My kids started back to school on September 5th, the day after Labor Day. For our family, the day after Labor Day marks a major shift in our calendar – and our thinking! After a long, fun summer filled with vacations, church camps and time spent with friends and family, it’s back to work, back to school, back to the regular routine. (And some would say, “not a moment too soon.”)
If any of your kids are starting their senior year in high school this year, you need to add, “it’s back to college planning” to that list. With the college financial aid deadlines looming, you need to act fast if you want to get your kids into a school that is not only a good academic fit, but one that is a good financial fit as well.
Below are 5 steps parents must take this month to pay less for college next year.
Narrow your list. At this point you should have a relatively short list of 5-8 schools that you are serious about attending next fall. Hopefully you spent at least part of your summer visiting or researching these schools. Your list should include stretch schools, even those that you think you can’t afford (you might be surprised), as well as 1 or 2 “safe” schools where admission and affordability are more attainable – just in case.
What? You don’t have a list? Get on it. May 1, 2018 is National College Decision Day. Your student has less than eight months to make one of the biggest decisions in their life.
If you have been to one of my college planning workshops, you already know that the biggest single factor determining how much you will pay for college is the school your student chooses to attend. The final decision doesn’t have to be made until the spring, but the longer you wait to develop your list of possible schools, the less likely it is that you will be able to find a school that is both a good academic fit as well as a good financial fit for your student.
Don’t let September end without a list of possible schools. As quickly as reasonably possible start checking schools off your list until you get to a manageable number of schools.
Calculate an estimate of your EFC. Your EFC is your Expected Family Contribution. This is the amount of money the financial aid system thinks your student and their family can afford to spend on college.
To estimate your EFC go to the College Board’s website and enter your information. At the end, you will get a number – perhaps a surprisingly big number – that’s your EFC. Your financial need is the difference between a school’s cost of attendance and your EFC. So, if the cost of attendance (counting tuition, room and board, etc.) is $52,000 and your EFC is $32,000, your financial need is the difference or $20,000.
One benefit of the online EFC calculators is that you can run the numbers in different ways. Does paying off your house or adding to your IRA change the outcome? If so, by how much? Experimenting with the online EFC calculator allows you to test various financial scenarios before completing the real thing.
That doesn’t mean you will qualify for $20,000 of free, financial aid. It just means that any need-based financial aid dollars you may be entitled to will be tied to that number. This includes government-sponsored need-based financial aid like Pell Grants and state grants, as well as institutional need-based aid, and whether your Stafford student loan interest is subsidized or not.
Create a college planning timeline. You and your student have a lot going on this year. In fact, one of the most often heard reasons for not applying for scholarships and not creating a short list of possible schools is that students don’t have the time to do these things.
A college planning timeline will help. Start with an Excel or even a Word document. List out, chronologically, all the things that need to be done between now and May 1 National College Decision day. Include the hard deadline for each task. Each task is likely to have several subtasks that have to be completed.
Each month note on your calendar the things that absolutely, must get done that month. Each week review your list for action items and deadlines due that week.
Most schools that offer financial aid (and they all do) have hard deadlines that must be met. Most schools dole out their financial aid on a first-come, first-served basis after a specific date. This date can come as soon as October 1. Without a detailed timeline showing when the deadlines are for the schools on your list, as well as what action items need to be done and by when, deadlines will be missed resulting in fewer financial aid opportunities and less money for college.
Review your assets and complete the FAFSA by October 1. Your EFC is calculated after taking into consideration your income and assets, your student’s income and assets, the number of students in your family attending college, and the age of the older parent.
The rules of the FAFSA form are that you are supposed to include the prior year’s tax information (that’s your 2016 tax return if you are completing the 2017-2018 FAFSA), AND… the value of your assets as of the day you complete the form.
Technically, money in your checking account on September 30, doesn’t get included on the FAFSA form, but 100% of the balance on October 1 does (assuming you file out the FAFSA on that date). It’s too late to do anything about last year’s income, but the time to reposition assets, pay off debts, and prepare your balance sheet is now.
Begin sharpening the saw. No doubt you already know plenty about paying for college, but it doesn’t end there. Financial aid opportunities vary from school to school, family to family and even student to student within the same family. The only way to ensure that you will pay no more than necessary for college is to educate yourself and become a smart consumer of a college education.
The more you know about paying for college and how the financial aid system works, the less you will pay for college.
Start by downloading My Favorite College Planning Tools. Here you will find several free resources that will likely save you time and money as you plan for college.
Be sure to attend all the financial aid workshops and college planning presentations offered by your school or school district. A list of my Pay Less for College workshops can be found at the top of this website under the Speaking & Events tab.
Read a book. “Launch: How to Get Your Kids Through College Debt Free and Into Jobs They Love Afterward” by Jeannie Burlowski is a great resource for parents of middle and high school aged kids who intend to go to college. I have my copy on my desk at all times. You can get your copy here.
All in, an undergraduate college education today can cost anywhere from $100,000 to over $250,000 – per student. That’s serious money and a major threat to your financial security in retirement.
Getting organized now, being smart about how you complete the FAFSA, and carefully choosing the right school will go a long, long way towards helping you and your family pay less for college.