Today’s episode is a discussion about “financial need” and the colleges that meet that for you. This term means different things to different people. To you, it may mean the total amount you will be responsible for in terms of college costs or expenses. To a college or university, financial need means the balance left after your EFC (expected family contribution) has been applied against the NET PRICE.
We call it – “THE GAP”.
Having a basic understanding of how colleges arrive at your need is critical. Here are the formulas that are important to note:
TUITION + ROOM/BOARD + FEES= NET PRICE
NET PRICE – EFC (Expected Family Contribution)= FINANCIAL NEED
The blog – College Greenlight – has a list of the college that I mention in this episode that meet financial need.
The College Money “PUZZLE” consists of four pieces – EFC (expected family contribution), Net Price Calculator, Financial Aid and Scholarships that when used “strategically” can help you figure out how to pay for college. This begins our two-part series to talk in depth about these pieces of the puzzle that are uniquely intertwined and interconnected. We will begin with Expected Family Contribution and Net Price Calculator.
According to this January 31, 2014 Forbes article by Tony Onink, you
can have a household income up to $425,000 and still qualify for some financial aid. It is just a matter of the number of dependents and type of school that you apply to, either public/private as well as two-year vs four-year college or university.
In this episode, we discuss why you should know your EFC (expected family contribution) and use the Net Price Calculator to find out the “true cost” of the college that you are looking at. Every college and university has some sort of calculator on their website, you just have to find it. They don’t really want you to know what it will cost. The “real cost” consists of tuition + room & board+ fees – EFC- Merit Aid/scholarships= balance or gap. This gap is what you have to be worried about.
Your EFC will usually not change from year to year. If you have more than one child in college, your EFC is split between the children. That is a good thing because you will likely receive more financial aid as a result. Stay tuned for Part 2 next week: Scholarships & Financial Aid.
I try to describe it for you but you must attend one local to you atlas 2-3 times between sophomore and senior year of high school. The first time attending a college fair with a sophomore (or younger) is just to get them used to the concept. The second time you attend with your child should be between 10th and 11th grade. They most likely have more of a focus or an idea of what they want to major in. If they are interested in sports, they will be attracted to those schools and teams that they have heard and/or seen on TV. By senior year, they will be laser focused when attending and only visit the top 5-10 schools of their choice and spending more quality time with the admissions person to show their genuine interest.
There is a lot of literature, brochures, cool stuff that they give away. The schools that caught our interest were:
In today’s interview, we talk with Felicia Gopaul, a certified financial planner, about when and how to start saving for college. We discuss saving vehicles or instruments such as 529 Plans as well as other funding resources.
Ms. Gopaul talks about how traditional financial planners might be familiar with saving for college but don’t usually have the expertise in college admission and many are retiring themselves. Find someone who has taken additional training to gain specific knowledge and experience in this area.
She talks in great detail about 529 plans, stresses the importance of saving for college and gives these tips:
Ensure that when you withdraw the funds that you are using the monies for necessary expenses such as tuition, books, computer etc… or face the possibility of a 10% penalty;
Although the 529 plans are made payable to the student, anyone can start a 529 plan;
If you are a grandparent who started a 529 plan and don’t use the funds for necessary expenses, the income can be viewed as a “gift” to the child and may hurt their chances for financial aid.
In order to minimize the impact, it is all about the timing. If you are someone other than the child’s parent, pay for the last year of college.
It also depends on what type of school the child is applying to. Some colleges require additional information about assets of other family members on the CSS Profile (which is in addition to the FASFA form).
[spp-tweet tweet=”If you don’t Save it, you will have to BORROW it!”]
This is the first of many conversations that we will have on the subject of college costs. We define common terms as well as give real-time examples from specific institutions about “hidden” college costs.
We also talk briefly about what you may bring with you as a first-year student and what expenses to watch out for. The sample schools that we discuss are: