Planning Ahead Can Save Thousands On College Expenses (Part II)

Author's note: Are you the parent of a student either currently enrolled in college - or who is planning on attending a post-secondary school next fall? You don't have to be told that college is expensive and planning is time consuming.  This two-part series, designed for parents and employee assistance (and other) professionals who are assisting them in this often-difficult process, can really help!

In part I of this two-part series, I outlined some of the issues that are just the "tip" of the college planning iceberg influencing whether today's "modern" family will be able to actually afford a 4-year college.  In this post, I will go over more key points.

Most EFC calculators pivot off a handful of data points- our calculator actually pivots off close to 20 significant data points that provide a more accurate picture of what your expected family contribution (EFC) might be. By knowing this number ahead of time,  you can create a more efficient plan for how best to pay for college. While EFC is mostly “income”-driven in nature, our work with families has uncovered additional “peripheral” areas, like assets, that can influence what a family’s “true” EFC looks like. Did you know that assets held in a student’s name can often be assessed as high as 26% in some formulas? 

This is because assets that are held in a student’s name typically do not have an asset protection allowance. There is over $150 billion in financial aid available each year if you know how to get it and with the competition for admissions becoming increasingly competitive, students need to know how best to present themselves to their targeted colleges.

If you are like many of the thousands of families who feel they are not receiving the kind of attention from their high schools that is needed during the college application process, take a peek at some of the various web-based tools that we have launched to help simplify this process. (www.smarttracktoolkit.com).

Be sure to monitor deadlines (both admissions and financial aid) for each college you are applying to.  Believe it or not schools often have different deadlines for their admissions applications versus their financial aid applications.  For students applying to state schools, did you know that different states have different deadlines for families to submit their FAFSA (Free Application for Federal Student Aid) forms? States like Kentucky, Tennessee and Vermont award aid on a first come, first-served basis so its critical to have your forms submitted in January (as a general rule of thumb) before most of the available aid disappears by late spring.

If you are a parent of a senior in high school or you have kids who are currently in college and are applying for financial aid, you can get a head start by using our College Funding tool to actually submit all of your financial aid forms on time (including the FAFSA & CSS Profile forms) and be entitled to a professional review with one of our experienced college funding advisors. 

Remember to use the promo code: “Impact” to receive 20% off when you purchase any of our 5 components and feel free to contact me with any questions you might have: jay.robie@smarttracktoolkit.com or 800 863-9440 ext. 277. Good luck!

About Smart Track™ Toolkit: The toolkit is a web based service that assists families with everything from admissions and test prep, to student athletics and financial aid.  Our intuitive software and on-demand workshops are key components to making sure students find their top choice colleges, and families can afford to send them there.

About the author: Jay Robie is the VP of Business Development in the Corporate and Education channels with the College Resource Center, LLC.  Jay has previous work experience as an Admissions Counselor at St. Lawrence University and Boston College as well as the Director of the Corporate Internship Program at Notre Dame High School.  Jay also has consulted for Road to College as an Admissions Planner.

Planning Ahead Can Save Thousands On College Expenses (Part I)

38 minutes. The average length of time a high school guidance counselor is able to spend with a student discussing college-specific items. 476:1 The national average ratio of high school students to guidance counselors. $1 trillion in student debt that has eclipsed credit card debt for the 1^st time in history.. College costs that rise 6-8% on average per year. A larger and more competitive applicant pool.  These issues and averages are just the “tip” of the college planning iceberg influencing whether today’s “modern” family will be able to actually afford a 4-year college. 

Much of this information has been penned already by many other authors, so I do not want to rehash something that has already been “beaten” senseless into the American public but rather highlight a few pointers that might help folks to mitigate some of their anxieties and fears. Our firm, the College Resource Center, has worked with thousands of families over the years on creating viable plans for how best to pay for college without going broke and while each family’s situation is different, there is a common link amongst them- they are all very concerned with how best to approach what can be an overwhelming process. 

Have a plan. If you don’t, your plan will arrive in the mail when you receive your 1^st tuition bill.  Determine what your EFC (Expected Family Contribution) will be. This is one of THE most important figures to know and basically lets a college know how much per year you can afford to pay to have your son or daughter attend that fine institution.

To get started, you can use our EFC calculator at Free Trial to register for a free trial and learn not only what your personal EFC is, but how much it potentially could be lowered by. (Your free trial will also give you access to an eCalendar to help you keep track of important dates and deadlines in the college admissions process)

Use the promo code: “Impact” to receive 20% off when you purchase any of our 5 components and feel free to contact me with any questions you might have: jay.robie@smarttracktoolkit.com or 800 863-9440 ext. 277. Good luck!

COMING NEXT: More on EFC calculators, admissions deadlines, and more.

About Smart Track™ Toolkit: The toolkit is a web based service that assists families with everything from admissions and test prep, to student athletics and financial aid.  Our intuitive software and on-demand workshops are key components to making sure students find their top choice colleges, and families can afford to send them there.

About the author: Jay Robie is the VP of Business Development in the Corporate and Education channels with the College Resource Center, LLC.  Jay has previous work experience as an Admissions Counselor at St. Lawrence University and Boston College as well as the Director of the Corporate Internship Program at Notre Dame High School.  Jay also has consulted for Road to College as an Admissions Planner.

3 Critical Questions to Research So You Can Get Grants, Scholarships and Other Financial Aid You Deserve

So how do you beat the colleges at their own game? Here are three areas to research.
 

1. Determine what percentage of financial need each college on your list has met historically. All things being roughly equal, wouldn’t you rather attend a more generous school compared to a stingy one?

2. Determine how that college meets need – i.e. the breakdown between free stuff (grants and scholarships) and self-help (loans/work study.) Two colleges could meet the same overall percentage of need, but your financial aid could be vastly different between the two.

3. Pin down the priority deadlines – some schools require forms as early as November 1! Others may want you to file by February 15th. Make sure you research deadlines for each college on your list, since a lot of financial aid is first come, first served.

Now, a quick word on how to use the information uncovered in #1 and #2, above. The ‘formula’ used by each school to determine your financial aid award is as follows: COA (Cost of Attendance) – EFC (Expected Family Contribution) = Need. Schools award financial aid based on how much need you show. As noted above, once you identify the percentage of need that your college meets, you have a decent handle on what your award will look like. Here is a simplified example:

Assume two colleges with a $50,000 Cost of Attendance and a $25,000 EFC. Your Need is $25,000. If “College A” meets 100% of need, you’ll receive an award of about $25,000 and your cost will be your EFC of $25,000. However, only the most elite, competitive colleges in the country will meet 100% of need. Most do not. If “College B” only meets 80% of need, you may only receive $20,000 in aid, and you’ll have to pay about $30,000 (this is your EFC + the 20% unmet portion). So your total out of pocket for one year at the second school is $5,000 more than the first school, even though their sticker prices may be the same.

How can you obtain these facts? The first place is to look on the websites of each college. Understand that you will have to click around for a while – colleges don’t make this information easy to find. You can also call the financial aid office but you may end up frustrated by the lack of responsiveness, according to most of the parents we work with. Another great resource is College Board - www.collegeboard.org. The information on there is trustworthy for the most part, but you have to really dig at it. You’d be well-served to consult a qualified college finance specialist. For example, our firm has all of this information at our fingertips and we get a lot of it directly from the colleges and some from the Department of Education. Our Smart Track™ Toolkit website has the tools (many of them for FREE) to help you project what each college will award within a small margin of error, and suggest legal and ethical ways to qualify for more grants and scholarships than you would on your own. No matter whether you seek out expert help or do it yourself, preparation and research can pay off in a big way. Don’t put it off or you could lose out – on tens of thousands of dollars in financial aid.

MurrayMiller is a financial educator devoted to the college planning space for over a decade.  Murray is the President and CEO of the College Resource Center, LLC.  You may contact him by emailing info@smarttracktoolkit.com or by calling 800-863-9440. For more information, including a schedule of free college workshops, visit www.SmartTrackToolkit.com.

About Smart Track™ Toolkit: The toolkit is a web based service that assists families with everything from admissions and test prep, to student athletics and financial aid. Our intuitive software and on-demand workshops are key components to making sure students find their top choice colleges, and families can afford to send them there.

Connect with us

http://www.facebook.com/smarttracktoolkit

http://twitter.com/uchoosecollege

A Beginner’s Guide to Financial Aid Part II

In the last blog entry, we covered some of the basics of the college financial aid system and how it is used to determine how much money you could receive. In case you have forgotten, the key formula is “COA – EFC = NEED”. COA in this case stands for “Cost Of Attendance” and is pretty straightforward (just add up the cost of everything for one year of college). What I would like to focus on in this entry is the EFC, which stands for “Expected Family Contribution”.

The first thing to do is clearly define what your EFC is. Most colleges and universities will define your EFC as “the minimum amount your family can afford to pay for one student for one year of college”. It is important to identify key components of this definition. “Minimum” implies that your EFC is a starting point and you may actually have to pay more than your EFC (depending on the college your student chooses.) Also notice the “one year of college” part. This is because you should file for financial aid every single year, which means that your EFC will likely be different every single year. The reason financial aid is filed for every year is because situations change. Jobs are gained or lost, benefits will start or stop. Even the number of students in your family attending college at the same time could change, and all of these things impact your EFC.

Now in terms of actually calculating your EFC, college and universities will use one or two methodologies (read: formulas.) The first is the Federal Methodology (FM). This is derived with a formula the Federal Government came up with and is calculated when you submit the FAFSA. Every college in the country that awards federal financial aid requires the submission of a FAFSA, which means that all of these colleges will see your FM EFC. Some colleges will go a step further and they will use their own formula to calculate your EFC. This is known as using an Institutional Methodology (IM). This can get complicated because different institutions can use different IM formulas. However the basic IM formula was created by CollegeBoard and is calculated when you submit your CSS/Profile.

Now that you know there are two different EFCs, it’s probably best to figure out what’s included in these formulas. Simply put, the FM and IM formulas use the following: parent income, parent assets, student income, and student assets. There is a handful of other information that could be used (ages of parents, ages of younger siblings, certain monthly expenses) but income/assets of parents/students are the big players.

Keep in mind that since we’re dealing with two different formulas, income/assets could be assessed differently. One example is your primary residence. Any equity in the primary home is considered an asset in the IM formula, but primary home equity is not part of the FM formula. If you happen to have more than one property though, equity in the additional properties is considered an asset in both the FM and IM formulas.

Things get more complicated when you delve into the nitty-gritty of each formula. If you’re concerned about your EFC and how you’re going to be able to afford to send your students to college, it is usually best to consult with a professional college advisor. Much like a CPA helps you with your taxes; College Advisors (the ones worth their salt) are well versed in EFC formulas and the many different avenues for paying college bills.

Once you finish your applications and the college gets your EFC, its time to create your financial aid award. In the next series entry we’ll discuss Awards and Appeals, something you may need to utilize depending on your EFC, your award, and any extenuating circumstances you think may be affecting your ability to pay for college.

About the author: Justin Munio is a Business Development Manager and Financial Aid Consultant with College Planning Strategies, LLC. With a degree in mathematics from SUNY Geneseo and 4 years working in the CPS Financial Aid Department, Justin is at the forefront of the financial aid process for the families of CPS and the Toolkit.

                       

About Smart Track™ Toolkit: The toolkit is a web based service that assists families with everything from admissions and test prep, to student athletics and financial aid. Our intuitive software and on-demand workshops are key components to making sure students find their top choice colleges, and families can afford to send them there.

A Beginner’s Guide to Financial Aid Part I

As most parents and students are aware, if you need money to go to college then you deal with the financial aid department. These are the people that are in charge of awarding grants, scholarships, student loans, and work-study packages. Figuring out how the college determines who gets money and who doesn’t can often times seem tricky, so let’s try to look at this process in as simple a format as possible.

Now, the concept is that financial aid goes to those families who need it the most. To determine this, colleges use two factors: Cost of Attendance (COA) and Estimated Family Contribution (EFC). Then, the financial aid department uses a simple formula: COA – EFC = NEED.

Your COA is pretty straightforward. It is the cost of tuition, room & board, books, fees, transportation, and an allowance for miscellaneous fees. The COA at a college can change every year, so financial aid is recalculated every year. Remember to include all of the items I just mentioned in your budget, since that is exactly what the college is doing when figuring out your financial aid. If you forget to factor in the cost of textbooks, you may not have enough money when you head off to college in the fall.

Your EFC is a bit more complicated because the college is trying to determine how much money they think your family can afford to spend on college. Unfortunately, your EFC is never going to be as low as you would prefer (unless of course it’s $0), but it is important to know what factors impact your EFC. There are many different things that go into the calculation of your EFC, but four of the biggest influences are Parent Income, Parent Assets, Student Income, and Student Assets. We will cover all of these in more detail in future blogs, so stay tuned as we continue the posts. Other factors that can influence your EFC include the number of family members in your household, the number of students in college at the same time, the ages of each family member, and even what state you live in. If this seems complicated, plenty of other families are thinking the same thing. Much like how a CPA can help you with your taxes, a good college advisor should be able to help you understand your EFC.

The last step in the process is to determine your NEED. This is high much financial aid you may be eligible for. Let’s say for example that your college has a COA of $50,000 and your EFC is $20,000. This means your NEED is $30,000 ($50K-$20K=$30K). Now, does this mean that you’re going to get a $30,000 scholarship? Not usually. Most colleges will award you some combination of grants/scholarships (free money) and work-study/student loans (self help). Keep in mind that money you receive based on this formula is called “Need-Based Aid”. Scholarships that you get for having a really high GPA or good SAT scores are called “Merit-Based” and are awarded based on separate criteria. Even if your EFC is higher than a college’s COA, you could still receive “Merit-Based” aid (so study hard!)

Next time we’ll talk about your EFC in more detail and explore the fact that there are 2 possible EFC formulas a college could use, each with a different set of questions.

About the author: Justin Munio is a Business Development Manager and Financial Aid Consultant with College Planning Strategies, LLC. With a degree in mathematics from SUNY Geneseo and over 3 years working in the CPS Financial Aid Department, Justin is at the forefront of the financial aid process for the families of CPS and the Toolkit.

About Smart Track™ Toolkit: The toolkit is a web based service that assists families with everything from admissions and test prep, to student athletics and financial aid. Our intuitive software and on-demand workshops are key components to making sure students find their top choice colleges, and families can afford to send them there.