There’s no escaping the fact that college costs are rising. Still, there is good news. There is more financial aid available than ever before. And, despite all of these college cost increases, a college education remains an affordable choice for most families.
“Sticker Price” vs. Affordability
Although some of the college price tags you hear about can be discouraging—$30,000 or more for yearly tuition and fees—most colleges are more affordable than you might think. After grants are taken into consideration, the net price the average undergraduate pays for a college education is significantly lower than the published tuition and fees. And remember, financial aid will further reduce the amount your family will actually pay.
Financial Aid Makes College Affordable for You
Financial aid is intended to make up the difference between what your family can afford to pay and what college costs. Over half of the students currently enrolled in college receive some sort of financial aid to help pay college costs.
The financial aid system is based on the goal of equal access — that anyone should be able to attend college, regardless of financial circumstances. Here’s how the system works:
Students and their families are expected to contribute to the cost of college to the extent that they’re able.
If a family is unable to contribute the entire cost, financial aid is available.
The EFC Works in Your Favor
The amount your family is able to contribute is frequently referred to as the Expected Family Contribution, or EFC. The figure is determined by whoever is awarding the aid — usually the federal government or individual colleges and universities.
The federal government and financial aid offices use “need formulas” that analyze your family’s financial circumstances (things like income, assets, and family size) and compare them proportionally with other families’ financial circumstances.
Most families can’t pay the EFC out of current income alone. But, not to worry — the formulas assume that families will meet their contribution through a combination of savings, current income, and borrowing.
Financial aid is limited. The formulas therefore measure a particular family’s ability to pay against other families’ ability to pay.
Don’t Rule Out Colleges with Higher Costs
Say your EFC is $5,000. At a college with a total cost of $8,000, you could be eligible for up to $3,000 in financial aid. At a college with a total cost of $25,000, you could be eligible for up to $20,000 in aid. In other words, your family would be asked to contribute the same amount at both colleges.