Choosing the right college for you: Part II – Financial Aid

Financial aid offers can have a large impact on where you choose to go to college.

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.

Come here for college and we will give you...A BRAND NEW CAR!!!

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.

Sometimes getting financial aid can feel like playing poker with the admissions office.

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.

College Admissions – Williams College

A dormitory at Williams College.

Williams College was ranked as the number one liberal arts college in America by the 2012 U.S. News and World Report. It is considered a feeder school for many top business, law, and medical schools. With an 2010 endowment of $1,468,492,932, it’s easy to see why. According to College Board, Williams also come with a hefty price tag of $44,920 per year for tuition and fees and an additional $11,850 per year for room and board (freshmen are required to live on campus). With personal, travel, and textbook expenses, the total cost can be almost $60,000 per year.

Interestingly, only 59.3% of incoming freshmen apply for financial aid, and of that 59.3%, 53.8% of students are granted need-based financial aid. This means that almost half of the kids there have parents who are paying the full price tag – you’ll be going to school with a lot of rich kids. The average financial aid package for kids who do get it is $41,133, and is 92% scholarship and 8% loans, which meant the average student debt upon graduation is $8,369 according to U.S. News and World Report. That number, however, may be misleading, since it’s the average debt of ALL graduating students, which includes the half with rich parents that probably don’t have any student debt, which means the average debt for the other half is probably double the average of the total student body.

The seal of Williams College.

As for the demographic statistics, 56% of the undergraduate population identifies as white, 12% as Latin, 10% Asian, 8% black, 7% multiracial, and 7% non-resident aliens not identified by race. 51% are women and 49% are men. 89% of students come from out of state and 11% from Massachusetts. New York is the home state of the highest percentage of students, and California is the third highest after in-state students.

Located in the northwestern-most corner of Massachusetts, Williams has a rural setting, and the total undergraduate student population (there are also 56 grad students) is just over 2,000 students, which means you’ll have about 500 students in your class, which means you could potentially know most of the people in your class (and since you’re in the middle of nowhere, you might as well). The surroundings, while sparsely populated, are very scenic, so if you are a hiker or nature-lover this may be a good place for you.

Mount Greylock is the highest mountain in Massachusetts.

As one of the oldest colleges in the country (Williams was founded in 1793), the college also has many traditions to bind the students together, including Mountain Day, which takes place on one of the first three Fridays in October, when the president of the college cancels classes and everyone celebrates by climbing the nearby Mount Greylock, where various festivities unfold. The athletics teams are known as the Williams Ephs (with a long E) after the school’s founder, Ephraim Williams, and their mascot is a purple cow. There are no fraternities or sororities at Williams.

One thing that makes Williams unique from other American undergraduate programs is that it offers an Oxford-style tutorial system for some of its classes, which means that some of your courses may be entirely one-on-one with your professor. They also have a partnership with Exeter College at Oxford university, where 24 juniors study abroad each year. The student to faculty ratio is 7:1, which means professors should be quite accessible. All in all, what you would expect from the creme de la creme of small, prestigious liberal arts colleges.

Have a question? Ask the experts at Test Masters!
Have a question? Ask the experts at Test Masters!

Want to see more College Admissions – University Profiles? Check them out here! Need help with the PSAT/SAT or ACT? Go farther with Test Masters!

How to Afford College: 5 Tips For Saving College Funds

college savings

Here’s a hard-tcollege savingso-swallow but easy-to-understand three-word fact for you:

College isn’t cheap.

And it doesn’t appear to be getting any cheaper. Cornell Economics Professor Ronald Ehrenberg pointed out that tuition has been known to “regularly outstrip growth in median family income”.

Yikes.

So if you are a prospective college student looking to pay for college, what do you do?

There’s no magic bullet, but here are five ways to fight rising college costs.

#1 Cut Costs
You and your parents have certain necessities to pay for, and those come first. You probably also participate in some activities you love. Those can probably stay, too. But if you stand back and think about it, there may be a few things you consistently purchase small amounts of that you can cut back on. Spending gobs of cash on videogames or collectibles will eat into your college savings if you aren’t careful.

Save the cash for class.

#2 Work
You shouldn’t get a job that will hurt your grades, but the law says you can begin working at 16 years old. If you have enough time, you may want to take advantage of that and get a job. Jobs can not only help boost your back account for college, but help you earn enough money that you may have some to actually spend.

You may even find a job you really like and return to something like it after college.

#3 Invest
If you have a little bit of money and want to grow it, you may want to consider taking a little more control over your college fund. If you don’t have a college fund, you may want to start one. While investing in the market does carry some risk, there are some relatively safe options and funds that are meant to both build your stockpile and protect it.

#4 Find Scholarships
There are TONS of scholarships. In fact, there are so many out there that there is a high likelihood you will find one for you. Get a book with a  good solid scholarship list and find every scholarship you are eligible for, then start applying. Keep an eye out for potential scholarships at school. Don’t be afraid to use the internet. In a short amount of research, you can find all kinds of options. Test Masters offers a scholarship for students who take their courses and score perfectly on the SAT or ACT.

#5 Get Creative
Some businesses actually offer students the chance to make money based on referrals and other processes. Keep your ears open for opportunities offered by businesses and see if you can make extra cash that way. You may want to start with our Test Masters referral program, something that has netted several incoming college students thousands of dollars for their future academic careers.

There are plenty of ways to better your bank balance. Take advantage of all of them.

Mid-Semester College Update

Okay guys and gals, as we head into the second half of the school year, we want to remind you of where you should be during this point in your college preparation process. So here is a friendly reminder for every grade level, which means that everybody should read this!

FRESHMAN

By now you guys should have a firm grasp on how to keep yourself organized amidst all the craziness that your teachers have thrown at you. Organization is crucial to getting those desirable grades, and it better have started now!

Did you find an extracurricular activity that interests you? If not, don’t give up. Extracurriculars are not just about building a resume they are about exploring your potential career interests. There’s something out there for everyone, so keep your head up and keep looking.

Be sure to meet with your counselor if you haven’t done so already. Don’t be shy with them. Become good friends with this person as they will be able to help you achieve your goals. Remember, anything is possible.

SOPHOMORES

Keep up those grades! You guys are in for the long haul, so hang in there just like you have. Don’t be bummed if you had a few slip-ups here and there this semester. You still have the second half of the semester, plus your final exams to make it up and come out on top.

How’s the college research coming along? Keep an eye out for the colleges that may interest you based on your desired field of study. Remember to find out their details regarding admissions requirements, financial aid, offered programs, etc.

Start thinking about the SAT, ACT, SAT II, and the AP exams. They are not too far away, the time to take them will be here before you know it, so you want to make sure that you are more than prepared.

JUNIORS

So did you make your college list? 10-15 schools, lets go! Remember to find the schools that match up with the areas of study that you are seeking to pursue.

You better keep those grades up! Don’t slack on us now! As you know, this year is your most important year for grades, you cannot mess this up!

Keep up the exam preparation. Do not lose focus. If you took the SAT in October and received the score of your dreams, congratulations! Now you can start focusing on the SAT II and the AP exams. If you were not satisfied with your score, then hit the books and take it again.

SENIORS

Okay seniors, this semester has been a big one for you. Hang in there, you’re almost there! As you get closer to completion of your college applications, you should have your exam scores locked in by now.

Make sure the letters of recommendation are ready to go. Do not put this off! The last thing you want to do to somebody that is writing a nice letter about you is to ask them at the very last minute, forcing them to rush through it. They will not be very happy about this, and your recommendation might end up reflecting it.

Whether you have applied through Early Action or Early Decision, make sure those applications are almost done. If they are then take a deep breath, and send those babies off!

Great job everybody. We understand the workload is tough, and we know you guys are doing a wonderful job. Keep up the good work!

P.S. Remember to READ READ READ!!!

Cash-Money for College: Five Tips to Line Your Pockets With

With the general economic downturn and the rising costs of higher education, finding extra dollars for college has become no easy task. If you’re the type of student who heads up the local National Honor Society and spends the weekend feeding homeless, you might have a free ride coming your way. However, if you are more dedicated to Xbox and ice cream sandwiches, finding ways to cover your costs might be more difficult. Consider using these five tips to save yourself a few extra dollars for late night pizza purchases when you get to the school of your dreams.

Know Your Loan
Would you ever sign something you didn’t read if it decided how much money you would have to hand over to someone else each month for the medium-term? Sounds stupid, doesn’t it? Simply understanding the loan process- what you will need to pay, interest variables, payment schedules, and how much of tuition the disbursement covers- can save you literally thousands. Take pride in knowing about this stuff. It determines your future.

Second Hand Book Buying
Most college textbooks are available for much cheaper online than they are in college bookstores. While some of your professors may DEMAND you get a particular edition of the book, most of them are cool and are happy to have students who are willing to read the material and come to class. Most of them will also send you a syllabus in advance of the semester so you can pick up your books cheap and spend your Summer getting a head-start on your homework… or at least saving some cash.

Bankin’
You might want to stay with your current bank when you go to college, but sometimes you wind up moving to a small town that doesn’t have convenient locations for your branch. You also might be able to get a better deal with your bank now that you are in college. Some student accounts are set up in a way that saves you massive amounts of fees. Take advantage of anything they give you, and stay informed about your banking process.

Shopperships
Some of us are great in school. Others are great shoppers. It might be annoying at times, but spending your own money is a drag. Learn the art of tracking a good deal. Keep your eyes open for free public events so you don’t have to drop hard-earned cash on Keisha tickets every time you want to unwind. Buy in bulk. Pitch in with others on large, shareable purchases. Becoming a better shopper pays real money.

Think Needs Then Wants
So now you have a little cash because you are crafty, intelligent, money-savvy future college student who takes good advice from smart experts who know the college admissions process. DON’T BLOW YOUR NEWFOUND DOUGH! I know you’ve had your eye on that new app that informs you of Apple products the second they come out… but first things first. In college, you will need to eat. You will want to brush your teeth, wash your armpits and sleep on sheets. You probably also want to have explore your new environment, which will inevitably take cash. Unless you want to be the smelly, bad-breathed loner who never leaves the dorm room, or the constantly broke splurge who can’t pay rent, you might want to start by spending on the things you really need: tuition, books, towels and toilet paper. Consider pizza, concert tickets and videogames a luxury.

How To Apply For Financial Aid For College

Applying for college is a long, multi-step process. Even after you get in, there remain many important questions, especially: how are you going to pay for college?

Never fear, that’s why College Compass is here! Applying for financial aid can be challenging, but a majority of students and their families undergo the process and receive assistance. There are two main categories of aid: public aid from the government, and private aid from other sources. Public aid can come from federal, state, or local governments. Private aid comes from private organizations such as banks or other associations interested in advancing education. The aid can come in the form of grants, scholarships, or loans. The first two forms may contain certain requirements to complete in order to receive the money, but do not require repayment of the funds after the educational activity is complete. Loans, on the other hand, require repayment, typically including some form of interest payment.

Despite there being many sources of funds, many of them follow the same application: the FAFSA, also known as the Free Application for Federal Student Aid. That’s right, it’s free… but it is a bit involved. The goal of the FAFSA is determine your Estimated Family Contribution, or EFC. This is the amount FAFSA expects your family will contribute to your education on annually based on their income and assets. Many scholarship programs, even those *not* associated with Federal or governmental student aid programs.

What does all this mean? Basically, if you want scholarships or loans, fill out FAFSA!!! It’s not an optional consideration. To start, go to FAFSA on the web at http://www.fafsa.ed.gov/. There you can either print out a version to work on by hand or submit your application electronically. You will want your parents or guardians involved as the application requires information from them about their resources to complete.

To complete the application, you will have to provide basic information about yourself, financial information about yourself, and financial information about your parents. For more detailed information, check out this FAFSA Worksheet, provided by FAFSA itself. Additionally, you will need to gather the following documents if applicable (list provided by FAFSA):

For the 2011-2012 school year you will need financial information from 2010. You may need to refer to:

  • Your Social Security card. It is important that you enter your Social Security Number correctly!
  • Your driver’s license (if any)
  • Your 2010 W-2 forms and other records of money earned
  • Your (and your spouse’s, if you are married) 2010 Federal Income Tax Return.
    • IRS 1040, 1040A, 1040 EZ
    • Foreign Tax Return, or
    • Tax Return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau
  • Your Parents’ 2010 Federal Income Tax Return (if you are a dependent student)
  • Your 2010 untaxed income records
  • Your current bank statements
  • Your current business and investment mortgage information, business and farm records, stock, bond and other investment records
  • Your alien registration or permanent resident card (if you are not a U.S. citizen)

Yup! You really do need to have all that information! Remember, they *want* to give you money, but they also want to make sure the funds are going to the right person. After you have all your documents and the application, get to work! But, make sure to block out several hours potentially over the span of several weeks to complete the application. You will need a pin that FAFSA provides in order to access and complete the application. After you finish, make sure to save a copy of the full application as well as any documents you used for future reference. Remember, you will have to reapply for FAFSA *every year* you are in school and are interested in financial aid.