For most families, the financial fit is a key part of building a college list. These families realize that being able to pay college costs is just as important as being admitted. It is a good idea to understand your family budget, financial aid practices, and where your student is likely to receive substantial financial or merit aid if that is needed in order to attend a particular school..

College Costs: What to Count

When you look at how much college may cost and consider both direct costs, what you pay directly to the college, and indirect costs, other expenses that come from being a college student. Tuition and fees, housing, food, and books are examples of direct costs. Transportation, bedding and other dorm supplies, entertainment, clothing, toiletries, computers, laundry, club & activity costs, and fraternity/sorority expenses are examples of indirect costs. Housing and food may be direct or indirect costs, depending on in the student chooses to live and eat on or off campus. Add all of this up and you get the: The Total Cost of Attendance = Direct Costs + Indirect Costs.

College Costs: In State vs Out of State Tuition

There is a tuition difference between in-state and out-of-state college costs. Public colleges receive some financial support from state governments. So really residents of the state are already supporting the college through their tax dollars. Some colleges list two separate tuition rates. Private colleges are different; they have one tuition rate, regardless of where you are from. According to a report from College Board, the 2021-22 average price of tuition and fees for a public four-year college in-state was $10,740, while the average cost for a public college out-of-state was $27,560.

Residency for College Tuition

States set their own policies about what qualifies a student as a resident for the purpose of tuition. Requirements vary, but typical considerations include where the student lives or graduated from high school, what state of residence the parents claim, and administrative evidence of residency such as paying income tax or registering to vote. Military families, ex-pat families, and students who split their time between divorced parents may need to provide additional information in support of state residency claims.

It can be difficult to establish residency after starting as a student at the college (most states don’t count a move for educational purposes as grounds to change residency classifications for tuition). It is up to you to understand the rules of each state.

Types of Financial Aid

There are two main categories of financial aid and several ways that aid can be provided. The most money you will ever get toward the cost of college is from the institution itself. So, have a great application and be ready for the FAFSA.

Need-Based Aid

Need-Based Aid is financial aid that is offered because the college has determined the student and their family has fewer financial resources that could be used to pay for college costs. This determination is made through a review of financial aid applications, specifically the FAFSA (Free Application for Federal Student Aid) and/or the CSS Profile (a separate financial aid application used by about 300 colleges).

The FAFSA is required if students wish to use Federal Subsidized or Unsubsidized LoansFederal Work Study, or Pell Grants. There is no cost to submit the FAFSA, which opens the October before the school year in which financial aid would be used and considers income from the “prior-prior” tax year. In other words, students who are seeking federal aid for the 2023-24 school year would submit the FAFSA that opens in October 2022 and would use income data from the 2021 tax year.

Related: Learn About FAFSA

The CSS Profile is used by a smaller number of colleges, which are usually private or highly selective, and that often give large amounts of need-based aid to help pay for heftier costs of attendance. This form is administered by College Board, and there is a charge to submit each application (there is no charge to families earning up to $100,000). The CSS Profile asks more questions in order to create a picture of family financial resources that goes beyond income and savings. The colleges that are most generous with need-based aid, tend to require the CSS Profile in addition to the FAFSA. [List of CSS Profile colleges and programs.]

Merit Aid and Scholarships

Non-Need Based Aid, sometimes called Merit Aidis financial aid that is not tied to the student’s family financial status. This aid might be labeled as a scholarship and could be automatic, based on grades and test scores, or be competitive, with additional application requirements. Sometimes colleges will discount tuition for students in order to encourage them to enroll. These colleges are betting that a family will like a college that offers a $20,000 discount labeled a “scholarship” more than another college that simply prices its tuition $20,000 lower. The process of deciding how much discount each family might need to encourage their commitment is part of Enrollment Management, a growing industry used by colleges around the country.

Both the FAFSA and the CSS Profile produce a number that represents how much each formula thinks a family should contribute EACH YEAR towards the cost of attendance. This is labeled the Expected Family Contribution (EFC). The EFC isn’t all that a college might expect a family to pay annually. Very few colleges meet 100% of demonstrated need. Instead, students may find that after federal and institutional aid is subtracted from the cost of attendance, there is a difference between the EFC and what the family has to pay. This is often called gapping.

The EFC is being renamed the Student Aid Index (SAI) in 2023 along with other changes to the FAFSA. More about these changes will be coming out in 2023, but for now, Jeff Levy has a good overview of the changes.

3 Ways to Estimate College Costs

So how do you come up with an estimate of how much your family would have to pay?

Net Price Calculators Estimate College Costs for Individual Students

Net Price Calculators (NPC) are available on most college websites*. They ask for some of the same information required by the FAFSA or CSS Profile and usually produce an estimate that includes federal aid (including Federal Student Loans!), applicable state grants, and typical discounts from the college. The more detail an NPC asks for, the more accurate its results are likely to be. However, they are only an estimate and are not binding on future offers from the financial aid office.

Colleges usually update their NPCs shortly before the new application cycle begins in August. The easiest way to find them is to do an internet search for the name of the college and “Net Price Calculator”.

*Federal law requires colleges that accept federal aid to have a Net Price Calculator. Some colleges that do not accept federal aid will not have this tool on their website. If that is the case with a school you are considering, contact the college financial aid office for more information about expected costs and institutional aid.

Common Data Set Records Need-Based and Non-Need Based Aid

The Common Data Set (CDS) is a set of questions and responses that use a common format across all participating colleges. This provides information about admissions, costs, class size, number of degrees in each major, and financial aid.

Section H reports Financial Aid data. You can see how many students requested need-based aid; how many were determined to have need; how many received need-based grants, self-help (work-study), or other grants; and what percentage of need was met. You can continue to the next set of responses to see how much non-need based aid was awarded the same year. Pay attention to both the percentage of students awarded aid and the size of the award.

Question H5 shows how many students took out loans and the average size of the loans. Be aware that this may not include all loans taken out by parents, such as home equity loans used to pay for college costs. You can find a CDS by searching for the college name and Common Data Set, then selecting the most recent year available.

Financial Fit Is a Key Factor in College Fit

I know this can feel both confusing and overwhelming. It may seem like a lot of alphabet soup and really high numbers. Awareness is an important first step. Too often, families neglect these steps and apply to colleges without considering how much they will be expected to pay – each year of attendance. Spring of senior year rolls around and a student with hard-earned admissions decisions finds that few if any of her choices are actually affordable. It’s better to have this awareness of cost and affordability earlier in the process. When I am supporting client families through this process, I ask them to make an honest assessment of their college budget and estimated need. Then when we create their student’s college list, at least some of the schools are affordable and likely to admit their student.