In a recent discussion with the father of a high school freshman, he told me they had done an online calculation for how much a specific school would cost their family. When looking at an Ivy League school that costs $60,000+ per year, they could expect to get about $2,000 per year in financial aid.
Those are what I call success penalties – the premium that successful families have to pay if they do not know how to navigate the college system. You do not need to be rich to have to pay success penalties. The family I was talking with was making a little over $200k per year. $60k a year out of a $200k income is tough to swallow.
That is why I talk about the need to Estimate Family Contribution in Chapter 6 of Never Pay Retail for College. The challenge is that the Department of Education and what most families consider “affordable” are at the opposite ends of the spectrum. When you understand your estimated family contribution (EFC), you can make more informed decisions about where your child should apply to college.
Choosing schools where your student will apply has the single biggest impact on the overall cost of college for your son or daughter. If you choose schools where your student will fall in the top 25% of the incoming class, the school will often incentivize your student to choose that school, even if your family could afford to pay more. And that can save 25%-50% off the retail cost for college.
So, instead of paying $60,000 per year for an Ivy League school, you could end up paying $30,000 per year for an excellent school where your child will thrive. Remember, college is one of the largest expenses a family faces. It is important that you do all that you can to choose the college that is the right academic and financial fit.
If you would like some help making sure that your family does not pay “success penalties” for college, I would love to help.