Paying for College
Financing a college education is one of the largest expenses a family will ever undertake. The cost of college has far outpaced the inflation rate and our wages over the past 30 years. Paying for college is not like how it used to be just one generation ago.
Trying to save enough money for college can feel daunting and sometimes absolutely impossible. And sadly, what most people don't know is that certain ways of saving for college can actually hurt your chances of qualifying for financial aid. That's right - saving for college the wrong way can end up making it more expensive for a family. Many families weed out schools just because their advertised price tag is simply too much. And that is one of the most common mistakes we see families make. Many times a college with a higher price tag can end up costing a family less money than another school with a cheaper price tag. In the end, each family is unique and should not assume they are stuck paying the advertised price.
There are many factors that go into determining merit-based financial aid and need-based financial aid, such as parents income and assets, student grades and test scores and sometimes even volunteer activities. Finding ways to make college affordable is really a balancing act between academic planning and financial planning. It is this type of holistic approach that you'll receive from us.
Trying to save enough money for college can feel daunting and sometimes absolutely impossible. And sadly, what most people don't know is that certain ways of saving for college can actually hurt your chances of qualifying for financial aid. That's right - saving for college the wrong way can end up making it more expensive for a family. Many families weed out schools just because their advertised price tag is simply too much. And that is one of the most common mistakes we see families make. Many times a college with a higher price tag can end up costing a family less money than another school with a cheaper price tag. In the end, each family is unique and should not assume they are stuck paying the advertised price.
There are many factors that go into determining merit-based financial aid and need-based financial aid, such as parents income and assets, student grades and test scores and sometimes even volunteer activities. Finding ways to make college affordable is really a balancing act between academic planning and financial planning. It is this type of holistic approach that you'll receive from us.
Understanding the financial aid process is critical to minimizing your costs for college. At the elementary level, it seems pretty easy to understand.
Cost of Attendance is essentially determined by tuition, room and board, books and supplies.
EFC is essentially determined by the income and assets of the parents and student.
The student's Need for financial aid is going to be filled with Federal resources first, such as Federal student loans, grants, and work-study. Then possibly State aid will kick in if you live in a State that provides any. If the Federal and State resources don't meet your Financial Need, you want to select a school that has their own free money to fill the unmet Need.
However, the real secret to making this formula work for you is understanding how the EFC is calculated. The EFC takes into consideration:
Truthfully, this over-simplifies the EFC part of the formula. The EFC is determined by over 100 factors and is about 30 pages long when printed out. It is NOT designed to calculate how much you can afford. Rather it measures your financial strength compared to other families. Most families are shocked to see how high their EFC is calculated to be. As a former Director of Financial Aid, JP knows most families incorrectly fill out the applications and usually over-represent their financial strength.
JP has also counseled many families who placed their savings and investments (the assets part of the EFC formula) in areas that jeopardized their Financial Need for Aid because they followed incorrect advice from their tax planners or wealth managers. Not all types of assets have to be counted in the EFC calculation. Knowing where to place your assets is very important to keep your EFC calculation as low as possible. The goal is to correctly reflect your financial strength and not over-represent it.
A classic example is a family who ignored JP's advice to move some money that admittedly would create a one-time tax hit of $5,000, but would have provided them an additional $10,000 in free financial aid each year over four years. The family lost out on $40,000 in free money because they could not see past the one-time tax hit. It's a classic example of not looking at the financial picture from a holistic perspective.
We are more than happy to work with families, their CPA's, their financial planners, etc. when it comes to designing a plan on how to most efficiently pay for college with the money you have, versus telling you just to take out school loans to cover the remaining costs.
Cost of Attendance is essentially determined by tuition, room and board, books and supplies.
EFC is essentially determined by the income and assets of the parents and student.
The student's Need for financial aid is going to be filled with Federal resources first, such as Federal student loans, grants, and work-study. Then possibly State aid will kick in if you live in a State that provides any. If the Federal and State resources don't meet your Financial Need, you want to select a school that has their own free money to fill the unmet Need.
However, the real secret to making this formula work for you is understanding how the EFC is calculated. The EFC takes into consideration:
- the family's taxed income from two years prior
- the family's untaxed income from two years prior
- the family's current assets
- the family’s current benefits
- family size
- the State you reside in
- the age of the oldest parent
- Other family members who will be attending college
Truthfully, this over-simplifies the EFC part of the formula. The EFC is determined by over 100 factors and is about 30 pages long when printed out. It is NOT designed to calculate how much you can afford. Rather it measures your financial strength compared to other families. Most families are shocked to see how high their EFC is calculated to be. As a former Director of Financial Aid, JP knows most families incorrectly fill out the applications and usually over-represent their financial strength.
JP has also counseled many families who placed their savings and investments (the assets part of the EFC formula) in areas that jeopardized their Financial Need for Aid because they followed incorrect advice from their tax planners or wealth managers. Not all types of assets have to be counted in the EFC calculation. Knowing where to place your assets is very important to keep your EFC calculation as low as possible. The goal is to correctly reflect your financial strength and not over-represent it.
A classic example is a family who ignored JP's advice to move some money that admittedly would create a one-time tax hit of $5,000, but would have provided them an additional $10,000 in free financial aid each year over four years. The family lost out on $40,000 in free money because they could not see past the one-time tax hit. It's a classic example of not looking at the financial picture from a holistic perspective.
We are more than happy to work with families, their CPA's, their financial planners, etc. when it comes to designing a plan on how to most efficiently pay for college with the money you have, versus telling you just to take out school loans to cover the remaining costs.