difference is the Free Application For Federal Student Aid (FAFSA) does not ask for home equity information, while the CSS profile and some institutional forms do (in some cases more detailed financial information on business enterprises, as well). As a result there could be about 12% of the equity value tacked on to the federal methodology's determined EFC. Another example: Say the EFC based on the FAFSA was $10,528 and the family had equity of $20,000; the EFC under the institutional methodology would be increased to $11,658 ($10,528 + 5.65% x $20,000).

Remember, the EFC is calculated on the "base year" income and assets of the parents and student. The base year for their college freshman year is the tax year that begins in January of the ajunior year of high school. The critical issue is that anything the family does financially during the base year can impact positively or negatively on their ability to qualify for financial aid. The sophomore year in high school is the latest time to effectively plan for college financing and the Fall of the junior year, the last chance to maneuver financially. However, there may still be positive actions the family can take before submitting the FSFSA or CSS Profile.

Let's look at the aid package--go back to the example of our $10,648 EFC which was for a private college and determined through institutional methodology. Assuming the that the total cost of attendance at this private college is $25,000 a year, our student has established a need of $14,352. Since many private colleges cover 100% of the established need the resulting aid package could be up to the full amount of the need ($14,352). About 60-70% of this amount will be in grants (money the student doesn't have to pay back), 16% in the form of a subsidized Stafford Loan (the student doesn't make payments until after graduation), and the remainder will be covered by Work Study.

At a public institution, because they have less private endowment and scholarship funds to assist the student, less than 100% of the established need is normally met. In our example the federal methodology said the student's EFC was $9,000. Let's assume now that the student applies to a less expensive public university which uses the federally determined EFC. The cost of this university is assumed to be $13,500 a year. The established need is now only $4,500. But the college can only cover 75% of the need or $3,375. This now creates an out-of-pocket expense for the family of $1,125 ($4,500-$3,500), making the total cost $10,125.

There's another difference. For the same reason that less of the established need is covered, the percentage of loans and work study received in the aid package as compared to the amount of grants and scholarships is higher. So in our example, the $3,375 would be covered by a loan first ($3,500 is the max for a Stafford loan for freshman).

In this situation then, the student could go to a more prestigious private college for about the same cost of the less expensive public institution. Keep in mind each circumstance is different and each college and university has different policies on financial aid distribution and eligibility.

But it is critical that this type of information is evaluated along with the scholastic benefits of the institutions the student is interested in attending. In that way the family can be assured of the best dollar value.

Campus Financial can provide the analysis that will put cost and awarded aid into perspective.

A student can often attend a private college for no more expense to the family than a public university!

GET THE FACTS ON COLLEGE COSTS BEFORE YOU APPLY!

Campus Financial has the answers!