Financial Aid 101: How to Pay for College - What the Costs and Common Misperceptions?

What Are Some Common Misperceptions?

A 2009 nationwide phone survey, conducted by the nonprofit organization Public Agenda, surveyed people’s perceptions about financial aid and tabulated the following results:

63 percent think the cost of college is going up at a faster rate than other items.

74 percent believe the price of college should not stop students who are qualified and motivated from going to college.

67 percent feel students have to borrow too much money to pay for college.

57 percent believe financial aid is available to help students pay for college.

Need-Blind versus Need-Sensitive Admissions

Some colleges practice the policy of need-blind admissions, while others are need-sensitive. Our financial aid experts explain the differences between need-blind and need-sensitive policies.

According to Jacquelyn Nealon, VP Enrollment Services at New York Institute of Technology, schools that are need-blind focus on the academic profile of the student, as well as other contributing factors like leadership. They do not consider a student’s ability to pay in the decision-making process about who to admit and they do not require financial information prior to acceptance.

Need-sensitive colleges take into account a student’s financial need when reviewing his or her college application.

When researching colleges, you should check whether they are need blind or need sensitive. Regardless of their policy, you should know whether a college will meet your full financial need, what the average financial aid package is, and whether merit- and/or need-based scholarships and grants are available.

“Colleges that practice need-blind admissions have no idea how much financial aid is going to be needed on a student-by-student basis and are often unable to meet 100 percent of a student’s need as a result. Colleges that are need-sensitive have a financial profile on each potential applicant and they admit students with financial need in mind in order to assure adequate financial aid for their admitted pool of students.” –Dominic Yoia, Senior Director of Financial Aid at Quinnipiac University

Some Need-Blind and Need-Sensitive Colleges

Tip: Transfer students, international students, and students accepted from the waitlist may be exempt from need-blind policies, so check with each college about its policies.

What are the Costs?

Cost, of course, is an important consideration in deciding which college to attend. You are not alone if you and your family are concerned about how to finance your education. The cost of attending college, known as the cost of attendance (COA), consists of:

• Tuition: Cost of your classes
• Fees: Gym, lab, registration, fraternity, and special program fees such as pharmacy, business, and science programs
• Room and board: Housing and meal plans
• Books and supplies: Books required for each class plus art supplies, calculators,etc.
• Personal expenses: Entertainment, laundry
• Transportation: Expenses to and from home, whether commuting or living on campus
• Miscellaneous expenses: Clothing, bus fare, cell phone and land line bills

There is a tremendous amount of variation in tuition between and within public and private universities. The most reasonable tuition is usually found in community colleges and city or state university systems, followed by out-of-state universities, and then private universities. In some cases, it could be more financially affordable to attend a public university in a neighboring state. For example, the State University of New York (SUNY) system has very affordable tuition rates for out-of-state students. You may also consider attending one of the well-regarded universities in Canada, where tuition for international students is fairly reasonable. It is also possible to find some real bargains, namely free tuition, at the following universities:

Tuition-Free Colleges

• Berea College (KY)
• City University of New York Macaulay Honors College
• Cooper Union (NY)
• Curtis Institute of Music (PA)
• Franklin W. Olin College of Engineering (MA)
• US Military Academy
• US Air Force Academy
• US Naval Academy
• US Coast Guard Academy
• US Merchant Marine Academy
• Webb Institute (NY)

The issue of cost naturally enters into your decision as to whether you should apply to a public university or a private university. You might initially think you should avoid private colleges if money is an issue in your family. Consider the sticker price of a car your family wants to buy. Except for certain makes and models, families don’t usually pay the full price of a car. The same can be said for the cost of private universities; not everyone pays the full sticker price for college. Private universities may actually have more funds to give to those in need or to those who have outstanding academic ability. Many private universities have endowments through various individuals and organizations, and they use these funds to attract the following types of students:

• Students who are the first in their family to attend college
• Students who are from low-income families
• Students who are academically gifted
• Students who might add to the geographic or ethnic diversity of their student population

Some of the most selective colleges in the country have very generous financial aid packages for those in various income levels. The policies for some of these colleges are outlined below:

Harvard College

• Students of families who have incomes below $60,000 will not have to contribute their income toward tuition, room and board, and mandatory fees.
• Students with families who earn less than $180,000 will pay varying percentages of their income. If a family earns $120,000 to $180,000, they will be asked to pay 10 percent of their income. For families earning $60,000 to $120,000, the families will be expected to contribute no more than 10 percent of their income.
• Harvard has eliminated loans to students receiving financial aid.

Columbia University

• For families with incomes under $60,000, parents do not contribute towards tuition, room, and board.
• For families who earn $60,000 to $100,000, parents pay significantly less than the full sticker price.
• Columbia will meet 100 percent of a student’s demonstrated need for four years of college.
• Columbia has eliminated loans to students, replacing them with grants.

Princeton University

• There is a no-loan policy for students with demonstrated financial need.
• Princeton will meet 100 percent of financial need.
• Full funding is provided for study abroad programs for students with demonstrated need.

Grinnell College

• Grinnell is committed to meeting the full financial need of admitted students.
• Financial aid consists of a campus work opportunity, a loan capped at $2,000 per year, and the rest in grants or scholarship funds.

Rensselaer Polytechnic Institute

• More than 90 percent of Rensselaer students receive scholarship aid.
• All applicants are assigned a financial aid counselor to guide them through need-based funding.
• Rensselaer Medalists are guaranteed $60,000 in scholarships over 4 years.
• Undergraduates can receive an additional year of aid to pursue a master’s degree while completing their bachelor’s degree through its recently announced co-terminal program.