Fall / Winter 2016-2017 | BWD 5
Paying for college : Know your ABCs
As tuition and other costs continue to climb , few families can afford a college education without some assistance . If you ’ re preparing to send a child to college , here are some financial aid tips to keep in mind :
APPLY EARLY . Whether you ’ re seeking need-based or merit-based aid , apply as early as possible . Filing deadlines vary , and some states and colleges provide assistance on a first-come , first-served basis .
BORROW WISELY . Don ’ t take on student loans unless you have a realistic plan for repaying them .
CHOOSE COLLEGES CAREFULLY . When researching colleges , find out how your child compares academically with a typical incoming freshman class . Many colleges offer preferential aid packages ( more in grants , less in loans ) to applicants in the top 25 percent ( based on grades and test scores ).
DON ’ T SAVE IN YOUR CHILD ’ S NAME . Student-owned assets have a much bigger impact on financial aid eligibility than parent-owned assets .
EDUCATE YOURSELF on the Expected Family Contribution ( EFC ), which the U . S . Department of Education describes as “ a measure of your family ’ s financial strength … calculated according to a formula .” Elements that are considered include a family ’ s taxed and untaxed income , assets , family size and the number of family members attending college during the year . You should learn about the different methodologies colleges use to determine your EFC , as well as different strategies available to boost your financial aid eligibility by reducing your EFC . For example , under the federal methodology , home equity doesn ’ t count in determining your EFC . That makes it possible to decrease your EFC by using other assets — such as cash — to pay down your mortgage . This strategy wouldn ’ t work , however , at schools that use the “ institutional ” methodology , which does consider home equity in determining the EFC .
Financial planning is like building a house , and preparing for college expenses is a single brick . “ Is your financial house built to last ?” — a Rehmann-exclusive whitepaper — can help you develop a blueprint to achieve your financial goals .
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