Reading about financial aid is sometimes boring. This post aims to fix that. At the end, we share how to figure out what you'll (most likely) really be expected to pay. Before we dive into the cool stuff, a quick bit of housekeeping:

• This post is about need-based financial aid, not merit scholarships or athletic awards
• FAFSA is federal student aid; CSS Profile is an additional kind of financial aid granted mostly by private colleges and universities (in addition to FAFSA)

7 shocking facts

#1 "Financial aid" includes loans and work-study

A big misconception is that financial aid is all grants and scholarships. It certainly includes those, but it also includes loans and work-study opportunities.

This is important, because it means that, even if the school does meet 100% of your demonstrated need, that package is almost certain to include loans.

So, even if you've saved up your entire Expected Family Contribution, you'd need to pay more than that if your goal is for your child to graduate college free from debt.

#2 The most expensive colleges often don't cost you the most

Need-blind schools are competitive to get into, but the cost to families is often less than what people expect. These schools are so wealthy that they admit students without regard for how much they can pay and have committed to meeting 100% of need for any student they wish to admit.

How is this possible? Big endowments allow students to be given grants as part of their financial aid packages.

#3 Elite colleges often offer financial aid to families with "solidly 6-figure" household incomes

Families with household incomes up to the low-$200,000s often receive some financial aid from elite 4-year private colleges (the ones that currently cost about $65,000/year). If you've got multiple kids in college at the same time, you might see awards a bit higher than that. Like with need-blind schools, this generosity is made possible by the giant endowments of those institutions.

#4 Not saving in hopes of maximizing aid is seriously one of the worst ideas ever

This one is so important that it gets its own post. If you are not sure you believe me on this, please please please read that post. This is such a bad idea, and anyone who thinks this is a good idea does not understand how financial aid and paying for college actually work.

In brief, the FAFSA calculation of how much of your income you must pay is so onerous, that saving ahead of time is virtually the only way to comfortably manage paying tuition. If you still have questions or are not sure after reading that post, I invite you to contact me personally. 

#5 FAFSA loves your twins or triplets

FAFSA math basically calculates a total amount it thinks your family can pay for education, then divides that by the number of kids you have in college that year (there's a small offset taken in one of the allowances, but it's minimal). So if you have multiple children entering college the same year, your expected contribution per kid is cut in half (or the total aid is doubled). 

I don't think this is entirely sensible,* but my opinion on that doesn't matter. These are the rules.

*The idea that aid is doubled if you have twins versus if you had two kids 4 years apart seems like an odd outcome to me. The annual percentage of income is ludicrous anyways, so if the goal is to give people a break for having multiple kids, why not look at the lifetime obligation of the family to educate all their children?

CSS Profile schools have a slightly more nuanced approach on this topic.

#6 Financial aid is and (sometimes) is not a black box

You could go run a calculation right now and get an accurate answer as to what FAFSA (federal student aid) would say your family would be expected to contribute—that's called the Expected Family Contribution ("EFC").

The calculation is set by law and publicly available. No secrets. Not a black box.

What can sometimes feel like a black box is the percentage of demonstrated need that a college will meet. For example, if the total cost of attendance is $65,000 and your Expected Family Contribution is $40,000, then $25,000 is your demonstrated need. That does not guarantee the school will meet it. How much is met will be determined by the resources the school has and how hard they want to try to attract your child to the school. This also means that two schools that have the same total cost of attendance won’t necessarily have the same bottom line once financial aid is considered.

#7 There are 3 different ways of calculating financial aid

FAFSA (federal student aid) is by far the most common. If this section feels boring to you, just know that all 3 methodologies are way more similar than they are different, but there are some differences that matter for people in certain situations.

The exact FAFSA calculation is publicly available, so it's easy to look up the rules. It can and does change over time, but knowing how it works today is still your best indicator of how it will work in the future.

A number of colleges (mostly private, but including some state schools, like U Michigan) require CSS Profile. Among the schools requiring you to fill out the CSS Profile, you'll find two methodologies—called "Institutional Methodology" and "Consensus Methodology"—that are basically the result of a group of elite, well-funded schools coming up with nuances that they feel improve the fairness of their financial aid awards. The two methodologies also empower individual colleges to exercise more discretion; for example, you will find that different schools treat your home equity differently in their calculations.

Between FAFSA and CSS Profile, some rules (like retirement account assets not counting against you) are the same, and others (like treatment of home equity) are different.

How to figure out what you'd really be expected to pay

If you have particular schools in mind and feel ready to get a serious estimate of how much it might cost to send your child there, search for: [school name] net price calculator.

Fill in the data as if your child were starting college this coming September (adjust their birthdate, etc.) This will give you a decent idea of what percentage of total cost to shoot for in your savings plan. Ideally you'll try the calculators for a few different schools to get a good general idea, as the schools can have different approaches.

A less-effort-intense approach is to search for your school(s) of interest over at the U.S. Department of Education's College ScoreCard. They have good data about average debt load at graduation. This gives you some idea of how much money schools have to offer financial aid (a lower average debt burden often indicates the school has the funds to be more generous in its offers).

Need help making a plan to save for college?

Use our interactive College Savings Guide. Learn which 529 plans are excellent (or not), the tax savings and other benefits that your state might offer, and how much you need to save to meet your goals.