College Planning: Lower Out-of-pocket College Costs - Part 2

College Planning: Lower Out-of-pocket College Costs - Part 2

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College Planning: Lower Your Out-of-Pocket College Costs
Part Two

In Part one we provided 5 tips for parents of seniors

3 Tips for Parents of Juniors

1. Plan Your “Base Financial Year” Carefully
Once you’ve sent in your college financial aid applications, the colleges will start reviewing your income and assets to calculate your financial aid package. This is your Base Financial Year and it starts now. If your child will start college in 2011, then your 2010 figures will be the ones the colleges use.

This means that any financial decision you make this year: accepting a pay raise, refinancing your home, building a new kitchen, buying or selling stocks, and even getting a divorce will all have an impact on the money your child receives as part of their “need based” aid package.

It is crucial that you plan your finances for this year very, very carefully. You want to make sure that any changes that you make to your finances this year will maximize your child’s chances for financial aid.

How you structure your taxes, where you place your assets, what you liquidate and how you arrange your savings can all increase the amount of money your child receives. Obviously, there’s no universal solution but if you contact us we’ll create a Customized College Funding Solution that guarantees results.

2. Interest Your Child in Potential Colleges
Your child might still have a long time to make a decision but it’s certainly not too early to begin looking at colleges. Request catalogs and admission applications, and start identifying the criteria that most interest your child. You could even make trips this summer to see some prospective campuses.

If you can get your child excited about going to a particular school now, you can give him or her some extra motivation to work harder and maintain their grades over the next year.

In general, I recommend that students apply to at least six to eight schools. That number increases the chances of being accepted by at least one school, boosting their confidence and giving you more options and negotiating power when you start examining each school’s aid package.

It’s not unusual to be able to get schools bidding competitively for students that they want.

3. Try Guestimating Your Expected Family Contribution (EFC)
The EFC is the amount of money that the federal government expects you to contribute towards your child’s education. Whichever school accepts your child, this amount will remain exactly the same.

There are two ways to calculate the EFC: Federal Methodology and Institutional Methodology.

The Federal Methodology is generally used by state schools. Most (although not all) private schools prefer to use the Institutional Methodology. This counts a bunch of other assets, including your home, that are not included in the Federal formula. Obviously, that means an EFC calculated by using the Institutional Methodology may be higher (leaving you with more money to pay) than an EFC calculated using the Federal Methodology.

I realize that all these methodologies and base financial years and so on all sound very complicated. But it’s worth fighting through: the result will be a great education for your child.

You should remember though that even if you make a six-figure income, you may still to find a way to pay the EFC. There are a number of little-known “tax-favored” strategies that can help you meet your required payments without dipping into your retirement funds or changing your standard of living.

About the Author:
Ian Welham
Complete College Planning Solutions
(973) 467-0101
http://completecollegeplanningsolutions.com

One of America's leading college financial aid experts, helps parents get every cent of financial aid they're entitled to, even if you make a six-figure income. "College Savings Video Series" reveals proven ways to reduce college tuition costs by $5,000 to $30,000 a year. Normally $47, FREE for a limited time: http://collegeadmissionscounselor.org



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