A mom emailed me earlier this week and I’ve somehow managed to stretch out the topic of her concern to three posts. If you’re curious, here are the previous ones:

Who Is Stressed Out About College?

Do You Really Expect Me To Pay That Much for College?

Today I’m going to address her chief question:

What do you do if the financial aid formula considers you affluent, but you don’t have the financial ability to pay full price? I suspect that plenty of people who visit my college blog are grappling with the same question.

This mom’s Expected Family contribution is high. Depending on the methodology, it ranges from $37,000 to $44,000. Many families are shocked at their EFC, but keep in mind that the federal EFC is a creation of Congress.

Paying for College When Your Considered Affluent

Here are a few of my thoughts on this issue:

1. Just because a family has a high Expected Family Contribution, doesn’t mean that they will pay full price.

This mom, or any other family with a high EFC, could look for schools that provide merit scholarships to affluent students.  Nearly all schools fall into that category.

It’s far easier to identify the schools that don’t offer merit scholarships to rich students than name those that do. There are probably only two or three dozen schools at most that don’t provide merit scholarships. As I mention in the second edition of The College Solution, the scholarship-free institutions are the nation’s most elite schools including the Ivy League members.

Check the top 10 institutions in US News’ prestigious national university and national liberal arts college categories and you’ll have a great idea of which schools don’t dispense merit scholarships to wealthy students.  Many of these schools don’t offer merit scholarship to rich students because they can easily attract these students without help. If their US News rankings ever started slipping (highly unlikely because of how the methodology is rigged), I’m sure they would start dispensing them.

MIT (a school on the  dream list that the mom shared) doesn’t offer any scholarships to rich students, which is no surprise because it is ranked 5th in the college rankings. Stanford and CalTech, also tied at No. 5, represent a slightly different approach taken by some highly elite schools. Stanford and CalTech, along with schools like Carleton College ($3,368), Bowdoin College ($1,000) and Northwestern ($2,521) offer very modest scholarships to rich students.

When I checked the Financial Aid section of Stanford’s Common Data Set (21011-2012), only 87 wealthy students out of a freshman class of 1,674 received a merit scholarship (non-need-based aid in higher-ed lingo) and the amount was a modest $4,985. The average merit scholarships for rich students at CalTech was $5,000.

2. A high EFC can still generate need-based financial aid.

This family, assuming that their child got into these elite schools (and that’s a huge assumption), could still be in line for financial aid at schools that are extremely expensive. For instance, the cost of CalTech is more than $56,000. The son could receive need-based aid that would close the gap between the family’s EFC and the cost of the school. If the family’s EFC was $37,000, that would mean an aid package of $19,000.

3. Rich families should broaden their search.

This advice actually is relevant to families of all income. If you are in need of financial help, students should look for schools that would be excited to have them in their freshmen class. Rather than looking for schools where you’d barely get in, search for schools where you’d be in the top 25% to 33% of the incoming class.

Colleges have finite amounts of money and they will reserve their best awards to their most coveted applicants. If you are wealthy, your child’s chances of getting large merit scholarships are much greater if you look beyond…..

4. Consider state universities.

If the cost is too much to absorb, consider your own in-state public universities. If a child receives a merit scholarship at a state school, chances are the price will be quite reasonable. I don’t see the point of going to a private institution if it would require great hardship on the part of the parents and/or the student.

Any other ideas?

If you have any other suggestions on this topic, I’d love to hear from you. Just send your comment in the box below.

And Happy Memorial Day!

Lynn O’Shaughnessy is the author of second edition of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price, which was released this month.

In my last post I shared an email from a mom whose is concerned that her family makes too much money to qualify for financial aid at schools on her son’s list. If you missed the post, here it is:

Do You Really Expect Me to Pay That Much for College?

I had intended to write a followup post that focused on the finances – and I will do that in the next post – but I veered in a different direction today. I have to confess that I experienced a visceral reaction to the mom’s email when she shared the schools on the teenager’s list – CalTech, MIT and Stanford.

All these schools are huddled near the top of US News & World Report’s college rankings. In fact, the three institutions are currently tied for 5th place in the prestigious national university category.

This touches upon one of my biggest pet peeves about the college process: bright students from affluent families often are determined to fish in the same pond. Too many upper-middle class and rich students seem to believe that if they are highly intelligent that they should aim for the same two or three dozen schools.

Rejecting Nearly Everyone

CalTech

Schools like MIT, CalTech and Stanford, however, reject nearly all applicants including valedictorians and test takers who can boast of perfect ACT and SAT scores. There are, after all, roughly 37,000 high schools in this country, which means that there are at least that many valedictorians. And, of course, in reaction to the college admission arms race, plenty of schools are bestowing valedictorian honors to multiple students.

I checked the stats for CalTech, MIT and Stanford and found that they accepted a grand total of 4,846 students during the latest available admission season. These are miserable odds even for valedictorians and yet spurned applicants are often stunned when they get rejected.

Just last week during a college presentation that I gave in Orange County, CA (a magnet for rich, smart, stressed-out teenagers), a mom mentioned that a brilliant girl she knew recently got rejected from all 12 institutions that she applied to. Apparently, the high school counselor had told the girl that she was smart enough to get into Ivy League schools so she applied to a bunch.

If this young woman had constructed a solid list of schools that represented great academic fits – and applied to elite schools sparingly -  she would have enjoyed lots of wonderful choices. Instead, the girl’s only offer came from the University of California, Merced. She didn’t even apply to that school, but since she was rejected from the premier UC campuses, she was given this opportunity as a consolation prize.

The Race to Nowhere Crowd

It’s no wonder that students get stressed out when they severely restrict the universe of schools that they will consider. Students, along with their parents, who take their cues from the college rankings, are typically the ones who are also stressing out about the documentary The Race to Nowhere.

This over-hyped documentary makes it appear that colleges and universities across the country are rejecting the vast majority of applicants; teenagers who have sacrificed their teenage years by spending their waking hours taking obscene numbers of AP classes and who have devoted the rest of their time to  extracurriculars that they think will wow the admission gods at places like Harvard and Amherst.

Here is a post that I wrote about this movie:

A Race to Nowhere Skeptic

Who Is and Isn’t Worried

I really do think this elite-college fixation is largely confined to private and public high schools where the student body is largely affluent. This spring when I was back in my home town of St. Louis, I had a conversation with a mother whose children attend a prestigious private high school – Mary Institute and St. Louis Country Day School (MICDS). She told me about all the elite colleges that had recently rejected students she knew.  I asked her what percentage of teenagers that she thought get accepted into their first-choice schools across the country.

Ten percent?” she replied.

I laughed, which prompted someone else in the room to blurt out, “Five percent.”

Actually, I laughed because the mom was so far off. The true figure, according to the latest annual UCLA survey of freshman nationwide, is 76%! And here’s another fact that some will find amazing: Only 2% of colleges and universities reject more than 75% of their applicants.

Where You Won’t Find As Much Stress

While I was back home, I gave a talk at my high school – Incarnate Word Academy. This private girl’s school (St. Louis has an extremely high number of Catholic single-sex high schools) doesn’t attract a lot of wealthy students and it’s not located in a fashionable part of town. (I grew up a half block from the school.) When I asked the parents in the audience how many were stressed at the prospects of their girls getting into good colleges and universities, very few raised their hand.

I think the reaction of parents at my alma mater is more common among families across the country.  Most of the students at my alma mater will end up attending state universities within Missouri that aren’t that selective. What these families are worried about is paying the tab, not getting into schools that impress U.S. News.

When I get Incarnate’s yearly newsletter that contains the collegiate choices of the graduates it makes me sad that few girls are attending schools beyond public universities in Missouri or some regional Catholic universities. Some of these girls should be aiming higher.

In contrast, the students at the most prestigious high schools in St. Louis and elsewhere should end their fixation with the same prestigious universities. They are often aiming too high when they apply to schools (Aiming high isn’t the right term because that implies that the most elite schools are always the best institutions for undergrads which I don’t believe.).

I wish more students, regardless of their financial wherewithal, would do a much better job of developing solid lists of schools. And that means casting a wider net!

Lynn O’Shaughnessy is the author of The College Solution: A Guide to Everyone Looking For the Right School at the Right Price.

I wanted to share an email that I received over the weekend from a mom named Linda, who is questioning whether her bright son’s No. 1 college choice – Cal Tech – is out of reach financially.

Mom’s Email

Here is what Linda wrote:

My son, a rising freshman, has dreamed of attending Cal Tech for years, which others have said is possible because of his abilities. I have told him to continue to do his best academically, but not to set his sights on one school, or even a top tier school, because it will all depend on affordability.

I am reading The College Solution (2nd edition), and decided to take your advice by calculating our Expected Family Contribution and running numbers through various Net Price Calculators. I was SHOCKED to see that our EFC is $37-44K, depending on the college!

Yes, my husband makes very nice income, but we also live in expensive Southern CA. We don’t drive luxury vehicles, and our cars are 8 & 12 years old. We don’t go on pricey  vacations or have expensive toys, such as a large screen TV! We have had several financial crises in the past five years that have nearly wiped out our savings. We would be hard pressed to pay for one year’s EFC, let alone 4 years worth. And this is just for one child!

Unfortunately, Caltech no longer gives merit aid, and  it doesn’t seem other schools of similar caliber (MIT, Stanford) don’t either. Is there any hope of my son attending his dream school, or are we being totally unrealistic?

My Response

First, I want to congratulate this mother for being proactive in evaluating whether schools on her son’s dream list make sense financially. Unfortunately, many parents and teenagers never try crunching the numbers in advance.

Sadly, most parents only discover what a school will cost months after their child has applied. They learn what the tab will be when their child receives a financial aid package, which they may only get a month or two before the freshman deposit deadline.

The better approach is to follow the lead of this mom and use an Expected Family Contribution calculator. I’d recommend that you use the College Board’s EFC calculator (See below).

Here is a previous blog post that further explains what an EFC is:

What Is Your Expected Family Contribution?

Determine Your EFC

The EFC calculator provides an estimate of what a family would be expected to pay, at a minimum, for one year of college. The EFC, which is expressed as a dollar figure, can be as low as $0 for a poor family.

The more affluent the family, the higher the EFC will be. There is no EFC ceiling for a wealthy family. A rich dad, who is a corporate executive of a national restaurant chain, once told me that when he calculated his EFC, it was $108,000. Obviously, no school costs that much. In this case, the family was going to explore schools that give merit scholarships to rich students and most colleges do. I’ll talk more about this in my next post.

EFC discussions inevitably lead to the questions about what financial aid formulas calculate. Unfortunately, financial aid formulas don’t take into consideration the cost of living in a state or region. Not surprisingly, this is a sore point among families living on the coasts and in other high-priced areas.

Critics rightfully complain that the methodology used to calculate EFC figures for millions of Americans isn’t always fair. In fact, it’s likely that the EFC won’t pinpoint what a family can truly afford for college. It’s no wonder since the EFC formula is actually a political creation. Congress dictates how the formula calculates families ability to pay for college.

Regardless of whether a EFC verdict is fair or not, families need to calculate in advance what kind of financial commitment they face.

I’ll have more thoughts on Linda’s dilemma in my next post.

Online Appearance Tuesday

I will be a guest on the Vanguard Group’s webcast on Tuesday that will include advice for families who are grappling with how to pay for college. You can sign up to watch here:

Lynn O’Shaughnessy is the author of the second edition of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price, which was released this month.

What is the best way to ace your teenager’s final exams?

This is a timely question as millions of high school students are getting ready to take their final exams.

You might assume that reading textbooks and notes over and over again is the best way to study, but researchers from Purdue and Washington University insist that it’s not the best approach.

Listen Up Test Takers

Here’s a better way to improve test scores:

You should practice retrieving as much information as you can from memory just as you would have to do on test day. You can do this by writing down what you absorbed — without consulting your notes or book — or you can review what you know out loud. And you should do this several times.

Even if you think you know it, the research shows retrieving it about three or four more times can achieve big gains in learning.

What the Experts Say

In contrast, simply reviewing your notes or textbook can provide you a false sense of confidence. In an interview with The Chronicle of Higher Education, here’s what one of the researchers, Jeffrey D. Karpicke, an assistant professor of psychology at Purdue, had to say about this phenomenon:

“When you’ve got your chemistry book in front of you, everything’s right there on the page, it’s all very familiar and fluent,” says Jeffrey D. Karpicke, an assistant professor of psychology at Purdue University and lead author of a paper in the May issue of Memory about students’ faulty intuitions about effective study habits.

“So you could say to yourself, ‘Yeah, I know this. Sure, this is all very familiar,’” Mr. Karpicke continues. “But of course, when you go in to take a classroom test, or in real life when you need to reconstruct your knowledge, the book’s not there. In our experiments, when students repeatedly read something, it falsely inflates their sense of their own learning.”

Learn More Here

To learn more, here is a press release from the Purdue study about the research on performing better on tests and here is the final exam article from The Chronicle.

Who ever thought that hitting the books might not always be the best strategy to acing your finals?

I also found some great advice from a professor writing in The Chronicle of Higher Education on how to take an exam after the studying is complete:

How to Take a Final Exam (Part 1)

How to Take a Final Exam (Part 2)

Lynn O’Shaughnessy is the author of the second edition of The College Solution, which was just released this month.

How can reduce your dependence on college loans?

About this time last year, Mark Kantrowitz, the publisher of FinAid and FastWeb, sent me some suggestions on how families can reduce their dependence on college loans.

I am running the suggestions again along with links to some of my college blog posts that I’ve written on the same topics. Here are the tips:

1. Borrow less for your entire education than your expected starting
salary. Ideally, education debt should be less than half your
expected starting salary.

Read my post: College Debt: Don’t Borrow More than $27,000

2. Live like a student while you are in school so you don’t have to
live like a student after you graduate.

3. Save money in a college savings plan before enrolling in college.

Read my post: Why 529 Plans Are Great For the Wealthy

4. Search for scholarships on free scholarship-matching sites like
Fastweb.

Read my post on an intriguing new scholarship search tool:

A New Way to Search for College Scholarships

Read my post: 7 Things You Need to Know About Private College Scholarships

5. If you enroll at an out-of-state public college, try to establish
residency first so that you can qualify for in-state tuition.

Read my post: Cutting the Price of Out-of-State Universities

6. Consider enrolling at a college with a “no loans” financial aid
policy.

Read my post: 63 Colleges With the Best Financial Aid

7. Compare colleges based on the out-of-pocket cost, the difference
between the cost of attendance and gift aid, such as grants,
scholarships and other money that does not need to be repaid.

8. Live at home with your parents. (Curiously, the debt reduction is
only significant for students who are at public colleges.)

9. Borrow federal first. Federal student loans are cheaper, more
available and have better repayment terms.

Read my post: Stafford Loans: Borrowing for College

Read my post: 2 out of 3 Student Loan Borrowers Are Struggling

10. Before buying something with student loan money, ask yourself
whether you’d still buy it at twice the price, because that’s about
what it will cost you after you’ve repaid the debt.

11. Pay the interest on unsubsidized loans during the in-school and
grace periods to prevent the loan balance from growing larger. This
will reduce the debt at graduation by about 20%.

12. Work part-time during the school year and full-time during the
summer to earn money for college.

13. Graduate with a bachelor’s degree in four years, not five or six.

Read my post: Who Graduates in 4 Years

14. Don’t switch majors or transfer colleges.

Read my post: Is Getting a Double Major a Dumb Idea?

15. After you graduate, accelerate repayment of the highest cost loan
first, namely the loan with the highest interest rate.

Lynn O’Shaughnessy is the author of the second edition of The College Solution, which was just released this month.  Follow her on Facebook, where she answers parents and teenagers’ questions on Fridays.

When you take into account all the sources of college aid that are available to students in this country, roughly nine percent comes from state governments. Recently that amounted to $9.2 billion.

How states dispense this aid varies significantly. While nearly all states are strapped for cash, some are far more generous than others to college students. The requirements for who qualifies for the cash is also all over the board.

Families with smart children are happy if they live in a state that doles out money based on merit. Often the teens who have higher grade point averages and test scores can win state grants regardless of whether they have the ability to pay for college. In contrast, families with low and moderate-incomes are more likely to benefit if they live in states where all or the majority of money is based on the financial need of the household.

Financial aid practices in all 50 states

The Brookings Institute just released a report that explores the financial aid practices of all 50 states. You don’t have to read between the lines to appreciate that the researchers who worked on this report — and it relied on some real heavy hitters  – aren’t happy with states that link the majority of their college grants to merit.

Most of the states which reward affluent students through their aid policies – and stiff many lower-income kids – are primarily in the South. The worst offender is Georgia which dispenses all its college grants based on merit. I guess if you’re a poor kid in Georgia and you don’t meet the requirements for a state merit scholarship, good luck paying for college!

In the chart below, you can see a bunch of interesting statistics. The left-hand column, for instance, shares what percentage of adults in each state have earned at least a bachelor’s degree. The next column indicates how many students attend college in their own state. California has the highest percentage of students who don’t cross state lines for college (93%), which I found that fascinating. In my talks around the state (I have one today in Costa Mesa), I will continue to urge California teenagers to look beyond their own state for great financial and academic fits.

The average grant in some states such as Alaska, Arizona and New Hampshire is incredibly low. According to the report, New Hampshire and Michigan fall into the worst possibly category: high tuition/low financial aid states. Alaska, as well as Utah, fall into the low tuition/low aid category. New Jersey and South Carolina fit into the high tuition and high aid category while West Virginia and Louisiana’s policies are characterized as low tuition/high aid.

In the second and third column from the right, you can see what percentage of state aid is based on financial need and what the average grant is.

I agree with the report that with limited resources, states should be directing their money to the students who actually need help to attend college. The report (Beyond Need and Merit: Strengthening State Grant Programs) recommended that states give their grants to students who have the most financial need and then link these grants to incentives to get the recipients to actually graduate. For instance, a student might be required to take a full class load of 15-credit-hours a semester to keep a grant.

What is painfully clear is that the states aren’t doing enough to support their higher-education systems, which is making the cost of college more expensive for all students heading off to state universities.

What do you think?

Lynn O’Shaughnessy is the author of the newly released second edition of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price.