Every year, hopeful high school students, with their parents tagging along, finally get to enjoy the fun part of the college admissions process. They start visiting college campuses.
Checking out college campuses is a logical step, but countless families make a serious mistake when buying their airline tickets or gassing up their car for a road trip.
Here's the mistake: parents let their teens visit whatever campus they want. “Dream big,” seems to be a common refrain from parents. Not setting boundaries for a teen when choosing route schools can set in motion eventual heartache and financial disaster.
This is especially true when teenagers have their hearts set on attending elite, or what I like to call, highly rejecting universities. The problem with this approach is that teenagers, who can be very impressionable, will fall in love with glamorous colleges and universities that their families can't afford.
Failure to pay attention to costs can often lead to emotional meltdowns when a child is admitted to an institution without receiving sufficient credit or need-based aid or any aid at all. Parents who refuse to pay for fancy schools that can now cost $400,000 (not a typo) for a bachelor's degree may have a hard time saying no. Teenagers, who often have no concept of money, try to guilt their parents into raiding their retirement accounts, taking out loans, or otherwise finding the money they never have to spend on a bachelor's degree. .
Fortunately, there is an easy way to avoid these unfortunate confrontations. Before parents allow their children to get serious about any school, they need to know what the net price of the school would be for their family.
In pursuit of this number, I recommend that parents take the Expected Family Contribution as a first step. An EFC is a dollar figure that shows what a family 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 latter application is used by approximately 200 schools, almost all private, to determine which students may qualify for institutional financial aid. The vast majority of schools use the FAFSA to determine 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 target schools that offer merit aid to wealthy families with high EFCs or schools that offer good aid packages to those with lower EFCs.
I have 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 tips in 2024 because the College Board, which operates the CSS Profile, inexplicably pulled the valid calculator from its website.
What also happened for the 2024-2025 admissions season was that the federal government, as you may know, dramatically revised the FAFSA, and part of that revision was the exchange of the term EFC for the Student Aid Index (SAI). It would take too long to explain why the term EFC was withdrawn, 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 Federal Student Aid Evaluator. It calculates federal financial aid, which probably won't be relevant to your clients since most federal aid goes to families making $60,000 or less a year. The appraiser, 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 private, brand-name 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 look up information from family income tax returns and often takes 10 or 15 minutes to complete. With the information the calculator receives, it will estimate the net price by subtracting the aid, if any, that a student would receive from the federal and state governments and from the school itself.
What matters is the net price and not the sticker price or the price the kid got on the street.
Another option to get institutional EFC and a one-stop site for collegiate net worth calculators is College Aid Pro. CAP provides an invaluable software program for financial advisors and consumers. After providing in-depth information about family finances, family size and parents' marital status, the software provides federal SAI and institutional EFC.
In addition, the CAP software uses this information to determine the net price of each college for users. Parents and counselors can also use the software to instantly search for schools based on how much the family is willing to pay for college. It's a real time saver.
Lynn O'Shaughnessy, a nationally recognized expert, offers an online course – Savvy College Planning – exclusively for financial advisors. Click here to get Lynn's guide, Finding the Most Generous Colleges.