Unraveling the Mystery of Financial Aid

Unraveling the Mystery of Financial Aid
Author: Brian Duggan

We are excited to feature a special guest post from Brock T. Jolly, CFP®, the Founder of The College Funding Coach. This article is a must-read for all who want to learn more about college pricing models, the intricacies of the financial aid process, and what you can do to maximize your college funding strategy.

Every year we hear stories of students filing into their counselor’s offices with exuberance after getting into their dream school(s). A month later, the student and/or parents sit dejectedly in the same office asking how the heck they are going to pay for it.

There are many reasons for this, but here are two major ones:

  1. Colleges are remarkably opaque when it comes to their prices.
  2. Many of us are much more focused on getting IN to college than determining how to pay for it.

College is big business. It is selling a product. And committing to that product before you even have an inkling of cost or ROI is rather absurd when you think about it. But this is the way things go.

At the College Funding Coach, we strive to change this by educating parents as early as possible on how college pricing works, what you can do to “fight back,” and why a college application and funding strategy should be incorporated into a comprehensive financial plan as early as possible.

Put simply you CANNOT plan for college in a vacuum.

Let’s get into it.

Need-Based Aid


You have probably heard of the FAFSA, and you may have heard that it’s not worth filling out if you have a high income. Indeed, it is true that most middle-class and upper-class families will not qualify for federal grants through the FAFSA.

Many other factors, however, dictate that you should complete the FAFSA regardless of income:

  • States and private organizations may use the FAFSA to determine aid. Some colleges require the FAFSA to qualify you for merit aid packages
  • No matter how high your income/assets, you will qualify for federal direct unsubsidized loans. More flexible and forgiving than private loans, these can be a good tool to add to your college funding strategy – whether you want your kids to have “skin in the game” or you’re very conscious of not dipping into retirement funds.
  • You will find it easier to appeal for more financial aid if the college has your FAFSA on file
  • Despite many schools saying they are need-blind, there is some evidence that ability to pay full freight may actually help you in the admissions process

After filing the FAFSA, you will receive a Student Aid Report (SAR). On it you will see your federal Expected Family Contribution (EFC). This an estimate amount of money, based on a rather complex formula that takes income heavily into account, that the federal government and some schools expect you to cover on your own. It is NOT the amount you will pay for college.

What the EFC is really used for is to calculate your need-based aid eligibility. If you subtract your EFC from the school’s total cost of attendance (sticker price), you will arrive at your need-based aid eligibility.

Here’s where it gets interesting: colleges don’t have to match your need. In fact, the vast majority will not meet your need or will meet it with some grants and an unsavory combination of work-study and student loans.

The colleges that do meet 100% of need (or close to it) tend to be highly selective. If you have a fantastic student but little money, it may not be a bad idea to research some of these schools.

Wait, hold up. Let’s throw another wrinkle into the mix: The CSS Profile.

CSS Profile

The CSS Profile is a form that many schools require in addition to the FAFSA. The colleges and universities that require the CSS Profile tend to be either private colleges or selective public universities.

You can find the current list of CSS Profile schools on the College Board’s website.

These CSS Profiles use a different formula, called the institutional methodology, to dig much further into your family’s financial situation than the FAFSA.


These schools use the CSS Profile to determine how much of their own money they are going to send you. They want to be as accurate as possible since they are digging into their own coffers. As a result, the CSS Profile counts other factors in its formula to determine need, such as primary home equity or non-custodial parent’s income (the FAFSA disregards this).

This means that you may have a different Expected Family Contribution from CSS Profile colleges.

It’s not all bad news, however. The CSS Profile is a double-edged sword. Since it digs deeper, a family with extraordinarily high medical expenses or other unique circumstances may get a fair shake.

Furthermore, remember our calculation to determine need-based aid: Cost of Attendance – Expected Family Contribution = Need-Based Aid

Well, many of these CSS Profile schools have very high costs of attendance. That means, even if you have higher income/assets, you may still qualify for some need-based aid at private colleges.

You may say that’s all well and good, but we will not qualify for a lot of need-based aid and a good private school like the University of Richmond here in Virginia charges almost $80,000 all in!

Why does this even matter if in-state publics are going to be cheaper for us?

Merit Aid: Why You Should Look at Private Colleges & Out-of-State Public Universities

Merit aid is what schools use to lure good students or students they need to round out their class. It is referred to by other names, like tuition discounts or college coupons. This is namely because merit aid can tend toward the arbitrary and unpredictable.

It is this institutional merit aid where families find the bulk of the free money for college.

Private schools in particular blur the line between need and merit. If they really want your student, and you can demonstrate hard evidence for why you need more aid, they may just help you out a little.

The most prestigious schools, however, tend to only award need-based aid, and the few selective colleges that do award merit scholarships award them to only a handful of students.

So, How Do You Find Merit Aid?

Stop looking at the wrong schools.

The simplest way to improve your chances at merit aid is provided by Jeff Selingo, author of Who Gets In And Why: A Year Inside College Admissions.

In his book, Selingo places colleges into two camps: buyers and sellers.

Sellers are traditionally prestigious, highly selective schools that know consumers will pay full freight and thus only focus on helping those with the highest need.

Buyers, on the other hand, may be a little less selective but still provide a quality education. These schools must work harder to lure students from their buyer competitors and from the sellers.

Consequently, if you will not qualify for a ton of need-based aid, but you have a great student, you should create a college application list with a mix of buyers and sellers whose financial aid packages you can leverage against each other. Your wallet will thank you.

The hunt for merit aid is not so cut-and-dry, however. While the awarding of merit aid can sometimes seem arbitrary and random to parents, there are some decent rules of thumb you can follow to increase your chances.

  1. Apply to schools where your student will be in the top 25% of their class.
  2. Research under-the-radar schools who are generous.
  3. Look at private colleges and out-of-state schools who give large non-resident scholarships. Several large public universities (e.g., Alabama) are known for awarding aggressive merit aid packages to good students.
  4. Consider applying to some colleges early action. At the very least, you will know where you stand early on and can adapt your application list from there.
  5. Search merit scholarships on each college’s website. Some of them have preset merit aid charts based on GPA and standardized test scores.
  6. Find the historic “non-need-based aid” data for each college. Here are two sites that will help:

There are other factors that vary year by year, college by college. Maybe the school sees that you’re from a state that doesn’t usually send kids there. Perhaps, they are interested in the fact that your child plays the bassoon, or maybe they need more students in their forestry school. You get the picture.

Ultimately, however, some factors just aren’t in your control.

A Note on Financial Aid Award Letters & Appeals

Colleges have a bad habit of making their award letters as confusing for parents as possible. Whether this is intentional or not (it likely is), it is crucial that parents understand the full cost of attendance, the amount of gift aid (grants/scholarships), the amount of self-help aid (loans and work-study), and the out-of-pocket cost.

Scrutinize these letters like a cynic. Is the “award” they are offering you really an “award” or is it really a $30,000 parent PLUS loan?

If you’re not sure what the information means, reach out to someone who does. Do not make assumptions!

Lastly, understand that the financial award letter is not always the college’s “final offer.” Now, this does not mean you can badger them over the head for more money or discounts like at a car dealership.

Instead, you can follow one of two paths:

  1. The Official Financial Aid Appeal for Need-Based Aid: this is a formal process where a financial aid administrator can adjust inputs in the financial aid formula based on qualified circumstances (e.g. your income on the FAFSA does not accurately represent your current situation). For more info, read The Financial Aid Appeals Process: Everything You Need to Know.
  2. The Unofficial Admissions Discussion: this involves keeping open lines of communication with the admissions office. Colleges hate the word “negotiation,” but this is essentially what it is. Let’s not get into semantics here (just don’t use the word negotiate with them!). If you politely demonstrate hard evidence for why you need a little more and even provide other school’s better award offers, the college may just find a couple thousands of dollars lying around. This is not a one-time discussion—sometimes money becomes available closer to the decision deadline.

The Problem with Financial Aid

Unfortunately, financial aid only goes so far. Almost every parent you talk to will have some variation of the same answer: “the college did not give us enough money.”

Many families make too much to qualify for considerable need-based aid but don’t make enough to cover the cost of college. They’re stuck in the middle, and some colleges are just not affordable.

As families search for every penny, merit aid has become a hot topic. Yet, even merit aid has its limits and is no guarantee (especially if your student is not “excellent” in the traditional sense).

At The College Funding Coach, we emphasize not only saving as early as possible, but also instituting a comprehensive strategy to cover this future tuition gap. Ultimately, we aim to educate and inform parents, so they do not get blindsided by reality.

Best of luck! And, a final bonus:

A List of Tips to Help You Your College Funding Journey:

  1. Calculate your EFC early to establish a baseline. You can do so here using our College Money Report.
  2. Determine what you are willing to pay and have the money conversation with your child.
  3. Establish a funding strategy with tax-efficient dollars that considers all your other financial goals, including retirement. If you don’t have the time, expertise, or desire to do this, reach out to a college funding expert or financial advisor who does. Unfortunately, many financial advisors don’t really understand how admission, financial aid, college cost reduction, and financial planning all intersect.
  4. Try and avoid getting stuck in the vicious cycle U.S. News rankings and general prestige. Create a list of schools, that are good fits for YOUR student and yours only.
  5. Don’t overlook financial fit/affordability.
  6. Remember that you need to pay THROUGH college, not TO college. This opens up some more financial concerns, but also tons of possibilities (e.g. waiting for 529 savings to rebound to pay off student loans).