Every year, hopeful high school students, with their parents tagging along, finally get to indulge in the fun part of the college admission process. They begin visiting college campuses.
Checking out college campuses is a logical step, but countless families make a serious mistake when they purchase their airline tickets or gas up their car for a road trip.
Here is the error: Parents let their teenagers visit whatever campuses they desire. “Dream big,” seems to be a common refrain from parents. Not setting limits on a teenager when selecting schools for the itinerary can set in motion eventual heartache and financial disaster.
This is especially true when teenagers have their heart set on attending elite, or what I like to call highly rejective universities. The problem with this approach is that teenagers, who can be highly impressionable, will fall in love with tantalizing colleges and universities that their families can’t afford.
Not paying attention to costs can often lead to emotional meltdowns when a child gets accepted to an institution without receiving enough merit or need-based aid or any help at all. Parents, who balk at paying for fancy schools that can now cost $400,000 (not a typo) for a bachelor’s degree can find it difficult to say no. Teenagers, who often have no concept of money, try to guilt their parents into raiding their retirement accounts, borrowing or in some other way finding the money they should never be spending on a bachelor’s degree.
Luckily, there is an easy way to avoid these unfortunate confrontations. Before parents allow their children to get serious about any school, they should know what the school’s net price would be for their household.
In pursuit of this number, I recommend parents obtain their Expected Family Contribution as a first step. An EFC is a dollar figure that indicates what the household should be able to pay for one year of college. The official figure is generated after a family completes the Free Application for Federal Student Aid and, if necessary, the CSS Profile. The later application is used by roughly 200 schools, nearly all private, to determine what students may qualify for institutional financial help. The vast majority of schools use the FAFSA to determine both government aid and institutional aid.
I always recommend that parents obtain their EFC(s) because it provides a quick idea of what colleges will expect a family to pay. With this information, families can aim for schools that provide merit aid for affluent families with high EFCs or schools that provide good aid packages to those with lower EFCs.
I previously recommended that parents use the College Board’s EFC calculator to determine both the CSS Profile EFC (institutional methodology) and the FAFSA EFC (federal methodology.)
I had to change my advice in 2024 because the College Board, which operates the CSS Profile, without explanation pulled the valuable calculator off its website.
What also happened for the 2024-2025 admission season was that the federal government, as you might know, dramatically overhauled the FAFSA and part of that overhaul was swapping out the term EFC for Student Aid Index (SAI). It would take too long to explain why the term EFC was retired, but suffice it to say that the move was unnecessary. The CSS Profile continues to use the term EFC.
The place to go now to determine a household’s SAI is the Federal Student Aid Estimator. It calculates federal financial aid, which probably won’t be relevant to your clients since most federal aid goes to households making $60,000 or less a year. The estimator, however, also provides a household’s SAI.
Since the College Board stopped offering its institutional EFC calculator, families and advisors have two options if they are interested in the brand-name private institutions that use the CSS Profile.
The free option is for families to go directly to the net price calculator that each college and university must provide on its website. If it’s a reliable calculator, it should ask for information from family income tax returns and often take 10 or 15 minutes to complete. With the information the calculator obtains, it will estimate the net price by subtracting aid, if any, that a student would receive from the federal and state governments and from the school itself.
It’s the net price and not the sticker price or the price the kid down the street got that matters.
Another option to obtain the institutional EFC and a one-stop place for collegiate net price calculators is College Aid Pro. CAP offers an invaluable software program for financial advisors and consumers. After supplying in-depth information about the family’s finances, household size and marital status of the parents, the software provides the federal SAI and institutional EFC.
In addition, the CAP software uses this information to determine the net price of any college for the user. Parents and advisors can also use the software to instantly search for schools based on how much the family wants to pay for college. It’s a real time-saver.
Lynn O’Shaughnessy, a nationally recognized college expert, offers an online course – Savvy College Planning - exclusively for financial advisors. Click here to get Lynn’s guide, Finding the Most Generous Colleges.
