This is a segment of Bautis Financial’s college planning series, which includes webinars, podcast episodes, blog posts and downloadables to aid college-bound students and families in the admissions process. Visit our college planning hub for more valuable resources.
Most families do not pay full price for college. In fact, 58% of college students who attend a public college or university receive grants or scholarships. At private four-year institutions, 89% of undergrads receive a price deduction from their schools.
There are four main sources where you can capture scholarships. They are: Colleges, the Federal Government, the State Government and Private Scholarships. Here’s the percentage breakdown of where scholarships or grants originate:
| Scholarship/Grants Source | % of Grants/Scholarships Given |
| Federal Government | 30% |
| Colleges | 49% |
| State Government | 9% |
| Private Scholarships | 12& |
As you can see, the sources of money are overwhelmingly skewed towards the federal government and colleges themselves. Many times we speak with parents who are very surprised to hear this, because they put an emphasis on private scholarships, including charities, foundations, civic organizations and workplaces. With that being said, these scholarships are not a great place to start when looking for ways to be able to better afford college.
Since students are most likely to get money from the schools themselves, we recommend devising a strategy that will maximize aid from this source and work your way back to the others. How you approach devising this strategy will depend heavily on your expected family contribution (EFC), or your family’s need for assistance.
Affluent families should look for schools that offer merit-based scholarships, because it’s likely they will not be awarded need-based aid. This strategy should start with researching schools that are historically generous with merit-based aid. For example, some high profile schools do not offer any merit-based aid. Other schools find themselves in a competitive situation with regards to attendance and are more generous with respect to this type of aid.
On the other hand, less affluent families would want to research schools that are generous with need-based aid but also generous considering that this family might receive aid from the federal government.
Here are some statistics to add a little color to the real cost of college across different types of schools after all aid is considered.
| Tuition/Room and Board | Actual Price | |
| Private Colleges | $50,770 | $29,110 |
| State Universities | $22,180 | $14,850 |
| 2-Year Public Colleges | $12,850 | $8,860 |
The next question we often get is: why are some of these colleges discounting so much? You might feel like there’s got to be a catch. Is the school not as good? This is definitely not the case.
People also ask: If most schools are discounting so heavily, why not just lower the price and skip the tuition breaks? The reasons you see these discounts are plain and simple — competition. Colleges need to be competitive with lower-priced state schools and this competition is driven by two sources:
- Their need to fill seats.
- Their need to fill seats with attractive students.
These colleges believe that students with attractive resumes will increase their rankings among all colleges and universities. For example, their rank in the US News & World Report’s college rankings.
The Federal Government as Source of Funds
The Federal government is one of the largest sources of funds when paying for college, but this will be limited to prospective students whose families need a great deal of financial help. However, the Federal government can be a great source of funds for affluent students who need to borrow money.
The Pell Grant
The first and most popular federal government subsidy is The Pell Grant, which is usually awarded to undergraduates who have a high degree of unmet financial need. The Federal Pell Grants eligibility is very specific. To qualify for the full amount ($6,495), the family’s adjusted gross income (AGI) listed on their taxes must be less than $27,000. Most families will be phased out of a portion of the money when their AGI reaches $60,000.
The TEACH Grant
The TEACH Grant provides grants of up to $4,000 a year to students who are completing or plan to complete coursework needed to begin a career in teaching.
The Iraq and Afghanistan Service Grant
The Iraq and Afghanistan Service Grant is awarded to dependents of soldiers who died as a result of service in the U.S. military in Iraq or Afghanistan after September 11, 2001 and have too high of an income to qualify for The Pell Grant.
The Supplemental Opportunity Grant
The Supplemental Opportunity Grant is a grant designed to supplement The Pell Grant. It’s awarded to an undergraduate student who demonstrates exceptional financial need to help pay for their education. Awards can range from $100-4,000.
Work Study Programs
Work study programs are also federally funded. These programs provide part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help finance the costs of education. These programs vary, because the college itself has discretion over how they are structured.
Remember that most high-income families will not qualify for these programs, but they will be able to take advantage of federal loan programs.
Merit Scholarships and Financial Aid at State Universities
In some states, the assistance for these programs come from the state and others come from the school. The proportion of aid that’ll be awarded is based on merit versus need, as well as factors each school uses. So, aid will vary — significantly.
With that being said, it’s important to do your research and understand how the schools you’re considering have awarded aid in the past. A great place to start your research is at The National Association of Student Financial Aid’s website. Here, you will find tons of state-specific information.
We encourage you to fill out the Free Application for Federal Student Aid (FAFSA) as early as possible, because the state money will run out. The FAFSA opens October 1, 2021.
It’s also important to understand that public universities outside of your state will likely not award need-based aid when you are non-residents. This is critical for low- to middle-income families. Out of state and in state residents will have the opportunity to receive merit-based aid in many cases.
It’s also imperative to understand a school’s requirements for merit-based aid. In most cases, they are based heavily on “the numbers” — test scores and grade point average (GPA). The level of scores and GPAs that will be needed to receive aid will also vary. We recommend combing through a school’s website, and even googling the school’s name and the word “scholarship” together. Ultimately, you can find information on the schools that have more aggressive merit programs and those that award more out of state merit scholarships.
Look Where Others Aren’t
Be careful not to fall victim to the buzz around schools, as this can be a costly trap. After all, the buzz itself can be directly related to the school being over priced.
Schools like to market to affluent students, because it’s a great way to increase revenue. They’ll even target out of state affluent families because they know they’re able to pay the higher, out of state sticker price. On the other hand, you’ll find many schools with lower sticker prices that fly under the radar. Typically, these schools offer more aid and merit-based scholarships.
If you are out of state and are looking for ways to cut costs, you can consider becoming a resident. By becoming a resident, you reap the benefit of a lower tuition. Also, some states offer reciprocity to bordering states. For instance, some schools offer in-state tuition for students who live within a certain amount of miles from the border of their state.
It’s a Buyers Market
Most people looking at colleges don’t realize that it is a buyer’s market. There are unseen pressures — like competition — forcing colleges to be extremely generous.
Most people are not paying full price. In fact, according to Federal statistics, 80% of freshmen attending private colleges and 65% of students attending state universities don’t pay full price. This will come down to being flexible regarding the schools you’re interested in, and doing research on the schools that will most likely give you the most aid and scholarships for your unique situation.
Begin your journey of mastering the college admissions process with Bautis Financial. Whether you’re a parent or guardian, student or school counselor, book a free consultation to discuss how our financial advisors can be a college planning resource.
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