Welcome to the second post of our new series on choosing the right college for you. Last time, we discussed the role that the cost of college can play in your decision making process. Another aspect of that issue will be discussed in this post: financial aid.
Financial aid is another important factor to consider when choosing a college, and it generally comes in three varieties: need based aid, merit based aid, and what I’m going to call interest group based aid. Need based aid is probably the most common type, and this is generally how it works: you and your family give the university all of your financial information, and the university calculates exactly how much you could possibly afford to pay, and if that amount is less than their normal tuition, that’s the price they give you. It’s a way to make sure that everyone pays as much as they can. Some schools are more generous than others, and there is usually a cut off point where if your family makes below a certain amount then they won’t have to pay anything. At Harvard, for instance, students from families that make less than $60,000 a year pay nothing (without aid, Harvard tuition is about $50,000 a year). Considering that the median household income in 2006 was $50,233 per year according to the Census Bureau, that could be good news for a lot of bright kids and their families.
The second form of financial aid is merit based aid, and generally takes the form of academic or sports scholarships. The most prestigious schools do not offer merit based aid – you have to be outstanding just to get accepted, and they have their pick of the applicants. Merit based aid is essentially a way for less prestigious schools to bribe top students into picking them, and if you are a top applicant, their offers can be quite attractive. For instance, as a national merit finalist (and becoming a national merit finalist can get you $2,500 from the National Merit Scholarship Corporation), when I was applying to college in 2006, not only did one school offer me a free ride, another even offered to pay me to go there (I think one even offered to buy me a car). If you are lucky enough get offers like these, consider them carefully, especially if you plan to go on to graduate school. Remember, if you intend to go to graduate school, you should view your undergraduate degree as a stepping stone to graduate school, since your graduate degree is going to be much more important on your resume. If the school offering you merit based scholarships has a record of getting their seniors into top graduate schools, it might be a wiser choice to go there than to a more prestigious (and expensive) school that doesn’t offer you any merit based aid.
The third kind of financial aid, which I refer to as interest group aid, includes scholarships provided by interest groups, often corporations, groups for religious and ethnic minorities, political groups, and groups for women. These types of scholarships often include need based and/or merit based components, such as a minimum high school GPA and an essay contest. Examples might include the Coca Cola Scholars program, the Ayn Rand Fountainhead essay competition (for young libertarians who believe we should get rid of all government welfare), and the Gates Millennium Scholars Program (for African American, American Indian/Alaska Native, Asian Pacific Islander American, and Hispanic American students with significant financial need). If you can qualify for any of these scholarships, go for it. These are great opportunities for students from all sorts of backgrounds, and a lot of money can be up for grabs here. You do have to really go out and look for them, though. Whoever you are and whatever your background, I encourage you to spend a couple of hours scouring the internet for miscellaneous scholarships to see what you can find. Remember, though, that outside scholarships often count against need based aid offered by the university.
In terms of deciding where to go to college, financial aid essentially adjusts the cost considerations by potentially making more expensive options more affordable (see Part I – Money). Sometimes, however, the financial aid offered may not be enough to make your choice obvious. Fortunately, by the time you find out about financial aid, you’ve generally already been accepted by the school. This can potentially give you a little bargaining power. If they’ve accepted you, then they want you to go to their school: the higher the percentage of accepted students who actually choose to attend their college, the better their rankings are, and for them better rankings = more money. If a school you really want to go to hasn’t given you as much financial aid as you might have hoped for, try calling up to ask about something else – say, study abroad opportunities – and mention to them that you really want to go there, but another school gave you a better financial aid deal and your parents want you to go there instead. If you’re lucky, they might call you back with a better deal, and if not, there’s no loss to you (note: this works better when it’s true, and even then, it depends on how badly the school wants you – if there are dozens of other kids lined up to take your place you may not be in that strong a position).
The nice thing about financial aid is that it can take some of the pressure to make good on your investment off you. If you can get a free ride to college, you don’t have to worry about paying back student loans when you get out of college, which makes it less urgent for you to major in something that’s going to get you a job in that field straight out of college. Of course, you still want to be thinking about your future career plans, but the stakes aren’t quite as high, which can give you time to be a little more creative about finding a career path that balances what kind of work you enjoy and how much money you want to make. As in the last post, think of picking a college as a business decision: the more benefits you get and the less it costs the better. Consider this ratio carefully.
Next time we’ll turn to some of the less quantifiable aspects of choosing a college: college culture and community.