Financial Aid Planning
Poor planning will result in poor outcomes. That's true of just about any endeavor you undertake. With college, poor planning will have a life-long impact on you and your future. Do it right.
Your plan must have two parts: financial and action.
The financial part should determine the following:
- What is the real cost of the college (including transportation, personal expenses, books)
- How much can the family afford to pay monthly
- What is the student's Expected Family Contribution (EFC)
- How much and what type of financial assistance the student will receive based on the EFC and the real cost
- Any shortfall between the cost and what the family can afford, plus assistance
- How much debt can be handled if loans are required (4 years worth)
- Any alternative means of funding (assets, equity, etc.)
Planning Ahead
Consider all options and calculate the result. If it's going to put the family in a bind financially, then look for a less expensive school.
If there's a second and third child to educate, consider putting a portion of the family's "monthly college payment" toward an investment that will grow and provide some cushion for handling the cost of the next college education. A loan could be used to defer payment of the remaining cost for the first student until after graduation, while the investment grows in value.
Compare loan rates and payment plans, including current rates on equity lines of credit.
Don't forget to project how financial decisions will affect the family's EFC for subsequent years.
The financial situation will change from year to year based on new financial aid awarded and changes in the family's finances (or another student in college). A well-thought-out plan will provide a good guide and keep knee-jerk decisions from being made.
Even if good prior planning resulted in enough money to pay for college, won't it be nice to keep some of it if there are alternatives? Finding out the family's EFC and how it can be lowered before the base year (remember, that would be two-year-old tax information) could save hundreds, even thousands of dollars.
The action part of the plan should:
Outline how colleges and universities will be chosen (financial aid policies are critical facts).
Have a timeline with milestones for completing important actions.
Have financial planning beginning no later than the fall of the sophomore year of high school.
Call for private scholarship research during the sophomore year as well. There are outside college scholarships that even first-year high school students can apply for.
Aside from the obvious educational considerations in choosing which schools to apply to, such as the cost and quality of the academic program the student wishes to pursue, consider also choosing schools that place the student in the top 25% of the freshman class. This will put the student in the running for merit-based aid.
Also, choose similar colleges. Being accepted by competing colleges provides good leverage when discussing award offers.
Call us today
Need advice about financial aid planning? Call (804) 937-2288 to discuss how we can help!