Overview
Determining how much each individual target college will cost your family is not an easy task.
The good news is that most families do not pay the full sticker price for college.
The bad news is that many colleges do not make it easy for you figure out – in advance – the discounted price you will pay upon admission.
The discounted price is commonly referred to as net price – which is the actual price after subtracting grant and scholarship awards. It is very important to focus on net price instead of sticker price when deciding where to apply.
Grants and scholarships are the best kind of financial aid because they reduce the price. Other types of financial aid such as student loans and work-study are useful resources that help you pay your share; but they do not reduce the price.
There are almost as many college discounting strategies as there are colleges and unfortunately there is no single approach to estimating net price for colleges.
That said, there are some key facts and trends
Although the FAFSA EFC is commonly referred to as the estimated family contribution, it is NOT the amount you are expected to pay for college. The amount you pay for college is the Net Price, which will vary from school to school. Sometimes your EFC will be higher than the Net Price of a particular target school and sometimes it will be lower.
Don’t assume that you won’t be eligible for school awarded need-based grants. Now that the sticker price of some private colleges is more than 70K, wealthier families are qualifying for significant need-based discounts. For example, a family of four with an income of 150K and a net worth of 150K will qualify for a school awarded need-based discount of around 40k at many private colleges and universities. Select a couple schools from the list of colleges that meet full need and estimate the net price of each for your family using the school net price calculators.
Even if you don’t qualify for need-based discounts there is good news because school awarded merit discounts on the rise. According to the most 2016 Tuition Discounting Study published by the National Association of College and University Business Officers, 60% of school awarded grants and scholarships were awarded without regard to family financial need.
