Getting FREE Money from the Colleges Themselves!


Other People’s Money Vs Your Money

Did you know there is FREE money available to help you pay for college?

Common sense example

Let me provide a little more general information before we dive in. First off, what I would like to do is give you what I call a “common sense example” of how there truly is lots of free money out there.

Let’s say school X, Y, or Z happen to be private schools in your state with big, scary sticker prices. Living on campus ranges from $55K to $80K+ per year. How many people do you know that can write a check for that kind of money? Most people I meet say “very few.”

However, these schools all fill up every year. How is that possible? Imagine I am the chief financial officer (CFO) at an expensive college. I have to pay all the bills–the salaries of professors, admin, and staff, plus for the fancy new wok station in the college food hall. The worst thing that could happen is I have an empty seat; therefore, I am willing to give what I call a “tuition discount” (free financial aid money) to motivate students to attend the school.

When I worked on Wall Street, one of my managing directors had a screensaver on his computer screen that scrolled with the message: “Revenue is good.” Remember, college is a business and getting some revenue from a student’s family is preferable to no revenue at all. Keep that in mind as we continue our journey.

Let me show you an example of the missed opportunities that a typical family concerned about college costs may make.

Typical family college plan for those concerned about funds

These scenarios assume the parents have discussed the situation with their student and it is a family approach. Many times (such as in my personal story), this is not discussed and the student assumes the family’s budget may be close to zero, or even zero (another reason I started this blog and wrote my new book “Pay for College Without Going Broke!”).

Assume your budget is $0-10K per year (all a family think they can afford and/or the student assumes that’s the case). That family’s student will never pursue options; either not going to college or trying to “go the hard way” (living at home and commuting). Typically, the family looks at four-year college sticker prices to live on campus:

Individual states could have higher prices. Let me repeat the statistics for New Jersey:

As a result, very quickly, most will determine living on campus is not an option and will not even bother to apply. Privates are ignored, with the assumption there is no way they are affordable. At this point, one of three things happen. They:

  1. Apply to in-state public and hope they receive financial aid based on myths (from friends, family, and neighbors)
  2. “Go the hard way” (live at home and commute)
  3. Do not go to college at all

Did you know that out of 2.7 million US high school graduates in 2021:

  • Only 43% enrolled in a four-year college/ university.
  • Only 19% enrolled in a two-year college.
  • Therefore, 38% never enrolled at all.

In the same study in 2010, 32% never enrolled. This, to me, is simply alarming, and the biggest reason for this is lack of information and knowledge about how to make college affordable. Once again, you need to learn about the free money.

Finding the solution

What if we can solve the matrix–finding the right schools for the family, no matter what their financial situation or budget is?

Imagine if the following choices were made available to an NJ student by finding the right school, solving the matrix, and getting free money:

  • In-state public–on campus: $35K; commute: $20K
  • Out-of-state public–on campus: $50K
  • Private: $10K

A private school with a sticker price of $80K that you could go to for $10K? How is that possible?

For now, let’s assume that no matter what your financial situation is, you can find schools to solve your unique matrix, and pay for colleges you never thought you could afford.

Your unique financial chessboard

If you play chess, you’ll know there are rules on how to move the various pieces around the board. For example, the knight has legal moves it can make (two spaces in one direction and one space to the left or right from there). These legal moves are all options; however, the key is: “What is the right move?”

The same is true of your financial chessboard. There are many options (legal moves), but which are the “right moves”? Let’s work it out because, let’s face it, it is better to use other people’s money rather than your own money to pay for your kids’ education.

There are insights on everything shown here to become more informed. As we discussed earlier, not everyone will have saved this money. Even if you did, wouldn’t you want to save some of your money if you could versus spending on college bills? You could then use the money saved for grad school, for your other kids’ future college costs, or your retirement. Besides, as we’ve discussed, how many of you have free cash flow after paying taxes and your monthly bills? If you plan to borrow, who will you borrow from and how much will you be allowed? If you opt for a loan, are you willing to jeopardize retirement or have less funds available for your other kids?

In summary, there are many insights on how best to free up or create more money. What you need is a comprehensive, integrated college funding plan that considers the following:

  • Other people’s (free) money opportunities first
  • Cash flow
  • Taxes
  • College loan options
  • Impact on retirement plans
  • Investments

In other words, you need to figure out your own personal and unique financial chessboard.

Other people’s money

By now, I’m sure you will agree that the best overall college funding plan is to find and get as much free (other people’s) money as possible first, rather than focusing on your own.


How many of you have rich relatives to cover the costs of college? Typically, not many; however, if you do, there are strategies to utilize that money for college costs. For example, one of the worst things you can do (if applicable) is have parents/grandparents pay college bills directly. Why? Schools view these “gifts” as “sources” in their financial aid analysis and typically reduce financial aid accordingly. In other words, this family “needs” less financial aid than another family because there is another source of money.

Education tax strategies

There is an overwhelming number of options with the Internal Revenue Service (IRS), which are extremely confusing and complex, but it is useful to understand them. Here are some examples:

  • Education tax credits (such as the American Opportunity Tax Credit)
  • Savings bonds
  • Tuition deductions
  • Tax-advantaged 529 plans
  • Assets in students’ names vs. parents’ names

Simply put, as a CPA and financial advisor, there is plenty of information and numerous strategies to learn as part of an overall college plan in these areas alone. However, what I am going to focus on in this post, the purpose of creating this new blog, plus me writing my new book “Pay for College Without Going Broke!” is the best way to make college affordable: financial aid, the best kept secret in America!

It is important to realize that colleges are businesses and are keen to get some money, rather than no money, to pay their bills. So, there are huge opportunities out there to get lots of free money, from the colleges themselves!

Financial Aid–The Best Kept Secret In America

Did you know there are tens of billions of dollars in financial aid available every year?

Financial aid

There is about $234.9 billion per year of financial aid available if you know how and where to get it. Of this amount, $175.1 billion is available for undergraduates (meaning attaining a bachelor’s degree rather than attending graduate school and pursing a master’s degree, PhD, law school, medical school, etc.).

Where does financial aid come from?

Let’s look at a recent financial aid pie chart that breaks down aid into different categories:

There is lots of interesting information here, but the two most important takeaways from this chart are:

  1. Most free money (not loans) comes from the colleges themselves, not from the government or private scholarships.
  2. Colleges are the gatekeepers of 90%+ of finances on this chart. To get access to this money, you must ask for it (by completing financial aid forms).

Other highlights

Federal loans are a large slice of the pie; however, when I talk about financial aid, I focus on the free money that does not have to be paid back, not loans. Many schools will mislead you by giving you a loan and calling it “financial aid”–be wary!

If you are a family of four and make more than $40K per year, you will not get any government free money–for example, no Federal Pell Grants. At the time of writing, the maximum Pell Grant per year is about $7,400; however, to get that maximum, the annual family income would typically have to be less than $10K.

Let me also point out that private scholarships only make up 1-3% of the total aid pie, which has been consistently true for many years, based on my experience.

Here is some other interesting information from the CollegeBoard “Trends in College Pricing and Student Aid” report from 2021, covering the period 2010/11 through 2020/21:

  • College free money (collegiate resources) increased by 62%.
  • Federal loans decreased by 47%.
  • Federal Pell Grants declined by 39%.

Once again, this is further evidence that there may be plenty of free money available from the colleges themselves!

Federal government financial aid

Although we are going to focus on college free money, do not overlook the US federal government financial aid options. Learn what’s possible for you:

  • Free money is mainly in the form of Pell Grants, typically for families with limited incomes.
  • “Work-study” is an on-campus part-time job intended to give you some spending money for “toothpaste, laundry detergent, and an occasional pizza.”
  • Direct student loans (formerly called Stafford loans) are in the student’s name (no cosigner needed), and payments are deferred until the student ultimately leaves school. Currently, the amount offered is $5,500 maximum for freshman year plus $6,500 sophomore year, and $7,500 junior and senior years). I generally recommend you consider having the student take these so they have a “stake” in their own education. I say, “If you still like them when they graduate, you can help them pay them off!”
  • The other big loan program is the Parent’s PLUS Loan. A parent and/or other adult must get this loan (not the student). The good news is this loan is fairly easy to obtain (you just need an OK credit score for one parent), and you can borrow up to the total sticker price, if desired. These loans would be the last option.

State government financial aid

Similar to the federal government aid, do not overlook your local state financial options and what is possible for you. The following options happen to be where I reside in New Jersey:

  • Free money:
    • State scholarships (based on merit)
    • Tuition aid grants (based on income/need)
    • Targeted profession-type scholarships–nurses, teachers in minority districts, etc.
  • College loans–NJ Class loans. NJ is one of the few states that has its own loan program. The great news is the NJ Class loan has better rates and terms than the Federal Parent PLUS loan. This has been true for many years.
  • Special 529 tax-advantaged plan. In New Jersey, it is called the “NJ Best Plan.”

You need to check out the financial aid available in the state where you live. Every state is different–some have little; some have lots.

Private scholarships: why chase crumbs?

How about private scholarships? As shown in the chart above, these represent only 3% of the total financial aid pie–and between 1-3% has been the case over my twenty-plus years of college experience. Rather than private scholarships, I focus on educating families on how to get the most free money from the colleges themselves.

Some quick points on private scholarships:

  • This is a time-allocation question–focus on the big money instead (college free money).
  • Do not ignore local scholarship opportunities–check out your high school and local clubs and associations.
  • Be wary of scams.

Are private scholarship services worth it? In general, to get a national scholarship, you need to write an essay explaining why you, versus the thousands of other applicants countrywide, deserve the scholarship. Each scholarship application and/or essay may be different. They involve lots of work–and what are the odds of success?

College and university free money

Colleges have billions of dollars in endowments with no government strings attached. Further, they make a business decision to give back some of that money in the form of financial aid.

Consider the following interesting recent endowment stats for the end of 2020:

  • Overall college endowments are at $691 billion.
  • The top 120 schools ranked by endowments totaled $515 billion.

As per a recent U.S. News & World Report article, their top-ranked 397 national universities had an average endowment of about $1.7 billion.

Common myths regarding financial aid

As you can see, there is plenty of money available overall. There are also what I call “myths vs. realities” regarding financial aid. Here are some of the common myths that I hear from families when I speak publicly or via my webinar polls:

  • “We make too much money.”
  • “My kid’s grades are too low.”
  • “Financial aid is limited to ‘special’ people” (athletes or straight-A students).
  • “It’s easy to get financial aid.”
  • “I can figure this out myself.”

Typical college financial aid statistics are misleading. For example, what if you heard via a school visit or saw in a college guide something like this: “70% of freshmen at School X receive financial aid and the average freshman award is $12K”? What would you think?

Many would assume they will get $12K in free money, no matter what. Others would further assume that their kid is above average, so of course they should get more. Unfortunately, that is not how it works, yet these assumptions lead to mistakes.

On the reality side, there is positive news. Colleges need you and are willing to give you discounts. They have empty seats, so are willing to compete with each other and pay for good students. In addition, about 82% of students attending private colleges receive free money and the average free discount is about $20K (remember, this is an average–much more money is available)!

In summary, I feel it is most important you focus on pursuing college free money. Ignore the myths and misleading statistics and find the “right schools” with money, and go ask for it! Free money is just that — free — and it’s waiting to be claimed!

Further, please note that the process is complex and confusing, which can lead to missed opportunities. What I hope you will learn from me is no matter what your financial situation is, I can show each and every one of you how you can tens of thousands per year!

Need Vs Merit

Did you know that regardless of your financial situation, you can get financial aid?

Types of financial aid

There are two types of financial aid: “need-based” and “non-need-based” aid. The vast majority of college guides discuss financial aid in terms of need aid vs. “merit” aid, and provide misleading statistics accordingly. I do not use the term “merit” on purpose; instead, I use “non-need-based.” Why? Well, most people assume merit aid is:

  • For straight-A students
  • For those that score 1600 on the SAT (or 36 on ACT)
  • For top-recruited athletes—for example, a student who can throw a football 60 yards, or score a 10.0 gymnastics routine

They therefore assume, “That’s not my kid,” and further assume that unless they are living in poverty, they are not going to get any free money. Amazing but true.

As I described earlier, during my many public presentations I often ask the audience whether they think they are going to get any financial aid. The vast majority assume “No,” either for the reasons outlined above or because they think they make or have too much money. Yet nothing is further from the truth.
Most people who believe “I am never going to get it” are actually thinking of need-based aid and ignoring non-need-based aid.

Please recognize that:

  • No matter what your financial situation, I can show you how to get tens of thousands of dollars per year in free money from colleges.
  • I can solve any matrix—even if the budget is $0 and your student is at a C-level GPA.
  • The only matrix I cannot solve is for a student getting Ds or lower and where the family college budget is $0. I cannot create that miracle.

For hope at this point, please look back at my common sense example outlined in Chapter 4.

Need-based financial aid

No matter what your family financial situation is, you want to first determine if you can qualify for need-based aid. You will also need to know your correct annual Student Aid Index (SAI) and see if that will get you free money (most people have no idea). Most importantly, you want to determine the strategies available to reduce your SAI—and make you eligible for need-based aid (vs. not) or make you eligible for even more free need-based dollars. Remember, many people are eligible for more need-based aid than they think.

Conceptual overview of need-based aid

  • Financial aid is allocated based on need—your need vs. your neighbor’s need countrywide—based on relative income and assets.
  • The Department of Education has a need-based analysis formula. It determines an SAI result, which is what you are expected to contribute for your education per year.
  • You must complete financial aid forms—for example the FAFSA form (there are more forms than a FAFSA if you want lots of free money); essentially, you provide your unique income,
    assets, etc.
  • By completing/submitting a financial aid form, an SAI calculator (what I call “the box”) produces an SAI as an output. That will determine your eligibility for need-based aid.
  • There are lots of myths/misunderstandings regarding need-based aid.

The need-based formula

The Federal Department of Education formula for eligibility for need-based aid is:

Cost of Attendance (COA) – Student Aid Index (SAI) = “Need.

COA represents the total cost of attendance. Each school annually provides official figures to the Department of Education.

This blog focuses on the COA of living on campus, which includes tuition, room, board, books/supplies—everything expected out of your pocket (what I call “the sticker price”). Officially, the school has multiple official COAs—living on campus, off campus (renting an apartment close by), and commuting (living at home).

Schools are typically not transparent about disclosing these total costs on their websites; however, there are third-party vendors that do publish these numbers. Based on my experience, schools that have lots of money typically are more transparent than those that do not give lots of free money. With a little effort, a family can find out what the COA is for a particular school.

SAI represents the Student Aid Index. What you are expected to pay per year is based upon your unique financial situation. This is the mysterious part of the equation that the vast majority of families do not understand.

Remember, this is based on output from an SAI calculator based on data you provide on financial aid forms like the FAFSA. To make it more complicated, there are at least two SAI methodologies/formulas (or boxes): the Federal SAI Methodology and the Institutional SAI Methodology.

The Federal SAI Methodology

In summary, the Federal SAI Methodology:

  • Is used by the vast majority of public schools to determine eligibility for giving out
    their own school’s need-based aid (limited money available)
  • Is used by some private institutions to determine eligibility for their school’s need-based aid (if they do not use the Institutional Methodology described below)
  • Is used to disburse federal and state government financial aid funds and loans (if eligible)
  • Does not assess home equity
  • Uses the FAFSA form to collect information

The Institutional SAI Methodology

The Institutional SAI Methodology, in summary:

  • Is used by most private universities
  • Is used to distribute university funds (lots of free money) with no government strings attached
  • Does assess home equity
  • Uses the CSS Profile form to collect information

Free Application for Federal Student Aid (FAFSA)

Unfortunately, the vast majority of the public only hear about the FAFSA form and focus all their time and attention on completing that, if at all. Hopefully after reading this blog, you will not make that mistake.

In summary, the FAFSA form either:

  • Determines eligibility for extremely limited federal and/or state free money (for example, limited Federal Pell Grants only if you make less than $40K/year with a family of four)
  • Provides access to federal loans that your student has to pay back (maximum of $5,500 freshman year)

Please be aware that many private schools have their own forms and their own formulas besides the two noted above. If you are interested in the tens of thousands of dollars in free money, completing all of those forms is well worth it.

In a separate blog post “You Have to Ask for the Money!” and a complete chapter in my new book “Pay for College Without Going Broke!”, I go into more detail about the financial aid process and the forms. For now, let’s get a better general understanding of how this works (and learning the opportunities).

Understanding need

Let’s assume your SAI is $30K, based on your unique income, assets, etc. on your financial aid forms. Take a look at the following illustration:

College A: $30K – SAI of $30K = need of $0…what does that mean?

It means:

  • You would not be eligible for any need-based aid at College A.
  • But you would be eligible for non-need-based
    aid—more on that later.

College B: $80K – SAI of $30K = need of $50K…what does that mean?

  • You would be eligible for $50K of need-based aid at College B.
  • Let’s also assume College B’s financial aid policy is if you have need at College B and are accepted at College B, you are guaranteed essentially $50K in free money.

Comparing the results of College A vs. College B

Let me introduce my concept of “true cost”:

Sticker price (COA) – expected free money = true cost:

  • True cost at College A: $30K COA/sticker price – $0 expected free money = $30K true cost.
  • True cost at College B: $80K COA/sticker price – $50K expected free money = $30K true cost—guaranteed. (Even if your student is the last one admitted to the school or the last one before the waiting list.)

It would cost the same to attend College A as College B! Let’s digest this for a moment and assume the following:

  • College A is an in-state public school with an all-in live-on-campus cost of $30K.
  • You do not get non-need-based aid at College A (remember, you are not eligible for need-based aid).
  • The family budget is OK with a cost of $30K per year; therefore, your expectation is $30K per year at College A.

This means that if you previously thought you couldn’t look at schools with big, scary sticker prices, now, based on this new “true cost” insight, you can rethink the whole situation!

If your budget was limited to $30K (and not much more), here’s what you would want to do to solve your unique matrix:

  • Assume there are limited College As in the state in which you live.
  • Include as many viable College As as possible (they cannot charge more than the sticker price).
  • Find as many viable College Bs as possible—there are lots of College Bs.
  • Increase the odds that you will find college success because now you can look at many more schools you did not think you could afford vs. limiting your choices to only College As (i.e., many more “right” college options for your student).

Some of you may be saying, “I cannot afford the in-state public school College A price, so what about me?” Stay tuned—remember, no matter what your financial situation is, I can show you how to get tens of thousands of dollars in free money.

Also, now that you know your SAI, you are guaranteed the funds you are “eligible for,” right? No! Not all schools are College Bs—more on that later.

What you want to know next

The next major step regarding need-based financial aid is finding the right schools that will give you the most free money based on need. Which schools will give you the best shot at getting more free money?

  • Some schools give more money than others.
  • Some schools meet 100% of need (College Bs).
  • Others don’t.


If you are focusing on need-based aid, wouldn’t you want those schools that give the most need-based aid? Ideally, schools that meet your need 100% with essentially all free money?

One thing that particularly frustrates me is that many schools consider loans or an on-campus job “financial aid.” Not me. I consider the free money (gift aid) that does not have to be paid back financial aid.

  • Many schools meet need with free money:
    – Gift aid—free money that does not have to be paid back
    – Grants/scholarships
  • Too many schools meet need with self-help money:
    – On-campus jobs (you have to earn money)
    – Loans (you have to pay back money)

I call loans or a job self-help—the loans have to be paid back, and you have to earn money if you work. Some schools meet need with free money; others don’t. Wouldn’t you want to know this before you apply?

Public vs. private schools

Choose your college wisely, as some schools have more money than others:

  • As a general rule, private schools have more money than public schools.
  • Many students can attend a private school for the same cost or less than an in-state public school.

The great news is that roughly 75% of colleges and universities in the US are private, increasing the odds of finding the right school for your student. Further, do you remember from earlier that 82% of students attending private schools receive financial aid and the average free money is $18,200, or an average 33% off the sticker price?

Understanding schools’ aid policy

The next challenge is to figure out what the financial aid policy is for each school. Public statistics can be misleading and information is not readily available.

If you heard, “51% of students receive financial aid, and the average free money is $12K,” what would you think? In summary:

  • Assume the statistics are “correct,” but looking at the disclosure above, what if most of the free money went to football players at the school? Even though the statistics would be right, there will be little money in financial aid for regular (non-football-playing) students; therefore, not much to students based on academics or even “need.”
  • Contrast that to College B, for example.

If applicable, wouldn’t you want to know that?

Finding the right financial schools for you and your pocketbook

No matter what your unique situation is, imagine a list of right financial schools for you. Assume there is a database that says, based on your financial situation, “Here is a list of ranked schools that will give you the most, more, average, less, and least free money, depending on your SAI.”

Assuming your SAI is $0–15K, which would be the right schools for your pocketbook? Take a look at this table:

This is a snapshot of a database sorting where you could expect the most to the least free money for an estimated SAI of $0–15K. (Please note that I did not include “more”, “average”, or “less” options—only “most” and “least”.) To further explain this table:

  • Sticker $: Cost of attendance living on campus at that particular type of school
  • True cost $: Net cost after receiving expected free money at that particular type of school
  • Public IS: Public in-state college/university
  • Public OOS: Public out-of-state college/ university
  • Private TD: Private school that gives tuition discounts (non-need-based aid)
  • Private 100% NB: Private school that gives 100% need-based aid (College B)
  • % = where in the freshman applicant pool (so, “<25%” means in the bottom 25%)

If we condense the table for this SAI, it looks like this:

In summary, College Bs—schools that have a financial aid policy that would meet your need 100% with essentially all free money—would be your best choice. “All” means even if the last one accepted (“one before the waiting list”), you are guaranteed the free money; in other words, your student just has to get accepted!

In this case, if the College B school had a sticker price of $80K and your SAI was $10K, you will essentially get $70K in free money and go to that school for $10K—guaranteed! Remember my common sense example from earlier? Now you can see how a student with an SAI of $0–10K can actually go to a four-year school and live on campus for $10K or less based on their SAI—simply find the right school!

If you were not in the top 5% (<96%) of the applicant pool at a public school, you would not expect to receive any free money and would be stuck at the sticker price—let’s say $35K. This is also true at an out-of-state public school, but with much higher sticker prices.

Assuming both schools were equally attractive to your student, would you rather pay $10K or $35K? Whichever you ultimately choose, wouldn’t it be nice to have those options?

Some of you may say, “I make too much money and will never be eligible for need-based aid” (and there-fore never get financial aid). Remember what I have said previously, no matter what your financial situation is, I can show you how to get tens of thousands of dollars in free money.

Non-need-based financial aid

If you can never get need-based financial aid, let me explain non-need-based financial aid. Essentially, this means finding schools that will give you what I call “tuition discounts.”

How to access non-need-based aid:

  • Getting tuition discounts from private schools with lots of money
  • Positioning your student for merit aid—what I call “the top 5%” of that school’s freshmen entering class

There is an opportunity for families who make too much money to qualify for need-based financial aid to get free money from schools too.

Understanding non-need-based financial aid

The vast majority of college publications, college financial aid statistics, and the colleges themselves break down financial aid into two categories:

  1. Need-based aid
  2. Merit aid

When you hear the term “merit,” what do you think? Most people probably think, “That money is not for my student.” Why? For most people “merit” means a “top” academic student with straight As or a talented athlete that will get an athletic scholarship. As a result, many conclude that they will not be eligible for merit aid, and further, they believe they will never get any need-based aid either. In my experience, this is one of the most misunderstood areas of financial aid and leads to lots of missed opportunities. That’s why I call this area of opportunity “non-need-based” aid instead of “merit.”

Think of my earlier common sense example and remember that college is a big business—someone figured out a long time ago that if I can build a college for C-level high school students, I can make lots of money!

Just like the need-based section, let’s find the right financial schools for your pocketbook. Assuming your SAI is $80K+, imagine a list of right financial schools for you, even if you will never get need-based aid.

Look at the table below; for this situation, there is a different priority list of most to least free money:

This table is a snapshot of a database sorting where you could expect the “most” to the “least” free money for an estimated SAI of $80K (never eligible for need-based aid). (Please note that I did not include “more”, “average”, or “less” options—only “most” and “least”.) See the earlier table and key for an explanation of the terms used here.

By condensing the table for this situation, it looks like this:

If you can find schools that have made a business decision to give tuition discounts to attract students, regardless of a family’s financial situation, these would be the best options to save yourself tens of thousands of dollars. (Please note that even if your child is not “top 5%” at a TD school, you can still get substantial free money. Shown here is a student who is in the top 50% of the applicants—50-95%—and they may get tens of thousands of dollars. Whereas, at a public school, they would probably get zero free dollars unless in the top 5%).

If you have a top student (straight As, 1500+ SAT), your friends, family, and/or neighbors may tell you no matter where your student goes, “Of course you should get scholarships.” What if this were not true? It all depends on whether you have found the right school financially. If you happen to find a school that gives you plenty of tuition discounts plus has lots of money, it could be true. In fact, if you pick the right private school, you may get close to a full scholarship.

What if the school selected was a College B—what I call “a 100% need-based school”? Unfortunately, the vast majority of those types of schools do not give any merit-based aid; instead, they only give out need-based aid, if eligible. As a result, in this family’s case, they would get $0 free money and be stuck at sticker price.

How crazy is that? Let me show you that this is not just crazy; it is also completely arbitrary, and it explains why so many people miss out.

Comparing elite private schools with dramatically different results

Imagine your college-bound student is interested in going to college in Washington, D.C. with a view to a career in the State Department, the CIA or the Supreme Court. Further, you find out two of the top schools in D.C. are Elite Private School 1 and Elite Private School 2, and you decide to do college visits. Let’s assume the sticker prices at both schools is $80K and your college budget is $35K/year—essentially the cost of an in-state public school where you live. Let’s also assume your SAI is greater than $80K, even after any financial strategies.

As part of the official visits, the financial aid director at Elite Private School 1 says something like: “70% of freshmen get financial aid, and the average free money is $45K per year.” Assume, Elite Private School 2 says essentially the same thing, and for both schools these statistics are “true”.

Given this information, you tell your student, “If you get the average $45K in free money from either elite private school, we will let you attend.” This would be because the true cost to attend either would be $35K and equal to your public school budget. Because of this understanding, you encourage your student to apply and see what happens.

Arbitrarily, your student applies only to Elite Private School 1, not Elite Private School 2. In case you are not aware, applying to these two elite private schools—and most private schools—is a much more complex application process than applying to a typical public school. It involves writing essays, doing interviews, and more.

Meanwhile, you learn that to be considered for financial aid overall, parents need to ask for it. This means you have to complete and submit financial aid forms (more than the FAFSA) to Elite Private School 1, and you do so. (Remember, colleges are the gatekeepers for distributing most financial aid.)

Your student figures out all of the complex application requirements, does all the extra work, and gets accepted (receiving a letter from the admissions office). Congratulations!

Now you wait for a financial aid letter from Elite Private School 1, which comes separately from the financial aid department. You receive the award letter and find out your student is awarded zero dollars (yes, $0!) in free money. You contact the financial aid office and say, “We attended a college visit, and your director said the average free money award was $45K. Our student is above average, so we expected more than $45K—there must be a mistake.

The financial aid office rep reviews your family’s file and eventually informs you, “Your SAI is greater than our cost of attendance, and Elite Private School 1 only gives need-based aid—no merit money—so, unfortunately, you are not eligible for any free money here.” (It is what I call, a College B.) As a result, you are stuck with the sticker price.

Because of this, you determine you cannot or do not want to spend the $80K+ to send your student to Elite Private School 1. Even though this was the student’s top choice, you send them to the less expensive public school instead. But what if you had been better informed and understood that finding the right school financially upfront would have changed the result?

Elite Private School 2 competes with Elite Private School 1 for top applicants; however, they have a different financial aid policy. Private Elite Private School 2 also gives what I call “tuition discounts” (merit aid) and has lots of money. They made a business decision to attract top applicants that would not be eligible for need-based aid and are unwilling to pay full sticker prices. Elite Private School 2 is generous with meeting need, if eligible, but do not guarantee to meet everyone’s need 100%. Simply put, this means they would give more need-based aid to those higher up the applicant pool and may give zero need-based aid to someone near the bottom.

As a result, if your family had learned about Elite Private School 2’s financial aid policy, and your student saw this as a top choice school, similar to Elite Private School 1, applying to Elite Private School 2 would have been the better option. If your student was a top applicant, they may have gotten close to a full scholarship. Even if they were in the middle of the accepted applicant pool, they probably would have gotten the average $45K in free money. As a result, you would be willing to send your student to D.C. ($80K COA – $45K free money = $35K true cost). All you needed to do was find the right school for your pocketbook. Isn’t that amazing?

What if your family’s situation was different? Let’s assume your family’s SAI is $30K and you have an annual budget of $30K. Additionally, your student is in the bottom 25% of the freshman applicant pool at both D.C. schools. Let’s also assume you do the same college visits and hear the same information, but your student arbitrarily applies to Elite Private School 2, not Elite Private School 1.

Great news—your student is accepted at Elite Private School 2, but the free money offered is only $10K. As a result, your family is unwilling to spend the $70K at this school ($80K COA – $10K free), and your student went to the less expensive public school.

If your family had learned about Elite Private School 1’s financial aid policy, and if your student had been accepted, they would have been guaranteed the $50K in free money and gone to that school for $30K. How crazy and arbitrary is that?

Avoid surprises

You do not want to be surprised. Therefore, a critical component of getting free money is understanding each school’s financial aid policy:

  • Know the school’s financial aid policy before you apply.
  • Make sure school choice is matched to your unique goals and college budget.
  • Be wary of school statistics.
  • Learn what your actual SAI is, and find out if, with strategies, you could reduce this to a level that allows you to get free need-based aid.
  • If ultimately eligible for need-based aid, target schools that give lots of need-based aid—ideally 100% need-based schools.
  • Remember what I said before—no matter what your financial situation is, I can show you how to get tens of thousands in free money from the colleges themselves. Therefore, if you are never able to get need-based aid, target schools that give tuition discounts and have lots of money.

In summary, financial aid is available to everyone and there are two types available: need-based and non-need-based aid. To determine if you can qualify for need-based aid, you need to know your correct SAI and, importantly, to determine the strategies available to reduce this to be eligible for the most free dollars.

Choose your schools wisely, as some have more money than others, and do your research to make sure you understand their policies before you apply. If you are not eligible for need-based aid, non-need-based financial aid is what you focus on, which involves finding schools that will offer “tuition discounts.” Remember, regardless of your financial situation, there is free college money available. With the right preparation, you can find the financial aid that will secure a place in the right school for your child.

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