Advertisement for the Mount Carroll Seminary from 1888, mentioning the available financial aid. (Photo credit: Wikipedia)

If you have a senior in high school, March is the cruelest month. And if you have younger kids, here’s a preview of what you’re in for—fasten your seatbelts.

Some colleges and universities are kind enough to do rolling admissions—you send in your stuff and within some reasonable time you get the thumbs up or thumbs down. I’m not going into all the details of early action, early decision, single application early action—really, what are they thinking? But lots of schools save their “good news” for the last two weeks in March, which leaves nearly every college bound senior twisting in the wind since the applications were submitted for early January deadlines.

I just watched an hour interview on the Wall Street Journal where some really high powered admissions directors were forced to admit that all the stuff they use as criteria has no real predictive power. Okay, so before I start foaming at the mouth, I’m going to try to get to the financial point of all this. Financial aid formulas? Well, really, there is no formula!

I’ve written other posts on estimating your college aid, but the most common misconception I hear is that there is one formula for state schools and those private schools that only use the FAFSA, and another formula based on the CSS Profile. Not true. Not entirely, at least.

State schools are processing so many applicants and have so little non-governmental money that yes, the aid you get is pretty much based on the FAFSA, and if you’re remotely middle class, you’re going to be footing the whole bill. Luckily, that bill isn’t yet in the stratosphere, at least not in relation to costs at private schools. In relation to your personal budget, you might feel a flutter in the ole’ ticker, because the FAFSA is going to expect that you can pay 47% of your income for college costs. For the 99% of families for whom saving even 10% of their income is a challenge, well, feel your heart pounding a little?

Now, every dumb college planning article I read gives the dumb advice that the cost of attendance can be lower at a private school than at a public, because maybe, just maybe, little Jack is a stellar quarterback or little Jill just published her first novel. What’s the truth? Yeah, maybe your kid will get an alluring financial aid package if 1)you’re pretty broke 2)the kid is a genius and 3) AND HERE’S THE IMPORTANT ONE: your kid is a contender for an Ivy-league type school but is willing to settle for the third tier. Even if your kid is a genius, ivy-type schools turn down tons of those kids every day—they don’t need to give merit aid because every kid who has survived the admissions gauntlet would qualify for merit aid (and a lot of the ones they turn down, too.) Confining aid awards to needs-only gives them a little economic and minority balance—they already have plenty of wealthy applicants who’ve been tutored since preschool and who have parents who can and will pay absolutely anything to get the fat envelope (or now, the congrats email). When your freshman class is 1,500 and you get 20,000 applicants for it, the admissions department isn’t exactly a buyer’s market. So if your college payment plan is that Jack or Jill is going to get scholarships, I hope their name is Christopher Paolini (oops, he didn’t go to college).

Next overlooked fact—there’s no CSS/Profile formula. Each private school is absolutely free to give away any money, or determine “need”, any way they want. Unlike Fed money (given away on the FAFSA formula), private schools can consider your home equity, your retirement funds, or the car you’re driving. Or not. So, to get a real sense of this, go to this page and type in the specific school your child is considering. Heck, you’re probably up all night worrying anyway, so type in a few and you’ll see quite a difference, even among very competitive schools. Plug in your specific information (get your tax return and investment statements) and you’ll see how differently the same assets and income will be treated.

And now you know the most important thing: it’s time to get a financial plan.

Image via Wikipedia

Whew! The shoemaker’s children have no shoes. That’s just to say I’ve endured four hours filling out the CSS Profile for my own daughter’s financial aid application. It’s not confusing when it’s for someone else, but when it’s your own…Here’s some extra tips I learned.

Don’t be modest on expenses

If you’re filling out the Profile (or the FAFSA, for that matter) before you have actually done your taxes, it’s an estimate. Estimate as accurately as possible, but estimate it on the high side when you’re figuring out what, for example, medical expenses might be. Don’t fail to include the cost of any health insurance premiums and deductibles in that estimate. You can always revise later, for the final application.

Be conservative on assets

For example, what is your house really worth? Don’t use the current assessed value (it’s probably high these days). Try to establish a price that a realtor would list it at if you had to sell rapidly. It’s fair to subtract the cost of needed repairs. Look up how much housing prices have fallen in the last two or three years. On the other hand, don’t lie—there’s been murmurs that colleges are using Zillow to double check prices if it seems outrageous. So if you live in Winnetka, you probably can’t put down $80,000.

Explain away

There’s a section for extra explanations and I recommend filling it up if anything is even slightly unclear. I noted explanations for at least five questions where I felt I could make a case for different interpretation. If you don’t have enough room in this section, send a snail mail letter to the school(s). It doesn’t hurt to try.

Read all the FAQs and explanations

You think you have a weird question? Check out what other parents have asked and you’ll probably learn something.

And lastly, my sympathies. I only had to make two calls to the College Board for our rather unique situation, and I think I know what I’m doing! I still think they have a mistake on the form (understating taxes paid for the self employed). Each application is unique and I’d advise allocating at least an afternoon, AFTER you’ve completed an initial run through of your taxes. Thankfully, it was a rainy day today.