CollegePlannerPro Blog

Secrets of the Financial Aid System: An Insider’s Guide to Helping Families Get Maximum Money for College

Posted by Chelsea Watkins on March 5, 2018

College costs have risen exponentially, almost 200% in the last twenty years. This means that most families are unprepared to pay for college. Many turn to costly options such as expensive student loans, or pulling funds early out of retirement accounts, incurring taxes and penalties. Or they limit their school choices to less expensive in-state public schools, thus potentially missing out on a best-fit educational opportunity for their child (or children). Unfortunately, many families, especially middle and upper income families, feel resigned to paying full price. They either put off or give up other personal financial goals, such as retirement, paying off their house, or even taking a vacation. Yet, if these families learn how the financial aid system works, the types of aid available, and what action steps they can take, then they can send their children to their dream schools without sacrificing their retirement or taking unnecessary financial risk.

Interested in learning more about how you can help guide families through the financial aid process?

Watch a recording of our recent webinar


How the Financial Aid System Works:

The price of college is much like flying on an airplane. Everyone is going to the same place, but everyone paid a different amount to get there. Some people used a discount website like Expedia. Others fly free, on miles. Still others paid top-dollar because they booked at the last minute and their company is paying for it anyway. The colleges utilize a practice called Financial Aid Leveraging, which is a process to determine how LITTLE must be offered to a family to still get them to attend. Most families mistakenly believe that the financial aid office is on their side and that the first offer is the BEST offer. When the truth is that the financial aid office is on the opposite side of the negotiating table. Families need to understand this reality and proceed accordingly.


The Three Types of Financial Aid:

Many families mistakenly believe they will not qualify for any aid, when in fact there are three types of aid that colleges award to students.


This type of financial aid is determined by the family’s Estimated Family Contribution as it relates to the Cost of Attendance. Here’s how it works: The Cost of Attendance (COA) is the published “sticker price” of the university for one year. It includes tuition, room and board, books, fees, health insurance, travel, sometimes personal expenses and anything else the college thinks should be included in its annual cost. When a student files a FAFSA form, the information will go into an algorithm to compute a number called the Estimated Family Contribution (EFC). This is the number that the Department of Education believes that the family can easily afford to spend on college. Then it’s a simple formula:

Cost of Attendance – Estimated Family Contribution = Family Need.

For example, if the Cost of Attendance is $50,000 and the Estimated Family Contribution is $30,000, then the formula is:

$50,000 - $30,000 = $20,000.

Thus, that family is eligible for up to $20,000/year of need-based financial aid. Now, for some families, it may be possible to lower their EFC. Let’s say a family lowered their EFC from $30,000 to $20,000. Now the formula looks like this:

$50,000 - $20,000 = $30,000.

The family is now eligible for up to $30,000/year of need-based aid.


This type of aid is based on the strength of the applicant, and the basis for the award is the original application. There is no separate merit scholarship application. The good news is that merit aid is not only for the perfect test score and GPA students. Many schools award merit aid because they see something interesting and unique in that student and want him or her to attend. It has NOTHING to do with the family’s financial situation, however many times the schools require students to file the financial aid forms to qualify for this type of aid.

Athletic (may be categorized as Merit Aid at Division II/III schools):

Athletic aid is not just reserved for the “big” sports: football, baseball, and basketball. Many additional sports offer partial scholarships to their athletes: Water Polo, Soccer, Volleyball, Golf, Tennis, Swimming, etc.


Actions to Take: 

Know Your EFC:

The EFC is an algorithm, based mainly on the income tax returns of the prior-prior year and unsheltered assets the day the forms are submitted. Prior-prior year means that if a student is starting college in the fall of 2018, the financial aid forms will use the tax returns from 2016. I discuss the algorithm in depth during the webinar. 

Keep Your Assets Sheltered from the Financial Aid Forms (and potentially lower your EFC):

There are places to put money so that it is sheltered from the financial aid forms. I discuss this in depth during the webinar. 

Focus on Merit-Based Aid:

Since this aid is based on how badly the school wants to student to attend, this is where the choice of school, academic record, extra-curriculars, and compelling personal statements can play a huge role. Independent college consultants can add huge value to their clients by advising them on their coursework and activities, helping them build a list, and guiding them to write incredible personal statements. 

Create a Plan NOW to Pay for College:

Most middle-class and above families must be realistic that their college costs will most likely be in the $30,000/year and above range. Since this is such a daunting number, many families put off making a plan and hope that it all works out. Hope is not a strategy when it comes to paying for college. In my experience, families who do not make a plan fall apart around year three or when the second child starts college. Yet, a simple cash flow analysis, followed by a savings commitment (no matter how small), can help a family build a solid foundation to survive the college cash-crunch years.


Interested in learning more about how you can help guide families through the financial aid process?

Watch a recording of our recent webinar


About the Author

Chelsea Watkins, Founder/CEO of College Application Training

Chelsea has over 25+ years of experience with the college application and funding process, starting with teaching SAT Prep for the Princeton Review while she was earning her undergrad degree at USC. She was asked by her students to help them with their college applications and created the College Application Mastery Program (CAMP). CAMP’s goal is to train students to create their best college application with distinct individuality, minimal stress, and maximum efficiency. While the students were achieving their admissions dreams, their parents were having difficulty financially paying for college. Many of them were taking on unsustainable levels of debt, or sacrificing their retirement to send their children to college. Chelsea then became a licensed financial professional to help families plan for college without sacrificing their retirement or taking unnecessary risks. Since that time, families who follow her process can both get into and comfortably pay for college! She resides in Los Angeles with her husband and son, who was just accepted to the kindergarten of his dreams.