Over the holidays an old friend of my daughter's mentioned to me that her little sister was in the midst of applying to colleges. Because I'm curious, and because I write about college planning, I asked where she was sending her applications.

When I heard the schools that Molly was applying to, I tried not to flinch. For a variety of reasons, the colleges and universities on her list were poor choices for a bright girl who needs considerable financial help.

Unfortunately, Molly has plenty of company when it comes to botching what is arguably the most important part of the entire college process. I can't stress how important it is to compile a solid college list. The task, however, is often left to teenagers who rarely understand the ramifications of their choices.

What students routinely fail to do when selecting schools is to research whether these institutions make sense academically and financially. Let's look at some of the schools where Molly applied to see where she went wrong.

Mistake No. 1: Overreaching

One error that Molly committed was playing the college-admissions version of the lottery in hopes of striking it big. She applied to Brown University and Massachusetts Institute of Technology even though few applicants can get past the admission bouncers at these two big-name schools.

Molly thought that she had earned the kind of academic record that could gain her a spot at these two elite institutions. After her first two years in high school, Molly had maintained a 4.0 GPA, but her grades slipped to a 3.7 GPA by the end of her junior year. Molly's sister explained the slide by saying that she had become overly involved in extracurricular activities. She earned an 1870 on her SAT out of a maximum score of 2400. Even if she maintained a perfect GPA and boosted her SAT score, the odds of getting into either of these schools is remote. With her current GPA and test scores (as good as they are), there is no chance at all. I continue to be amazed at the number of teenagers with stellar transcripts who are stunned when they don't get into an Ivy League school. They shouldn't be.

You might assume that what Molly did wasn't harmful. However, she wasted two applications that could have been devoted to schools that represent solid academic matches. After all, there is a finite number of applications that students should complete. Eight applications is usually the maximum I recommend.

While Molly's grades and test scores weren't good enough for MIT (she's already gotten the rejection letter), bright females do enjoy a greater chance at getting admitted to many prestigious engineering schools, including MIT, Harvey Mudd College and California Institute of Technology. MIT, for instance, recently accepted 15.5 percent of its female applicants compared to 9.1 percent of its male applicants. The numbers diverge even more on the West Coast, where Cal Tech accepted 23.1 percent of women applicants and just 9.1 percent of men. At Harvey Mudd, the acceptance rates for women versus men were even higher: men 48 percent versus 17 percent!

Mistake No. 2: Failing to Consider the Finances

It's my experience that students rarely research whether a school is going to be affordable. That's a critical oversight for students who need financial aid. Unfortunately, Molly's list included Boston University and New York University, which are not known for their generosity. If Molly ends up attending either of these schools, she will likely graduate with a large amount of debt.

Lots of wealthy students make a similar mistake. Parents of smart rich students assume they will qualify for merit scholarships at the nation's most prestigious schools such as the Ivies and elite liberal arts colleges like Amherst and Williams. The top private schools, however, don't provide any merit aid to rich applicants. This won't matter if wealthy parents have enough money to handle the $225,000 price tag of an institution like Harvard or Swarthmore, but many can't swing that. They are too over-extended. The good news for these families is that most colleges provide merit aid to wealthy teenagers.

Regardless of their income, the best way that parents can avoid financial aid surprises is to take advantage of net price calculators. (I devoted my April column to net price calculators: “Online Cost Calculators May Revolutionize the College Application Process.” Here's the link: http://bit.ly/zdnc7f) A net price calculator, which every school must post on its website, is supposed to provide families with a realistic estimate of what the institution will cost them after deducting anticipated grants.

Mistake No. 3: Overlooking Graduation Rates

Molly applied to three public universities including San Francisco State University, which is a popular school in California and it's not surprising why. What 19-year-old wouldn't want to live in San Francisco?

Molly, along with her parents, assumes that state schools will be the cheapest alternative, but that's not always true. Private schools can provide enough merit awards to make the price comparable or even cheaper than state institutions. What's more, a state school that on the surface looks reasonably priced won't be if students can't graduate in four years. What many teenagers fail to do is check out graduation rates. San Francisco State's four-year graduation rate is an appalling 11.7 percent.

You can find four-year grad rates of any college or university by visiting CollegeResults.org.

WRITER'S BIO:

Lynn O'Shaughnessy is a college consultant, author and speaker. She writes three college blogs for CBSMoneyWatch, U.S. News & World Report and TheCollegeSolutionBlog.com.