Paying for College

“I won’t qualify for financial aid. We make too much.”

This is the greatest myth in college financial aid. It’s true that parents and students have the primary responsibility for paying the cost of a college education. Nevertheless, with college costs escalating annually few families can afford the total cost of a four-year college education for one student, let alone for more than one child. As a result, the federal government and has joined with state governments and colleges and universities to provide financial aid to families who need assistance with college costs.  Although we are not financial planners and will not advise you on investments, College Pathways can guide you through the financial aid process.

Financial Aid Basics

Financial aid awards are a combination of need-based and merit-based aid. There are two financial aid applications used by colleges to calculate a need-based financial aid award: FAFSA, and CSS Profile. Both applications are used to determine a family’s ability to pay for college, i.e., what their expected family contribution will be – the EFC. Each college has a cost of attendance – the COA. The COA is the total of everything it costs to attend that college: tuition, fees, books, room and board, transportation, insurance, personal expenses – everything. The student’s need is determined by subtracting the EFC from the COA:

Cost of Attendance (COA) – Expected Family Contribution (EFC) = Need

If a private college has a COA of $50,000 and the EFC for the student is $20,000 then there’s $30,000 of need. If the COA at a state university  is $25,000, the EFC would remain at $20,000, so the amount of need would be $5,000.

  Private College              State University

COA $50,000                COA $25,000

EFC 20,000                     EFC 20,000

Need 30,000                  Need 5,000

A few colleges will cover 100% of need in a financial aid award, but most cover only a percentage of the full need which leaves a gap, in addition to their expected family contribution, for the family to cover.  The FAFSA is used by colleges to calculate eligibility for federal student aid. It is also used by many institutions to calculate eligibility for institutional aid.

FAFSA –  Free Application for Federal Student

  • All colleges require submission of the FAFSA application for financial aid.

  • FAFSA uses the federal methodology in determining a student’s ability to pay.

  • It is income based, fewer assets considered in formula.

  • FAFSA may be submitted to colleges after October 1st.

  • FAFSA worksheet is available in advance.

  • FAFSA4caster for estimate –

CSS Profile – Institutional Financial Aid Application

  • Financial aid application for many private colleges

  • A profile is always used in conjunction with the FAFSA. Therefore both applications must be submitted to these schools.

  • Profile treats income and assets differently than the FAFSA. For example, home equity is not protected under the CSS Profile formula, and income from the non-custodial divorced parent must be included in ability to pay.

  • CSS Profile may be submitted earlier than Jan. 2nd.

  • Tax returns are often requested by colleges after financial aid award is made.


Scholarships can be an important piece in financing a college education. They are available to students for academic achievement; to students with special abilities or talents; for leadership or community service, or because of ethnicity, nationality, family background, or parent occupation. There are thousands of scholarships out there but students must be proactive in pursuit of most scholarship opportunities.

Here are some useful scholarship search websites:

Tax Credits

The American Opportunity Credit is available to a broad range of taxpayers, including many with higher incomes and those who owe no tax. The credit may be claimed for four post-secondary education years. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.  The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning credits.