Although my kids are still young, I am starting to learn more about the college selection process to help some of my financial planning clients with older kids. It is a highly complicated and seemingly mysterious process, but doesn’t need to be frustrating.

The best quote I’ve read so far regarding college pricing is that “Colleges are priced like airlines – everyone pays a different price”. If you can understand the fact that colleges are run like profit-maximizing businesses, then it makes it much easier to comparison shop and become a smart college shopper.

Some of the best tips I’ve learned so far include:

  1. Start early. The earlier you start researching colleges and their costs, the more likely you’ll be to find the best fit for your child at the most reasonable price. You want to influence your child’s direction before they get their heart set on one or two schools.
  2. Brand name doesn’t mean quality. There are a handful of schools that it seems everyone wants to go to. The problem is these schools know that and can afford to be very selective in admissions and stingy with financial aid. A better measure of quality are things like 4-year graduation rates and student retention rates.  If it takes your child more than four years to graduate, your total cost can be significantly higher than you budgeted. For example, San Francisco State has a 13% 4-year graduation rate, wheras Cal and UCLA have a 70% graduation rate.
  3. Know your EFC. The first thing to do is to understand what your family’s Expected Family Contribution (EFC) is likely to be using an online calculator. The cost of the college less your EFC is known as your Demonstrated Financial Need, which will determine whether you qualify for need-based aid or not. If you have a high EFC, then you might not qualify for need-based aid, so should focus on finding schools that are generous with merit aid. Knowing which schools are generous with merit aid can help you influence your child’s list of targeted schools.
  4. Use Net Price Calculators. Hardly anyone pays full price for college and merit-based aid has been on a rise as colleges compete for students. 66% of students at all colleges and almost 90% at private schools don’t pay full price. The average discount is 40% at all schools and over 50% at private schools. Hence, it is important to use net price calculators to get a better handle on your actual price to further influence your child’s choices.
  5. Avoid stingy schools. There are actually quite a few schools that report meeting 100% of student financial need. You can research which schools are most generous with free money (i.e., grants and scholarships) at Look for a high “percentage of need met” statistic.
  6. Apply early and often for financial aid. If you don’t want to be one of the minority that pays full price, then it is in your interest to apply for financial aid, as all aid is given out this way, both need-based and merit-based.  Aid is awarded on a first-come, first-served basis, so complete the FAFSA and/or CSS Profile as close to January 1st as possible.

In summary, paying for college doesn’t need to be a daunting and overwhelming task. Much can be done to be a smart shopper and reduce the financial burden of college. As with many things in life, the earlier you start planning, the better luck you’ll have.