Net price calculators are supposed to be the best new thing to help you figure out what a college costs. And they can be helpful. But can you trust them?

In short, no. At least not unless you know the four year graduate rate for the college in question.  You see, no matter how accurate the net price calculator is at letting you know what the college might cost you, until you have some idea of how many years of college you will have to pay for, you won’t know the real cost of the college.

Say the calculator says you have to pay $10,000 a year for college. If most students graduate from the college you have an interest in within four years, you would pay $40,000.  But what if most students need six years to graduate?  You would end up paying $60,000 for the college.

The net price calculator, even if accurate for your yearly cost, doesn’t tell you whether the college costs $40,000 or $60,000. Does that make a difference to you? Of course.

Use the net price calculators. But also make sure you understand the time it takes to graduate from the college. Only then can you begin to have an idea of what you might have to pay.

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The National Association for College Admission Counseling (NACAC) is presenting a free webinar on the FAFSA. The FAFSA, Free Application for Federal Student Aid, is the form that is required to be completed by everyone applying for federal financial aid.

This webinar will be held on Wednesday, December 7, 2011, at 2:00 EST. The seminar lasts for one hour and will cover topics like:

• What is the FAFSA
• Steps to take before applying for financial aid
• Strategies and deadlines in the application process
• Frequently asked questions

The webinar is aimed at high school counselors as well as students and their families who will be applying for financial aid.

As a member of NACAC I am promoting this webinar to help as many people as possible become aware of what the FAFSA is and how to properly complete it.

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Everyone should have their financial aid award by now.  But I have many people asking about how to figure out what the letters mean.

Finaid has published a Quick Reference Guide to Evaluating Financial Aid Award Letters.  This is an excellent quick guide to understanding financial aid award letters.

For parents of younger students, you should take a look at this guide also. It presents some of the financial aid information I have talked about in the past but in a different format.

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US News has posted a list of the 63 colleges that meet 100% of a student’s financial need. Need is defined as the difference between the cost of the college and what a family is expected to pay based on the FAFSA or CSS PROFILE.

In most cases, if you have a family income below $100,000, these colleges will probably be a better deal than the local state college.

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Kiplinger’s has published their 2011 list of best value public colleges.  While I am not generally a fan of college ranking sites I think there is some validity to sites that rank colleges based on financial aid issues.

However, cost alone is not the only issue. Pay attention to the 4 year graduation rate because if you have to pay for more than 4 years of college it will be more expensive in most cases than the college that graduates students in 4 years.

You should also pay close attention to the average debt at graduation to know what you are likely to have to repay.

Like many ranking systems, the best aspect of the Kiplinger list is the information that it provides to students and families. Use the ranking as a general guideline but pay attention to the actual information they give you. And remember, many private colleges can be just as affordable as public colleges for families with low or middle income.

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I was recently asked if colleges offered a more attractive financial aid package to a student if the parents have contributed to the alumni fund? And do colleges generally award better financial aid to children of their alumni?

It can vary from college to college but in general terms, contributions to the alumni fund will have no effect on a financial aid award. Similarly, children of alumni do not generally get better financial aid awards.

It is true that colleges often alumni preference in the admissions process. This is done in the hope that there will be more monetary contributions coming back to the college. Their focus is on getting money back, not giving more out. Getting in may be easier for alumni, but you won’t get better financial aid.

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Cornell University and Dartmouth College are announcing changes in their financial aid policies according to an article in Inside Higher Education.  Basically, the new policy is that each of these colleges will match the financial aid award offered by some of their competitor colleges including the other colleges of the Ivy League.

Here is how it would work. If a student applies to both Cornell and Harvard and gets a financial aid award from Harvard that is better than the one from Cornell, Cornell will match the award at Harvard. Sounds good since the student can now make a college selection without the issue of which college has the better financial aid package.

But, things aren’t quite that simple.  The student needs to know about this policy and ask Cornell or Dartmouth to match the financial aid award from the competing college.  Don’t ask, don’t get more money. The reality also is that a student admitted to both Cornell and Harvard will in all likelihood choose Harvard if the cost is the same at both.

So why are Cornell and Dartmouth changing their policies?  The real focus of this new policy is recruited athletes.  Recruited athletes will often choose a college based on that particular athletic program or the coach at that college. If a recruited athlete prefers Cornell’s athletic program to Harvard’s they now can get more money to play for Cornell.

This has the consequence that two students applying to Cornell, one who also applied to Harvard and is a recruited athlete, may get a better financial aid package to Cornell than the non athlete. Doesn’t quite seem fair given that the Ivy League rules specifically forbid the granting of merit based scholarships including athletic scholarships.

This also has the additional consequence of potentially increasing even further the applications to the Ivy League colleges with stronger aid (Harvard, Yale and Princeton) since you need to have a financial aid award from one of the those colleges to show to Cornell or Dartmouth.

The only good news from this deceptive practice is that Cornell is being open about what they are doing.  As long as you are an avid follower of Ivy League admissions, you as a recruited athlete can get a good deal. Just remember to apply to Harvard or Yale as well.

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There is a new poll out by the College Board and the Art and Science Group that finds that people don’t understand financial aid when choosing a college. These are not people reading my blog, of course, since you all know that understanding financial aid is critical. Right?

The poll finds that many people still rule out particular colleges based on cost. As I have talked about many times, it is not the stated cost of the college that should be of concern to you. Your only concern should be what the college will cost your family.  Don’t forget about financial aid whether it be need based or merit based.

The poll also found that most families do not use financial aid calculators to see approximately what they might have to pay for a college.  Everyone planning on going to college should get a preliminary estimate early on in the process to better plan for how they will pay for college. My favorite college calculator for quick estimates is the expected family contribution calculator available at the College Board website.  That lets you see your families estimated contribution for both those colleges that use the FAFSA only, the federal methodology, and for those colleges that also use the CSS PROFILE, the institutional methodology.

The last finding of the poll I want to comment on is the view of most people that the job of researching scholarships and completing the FAFSA are the most difficult parts of the college admissions process besides the college essays.

I can’t let that finding go without comment. Most of the money for college comes from the federal government and the colleges themselves. NOT outside scholarships. For the money from the colleges you need to research and understand how each college handles financial aid.  Outside scholarships are the most helpful for those students whose family makes too much to be considered for financial aid. Don’t just assume your family fits into this category. Check it out at each college.

The FAFSA used to be fairly complicated to complete but the government has been working hard to simplify this document. It is much simpler now that is was 5 years ago. For most people it will take less than an hour to complete.  You can also complete an early FAFSA and get an estimate of your expected family contribution by going to the FAFSA4Caster.

There are a number of other findings from the poll and I encourage everyone interested to view the poll results yourself.

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I see it all the time.  High schools hold financial aid nights, hosted by a college financial aid officer.  Seems to make sense, but the problem is that colleges are businesses and it is not in their best interests for students to really understand financial aid.

These financial aid meetings explain the FAFSA and discuss various types of loans, scholarships and work study.  But they don’t tell students what they really need to know about financial aid.

So what do you need to know that the financial aid officers won’t talk about?

• You need to understand how college financial aid works at a particular college. It is not the same for each college.
• You need to understand what percent of need a particular college is likely to meet.
• You need to understand what gapping means and, if the college gaps financial aid, what percent of gapping is typical.
• You need to know what the typical student takes out in loans by the time they graduate.
• You need to know if the college offers merit based loans and, if so, might you qualify.
• You need to know what the 4 year graduation rate is at the college.
• You need to know if the college has a particular package of grants and loans or if it differs depending on the student.

If you need financial aid and don’t understand these questions or don’t know the answers to each of these questions for each college you are considering, you are making a mistake that will cost you thousand’s of dollars.

To understand how college financial aid works, go to my financial aid page and it will all be explained.

To get some of the answers to these questions for the colleges you are considering, check out each college at the CollegeBoard website.  Search for that college by name and then look at the page on Cost and Financial Aid.  That page will tell you the cost of the college but more importantly, the number of students who had their full need met, the average percent of need met, the breakdown of a typical financial aid package between grants and loans, whether there are merit based awards and the average debt at graduation. If a college does not provide that information, trust me, the answer is not good.

These websites will give you the basic information you need to understand how college financial aid works without relying on the college that is trying to get your money.  Want more in depth information about college financial aid? Check out Paying for College Without Going Broke by Kalman Chany.  This book is updated each year so make sure you get the most recent edition.

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Now that admissions decisions are in, everyone seems to be talking about how families can afford to pay for the college of their choice.  The New York Times recently had an article entitled “How to Get More College Financial Aid.” Basically, the article talks about how to ask a college for more financial aid after they have given you their first offer.

Can you ask for more financial aid? Sure. Are you likely to be successful at most colleges without a change in circumstances since you filed your FAFSA or PROFILE? No.  Some colleges will reconsider their aid offer if they really want you as a student but asking for additional aid is a last ditch effort.

Do you really want to get more money for college? The best way to do so is to understand financial aid before even deciding where to apply.  Yes, I know I may sound like a broken record here but it really is true. If you understand college financial aid you will have a much better chance of understanding which colleges will be likely to give you more money. This is a much better option than applying to a college without understanding how that college handles financial aid and then hoping the college will reconsider their aid offer.

Be proactive, not reactive, when it comes to financial aid.  If you are, you will be much happier to look at that financial aid award.

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