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Applying to college can be both time-consuming and expensive — with some schools charging as much as $75 just to apply. Fortunately, there are ways to make the process easier, and potentially cheaper.

The Common Application (or Common App) is an online college application platform used by more than 1,000 colleges that allows you to apply to multiple schools using one centralized application. The bulk of the application questions only need to be filled out once, though certain colleges and universities might also require supplements, such as short answer questions and/or essay prompts specific to that school. The new edition of the Common App opens Aug. 1 every year.

The Common App also provides students with valuable resources for the application process, including step-by-step application guidelines, information about financial aid and scholarship options, as well as how to get your application fee waived.

How Much Does the Common App Cost?

Although the Common App is free to use, individual schools often have their own application fees that students must pay to apply. The average undergraduate application fee for U.S. students is $56. However, some schools don’t charge application fees.

The Common App organization understands that some students are unable to pay application fees, and they don’t want this to be a barrier for students to be able to apply for college. For this reason, they have created the Common App Fee Waiver, which allows students to apply to schools without any fees.

Not every school will accept a fee waiver but thousands of schools around the world do.


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How the Common App Fee Waiver Works

You can use the Common App Fee Waiver section of your Profile to request a fee waiver. If you select that you are eligible for the Common App fee waiver, you will not be charged any application fees when you submit through Common App.

Recommended: Ultimate College Application Checklist

How to Apply

Students can apply for the Common App Fee Waiver in the Personal Information or Profile section of their application. There is a place in this section to select “Yes” to apply for the waiver and indicate eligibility.

In order to complete the application for a Fee Waiver, students must also have their college counselor submit a fee waiver form.

Many schools use the honor system and trust that a form from a counselor proves a student’s eligibility, but some schools may ask for electronic or hard copies of paperwork for verification of eligibility.

Recommended: Important College Application Deadlines

Who is Eligible?

Students who fit any of the following criteria may be eligible to receive a Common App Fee Waiver:

•   Students who are orphans or wards of the state
•   Students whose family receives public assistance
•   Students who received or are eligible to receive SAT or ACT testing fee waivers
•   Students enrolled in or eligible to enroll in Federal Free or Reduced Price Lunch Programs
•   Students whose family’s annual income fits the eligibility for the USDA Food and Nutrition Service
•   Students enrolled in local, state, or federal aid programs for low-income families
•   Students who are homeless, live in a foster home or in federally subsidized public housing
•   Students who get a written statement from a community leader, financial aid officer, school counselor or official

Each school decides whether to grant a student’s request for a Common App Fee Waiver.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Beyond the Application: Paying for College

Students and families applying for Common App Fee Waivers may also be looking into financing options to pay for college tuition. There are several options for parents and students who need help paying for college. These include:

Filling out the FAFSA

The first step is to fill out the Free Application for Federal Student Aid (FAFSA). Even if you don’t think you will qualify for aid, it’s a good idea to fill out this form. The FAFSA opens up opportunities for students to receive student loans, federal grants, school aid, and work-study positions.

Applying for Scholarships

There are thousands of private scholarships available to students, and the benefit of scholarships is that they don’t have to be paid back, unlike student loans.

Finding Affordable Schools

Although some universities cost tens of thousands of dollars each year to attend, others are much more affordable. Some schools are also more generous with student financial aid than others. Students may want to carefully compare the financial aid packages offered to them to figure out which school is the most affordable for them.

Applying for Work-Study Jobs

Students can work part time to help pay for college. The federal work-study program provides work opportunities for students to get jobs on campus.

Applying for Grants

In addition to scholarships, there are thousands of grants available to students. These grants are issued by the federal government, the Pell program, and individual states. Some are need-based, while others are merit-based. To find out if you qualify and to become eligible for grants, you need to fill out the FAFSA.

Saving Money in a 529 Plan

Many families put money aside each month to help pay for college tuition. One way to do this is using a 529 Plan, which is an investment account that offers tax benefits when used to pay for qualified education expenses for a designated beneficiary.

Taking out Federal Loans

Federal student loans are administered by the U.S. Department of Education, and may be subsidized (which means you won’t be charged interest while you are in college and for six months after) or unsubsidized (meaning interest starts accruing right away). Federal loans tend to have lower interest rates and more flexible repayment plans than private loans.

To qualify for a federal loan, you will need to complete and submit the FAFSA.

Taking out Private Loans

Another option for covering the cost of attendance for college is to take out a private student loan. These are available through banks, credit unions, and online lenders. Rates tend to be higher than federal student loans, but borrowing limits are typically higher. These loans are not need-based and generally require a credit check. Borrowers (or cosigners) with excellent credit tend to qualify for the lowest rates.

Keep in mind that private student loans may not offer the same borrower protections that federal student loans offer, such as forbearance or income-driven repayment plans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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An investor calculating yield to call is getting an idea of how much their overall bond returns will be. Specifically, yield to call refers to the total returns garnered by holding onto a bond until its call date. That doesn’t apply to all bonds, naturally, but can be very important for many investors to understand.

For investors who utilize bonds — callable bonds, in particular — as a part of their investment strategy, having a deep understanding of yield to call can be critical.

What Is Yield to Call?

As mentioned, yield to call (often abbreviated as “YTC”) refers to the overall return earned by an investor who buys an investment bond and holds it until its call date. Yield to call only concerns what are called callable bonds, which are a type of bond option.

With callable bonds, issuers have the option of repaying investors the value of the bond before it matures, potentially allowing them to save on interest payments. Callable bonds come with a call date and a call price, and the call date always comes before the bond itself matures.

A little more background: in a YTC scenario, ”yield” refers to the total amount of income earned over a period of time. In this case, the yield is the total interest a bond purchaser has accrued since purchasing the bond.

How Yield to Call Works

If an investor buys a callable bond, they’ll see interest payments from the bond issuer up until the bond reaches maturity. The callable bond also has a call date, and the investor can choose to hold onto the bond until that date. If the investor does so, then YTC amounts to the total return the investor has received up until that date.

Yield to call is similar to yield to maturity, which is the overall interest accrued by an investor who holds a bond until it matures. But there are some differences, especially when it comes to how YTC is calculated.

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Yield to Call Formula

The raw yield to call calculation formula looks like this:

An investor should have all of the variables on-hand to do the calculation. Before we run through an example, though, here’s a breakdown of those variables:

•   Yield to call: The variable we are trying to solve for!

•   Coupon interest payment: How much the bondholder receives in interest payments annually.

•   Call price: The predetermined call price of the callable bond in question.

•   Current market value: The bond’s current value.

•   Time until call date: The number of years until the bond’s first call date arrives

The yield-to-call calculation will tell an investor the returns they’ll receive up until their bond’s call date. A bond’s value is roughly equal to the present value of its future earnings or cash flows — or, the return, at the present moment, that the bond should provide in the future.

How to Calculate Yield to Call

It can be helpful to see how yield to call looks in a hypothetical example to further understand it.

Yield to Call Example

For this example, we’ll say that the current face value of the bond is $950, it has an annual coupon interest payment of $50, and it can be called at $1,000 in four years.

Here’s how the raw formula transforms when we input those variables:

Yield to call = ($50 + ( $1,000 – $950 ) ÷ 4 ) ÷ (( $1,000 + $950 ) ÷ 2)

YTC = $25 ÷ $975

YTC = 0.0256 = 2.56%

Interpreting Yield to Call Results

Once we know that our hypothetical, callable bond has a yield to call of 2.56%, what does that mean, exactly? Well, if you remember back to the beginning, yield to call measures the yield of a bond if the investor holds it until its call date.

The percentage, 2.56%, is the effective return an investor can expect on their bond, assuming it is called before it matures. It’s important to remember, too, that callable bonds can be called by the issuer at any time after the call date. So, just because there is an expected return, that doesn’t necessarily mean that’s what they’ll see.

Yield to call calculations make a couple of big assumptions. First, it’s assumed that the investor will not sell the bond before the call date. And second, the calculation assumes that the bond will actually be called on the call date. Because of these assumptions, calculations can produce a number that may not always be 100% accurate.

Yield to Call Comparisons

Two calculations that are similar to YTC are “yield to maturity,” and “yield to worst.” All three calculations are related and offer different methods for measuring the value that a bond will deliver to an investor.

A different type of yield calculation would be needed if you wanted to try and measure the overall interest you’d earn if you held a bond to maturity. That’s different from measuring the overall interest you’d earn by simply holding the bond until its call date.

Yield to Call vs Yield to Maturity

YTC calculates expected returns to a bond’s call date; yield to maturity calculates expected returns to the bond’s maturity date. Yield to maturity gives investors a look at the total rate of return a bond will earn over its entire life, not merely until its call date (if it has one).

Yield to Call vs Yield to Worst

Yield to worst, or “YTW,” measures the absolute lowest possible yield that a bond can deliver to an investor. Assuming that a bond has multiple call dates, the yield to worst is the lowest expected return for each of those call dates versus the yield to maturity. Essentially, it gives a “worst case” return expectation for bondholders who hold a bond to either its call date or for its entire life.

If a bond has no call date, then the YTW is equal to the yield to maturity — because there are no other possible alternatives.

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The Takeaway

Learning what yield to call is and how to calculate it, can be yet another valuable addition to your investing tool chest. For bond investors, YTC can be helpful in trying to figure out what types of returns you can expect, especially if you’re investing or trading callable bonds.

It may be that you never actually do these calculations, but having a cursory background in what the term yield to call means, and what it tells you, is still helpful information to keep in your back pocket.

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FAQ

What is the advantage of yield to call?

Yield to call helps investors get a better idea of what they can expect in terms of returns from their bond holdings. That can help inform their overall investment strategy.

How do you calculate yield to call in Excel?

Calculating yield to call can be done the old fashioned way, with a pen and paper, or in a spreadsheet software, of which there are several. An internet search should yield results as to how to calculate YTC within any one of those programs.

Is yield to call always lower than yield to maturity?

Generally, an investor would see higher returns if they hold a bond to its full maturity, rather than sell it earlier. For that reason, yield to call is generally lower than yield to maturity.

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