The 7 Questions You Must Ask to Save Thousands on College Tuition

Tuition costs are still rising faster than the average rate of inflation. This means more and more families are finding it increasingly difficult to afford a college education. Despite this, thousands of families are paying too much money simply because they did not know the right questions to ask.

Basics of Financial Aid

There are three basic types of college financial aid: grants and scholarships, loans, and work-study. Grants and scholarships are preferable because they provide free money that never needs to be repaid. For a detailed look at each of these different forms of aid, consult my article about comparing financial aid offers.

There are also two different categories of financial aid which contain each of those types: merit-based and need-based. Merit based aid is awarded for high achievement typically determined by GPA, SAT/ACT scores, or other forms of involvement, while need based aid is offered by all colleges and universities to any family who cannot pay the full cost of the college.

The amount of need a family has is determined by a federal form called the FAFSA. This free application collects data about a family's income, savings, and investments, and calculates an Expected Family Contribution, or EFC. This EFC number is then reported to the college, who will determine an appropriate financial aid package.

Now that you know some of the basics, here are the questions you will need to ask of each college in order to save the most money:

The 7 Questions You Must Ask

Question 1 - What percent of my need will you meet?

The information above about the EFC may lead you to believe that a college will support 100% of the remaining funds with need-based financial aid. Unfortunately, this is not often the case. About 100 colleges and universities nationwide have a commitment to cover 100% of the tuition after your EFC is calculated, but the rest -- nearly 2,900 other colleges -- do not. It is important to know how much of the gap will be addressed by the university.

Colleges will typically meet need by first using a combination of work study and loans, and then supplement what is lift with grants. There is usually a standard loan and work study amount that each will award, so make sure you ask for these numbers.

Make sure that you do not select a college based on its price tag. This may seem counterintuitive, but know that in general, the more expensive private colleges will be among the few that offer to cover 100% of the student's need after the EFC. Less expensive public universities tend to provide far less than 100%. For many students, it can end up being less expensive to go to an higher-priced private college. Until you know how much of your need a college will meet, never cross off a school just because it is expensive.

Question 2 - Do you offer merit based aid?

If a student is near the top of the application pool for a less selective college, they may qualify for merit based aid. In many cases, students willing to look at less competitive universities get better financial aid packages. If a school does provide merit based aid, here is what you will want to know:

  • How much are merit awards worth?
  • How many are available?
  • What qualifications must a student must have to receive one?

Question 3 - How is financial aid determined after the first year?

Remember that the FAFSA is a yearly document. This means before every school year, you will have to fill it out again. A college will typically reevaluate a student's financial aid package at this time. Some have a sleazy policy of tempting students with generous packages for the first year, and then converting grant money to loans in the following years. Always ask the college about their policies for recalculating aid and the average loan a student takes after the first year. It is typical that the loan amount will increase each year, but you will want to take this into consideration if the increase is substantial.

Question 4 - How much, on average, does a student carry in loans at graduation?

When it comes to comparing colleges' financial aid packages, knowing how much a student must repay at graduation is one of the best factors to use. Know that almost all students will have at least some money they will need to repay, but a savvy consumer will always know when a loan amount is simply too high.

Question 5 - How are private scholarships handled?

Scholarships that a student has received from private sources (such as a scholarship competition they applied to) are dealt with differently by each college. Most will consider this money in calculating a financial aid package, and will reduce their offer accordingly. However, the method in which they reduce the aid varies. While some colleges reduce the loan burden, others will reduce grant money. Naturally, a college that does not adjust financial aid or one that adjusts loan amounts is preferable to one that subtracts grants.

Question 6 - How are financial aid packages calculated?

Specifically, you need to know what percentage of aid comes from grants vs. loans and work study. Grants are the best to receive because they offer free money that does not need to be repaid. However, work study is far better than loans because not only do students receive money that does not need to be repaid, they also receive valuable work experience. You will always want to learn what types of work study programs are available and how many hours a week each student can work.

Question 7 - What is the average time to graduation?

Did you know that most students now actually do not graduate from college in four years? The amount of time a student takes to graduate has an incredible effect on how much college will end up costing. A student coming in with substantial credits as a result of community college classes or AP tests may graduate in fewer than four years, saving not only time but a lot of money. While students focused on a particularly challenging major may take as many as six years. Engineering students tend to have the longest average time to graduation, for example.

Never be afraid to take a notebook with you to each college you visit and write down the answers to each of these seven questions. If you can't visit a college personally, call the financial aid office and find out the answers. Once you have the ability to compare universities, you will have a better idea what your personal financial situation can handle. Never be afraid to share your personal worries and fears with financial aid counselors at each college who can better advise you what to do in your situation. A well-informed consumer is the one who will save thousands on college tuition.

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