Tuesday, December 8, 2009

The Financial Aid Game

Posted by Ahmed Al-Salem
The price of college, after growing faster than inflation for three decades, is enough to give all but the wealthiest families a run for their money. Four-year private colleges now charge an average of more than $37,000 a year, including tuition, fees and room and board, with expenses at the most elite colleges topping $50,000. That's the sticker price. A family's actual cost will vary depending on how much financial aid, need-based or merit-based, a student receives. Merit aid is a separate topic and intertwined with the question of admissions, since schools use this aid to attract the students they want most. It's always difficult to predict how much merit aid a student will be offered by any given school, yet it can be crucial to determining where a child goes. By contrast, need-based aid is generally based on set formulas determining a student's and parents' ability to pay for college out of both their income and some of their assets. These formulas may not be entirely fair or generous, but at least predictable. The formulas are used to come up with something known as your "expected family contribution." The EFC is subtracted from the college's total cost of attendance, including tuition, fees, room and board. If the family's EFC is less than the cost, the student is eligible for need-based aid.

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