Do You Know Your EFC(s)

fafsa efc
The Estimated Family Contribution (EFC) is calculated by one of two formulas. The Institutional Methodology (IM) or The Consensus Methodology (CM). Each formula have their differences in what and how they assess certain information pertaining to income, assets, and other factors. Therefore, many times a family will have a different outcome in what they will receive in their initial financial aid offer from college to college that requires the CSS Profile form. For example, one of the questions on Profile will ask for the value of the parent’s total value of their 401K, 403Bs, SEPs, and IRAs. Many colleges claim that they do not assess retirement plans. Not true. Some do, some don’t. FYI, parents do not have to disclose the value of their retirement plans. Most parents don’t know this. In addition, many colleges will have their own addendum questions on the Profile which will affect the outcome of the student’s financial aid offer. Lastly, believe it or not, some colleges will not disclose their EFC. If you would more information on this topic and others, please contact our office.

College Aid Consulting Services Featured In The New York Times

College Aid Consulting Services Featured In The New York Times

Excited to share that College Aid Consulting Services featured in The New York Times today discussing appealing financial aid offers. Much of the information I shared with her was not covered in the article. First, why should a family appeal or negotiate for a better award? One reason is if the award is not a fair one. The problem here is that many families don’t know if the initial award(s) is fair (see “Disparity In College Financial Aid Offers” March 20). If you would like more information and appropriate advice on on your awards, please contact our office now.

What You Need To Know About 529 Plans 2017

529 Plans 2017

Here is what you need to know about 529 plans 2017 update.  A 529 savings account allows you to build an education fund within an individual investment account. Money you contribute is invested in one or more specific investment portfolios.

I recommend families create the account in the parents name since the three formulas colleges utilize to determine how much financial aid a student may receive will assess students assets much higher than the parent’s assets.

As 529 plans, both college savings plans and prepaid tuition plans offer significant federal tax advantages. Funds in each type of plan grow tax deferred, and withdrawals from either plan used for the beneficiary’s qualified education expenses are completely income tax free at the federal level. As a general rule, I don’t recommend parents utilize multiple plans. However there are occasions that call for multiple 529 plans:

  1. If your children are more than a couple of years apart in age, you will most likely have different investment objectives for their college savings. You may decide that one particular 529 plan has better equity-weighted investments (suitable for a young child) while a different 529 plan is more attractive for its conservative options (suitable for an older child).
  2. If you have a sense of which particular schools, or types of school, your children are likely to attend, the choice of institution may influence your selection of a 529 plan. This is especially true if your state offers a prepaid tuition plan, or if you are considering the private-college Independent 529 Plan. A few of the 529 savings plans also offer extra benefits for students attending certain schools.
  3. If you’re simply not sure about your choice of 529 plan, you can hedge your bets by spreading your contributions among two or more 529 plans. You might also achieve some more diversification in your investments by doing so, at least in regard to the fund managers handling your college savings.
  4. If you will need to fund a child’s education with money out of your pocket, it’s almost impossible to find a scenario a 529 plan does not makes sense.

When shopping for a 529 plan, you should always consider your own state’s 529 plan, even if you ultimately decide to go with an out-of-state 529 plan. Special tax or other benefits may be available for using your in-state plan.

In some states, you may be able to take full advantage of a state tax deduction by enrolling just one of your children in the state’s 529 plan, giving you more freedom to search outside your state for a 529 plan for your other child. In other states, however, the full state tax benefit is obtained only when both of your children are enrolled in the in-state 529 plan.

If you would like professional advice and assistance completing the financial aid forms correctly and working the system all while saving you time and stress please contact our office for a complimentary consultation.

High School Juniors Start College Campus Tours Now

In our many years of helping students, we can advise every high school Junior start college campus tours now. Here are the questions we feel every prepared family should ask.

Campus tour guides are current students, work study or admissions personnel.  This means that they are invaluable resources for opinions about the best classes, campus social life, dining hall food and the worst dorms. However, they may not know much about financial aid, specialized learning services or how the administration makes decisions.  Read below for how to get the best answers for Finanical Aid.

Do your research online first

Campus tours an important component of any visit to a prospective college or university. It’s a unique opportunity explore a school’s buildings and grounds and ask questions with someone that spends time there on a regular basis.

Don’t waste this opportunity, part of maximizing your college tour is avoiding inappropriate or ineffective questions.   These questions would involve facts and figures about the school, applicants taking college tours can find out how current students experience these statistics.

Spend time compairing statistics like the percent of students who live on campus, average class size, graduation rate and so on.  These facts and figures available on the school’s website or from third-party resources.

The latter category, ineffective questions, can be subdivided into two areas: questions that are beyond the knowledge of your tour guide, and questions that can be answered by visiting the college’s website.

Ask questions about how current students experience these statistics.

  1. Student-to-professor ratio, for example, ask if it truly feels that way. Are small classes found only in highly specialized senior-level seminars? Do freshmen ever enroll in small classes? Or you might see that 20 percent of the student body participates in the Greek system, so you could ask your tour guide how that affects his or her social experience on campus.
  2. Ask about classes. Your tour guide may know very little about decisions that are handled at the administrative level. Asking about his or her experience in freshman-level classes is fine, but asking which classes are assigned adjuncts versus tenured professors may not result in an informed answer.
  3.  Accessibility of advisers and staff.  Find out how seriously professors take their office hours. It’s worth asking how they utilize these opportunities with staff, so you can put their answer the student perspective that is worth knowing, even if it is a limited sample size.
  4. Crime and safety are two additional topics to consider, especially for females. The statistics available on a school’s website can be useful measures, but your tour guide can also share his or her impression of campus safety. A campus that is statistically safe but where students have safety concerns can be a stressful environment. The campus website may discuss safety initiatives, like late night patrols and increased campus lighting, but the actual student experience may be more relevant.

A college tour can provide invaluable insight into daily life on a campus. Use your tour time wisely, and target your questions for maximum usefulness. Oh, and by the way, have fun on your tour(s).

Getting Answers For Financial Aid

For instance, financial aid may be an uncomfortable subject, as it involves both personal and parental resources. In addition, a student tour guide may not know how the school awards grants versus loans. Even if your tour guide has extensive personal experience with the system, his or her experience likely will not match yours. Instead, ask financial aid question when you meet with an admissions counselor.

The same goes for any specialized learning needs that you may have. Even if your tour guide shares a similar challenge, and is familiar with the available campus resources, he or she may not wish to discuss this topic with strangers.

If you would like professional assistance in correctly filling out your FAFSA, CSS Profile and other forms while saving you the time and frustration contact our office for your free consultation today.

CollegeWeekLive.com Paying for College 2017

CollegeWeekLive’s Paying for College

Join me January 19th for CollegeWeekLive.com Paying for College fair. I’ll be giving a live webcast on how to secure financial aid at 5 pm ET!  I’ll be telling you all about “How to Properly Pursue College Financial Aid” including ways to maximize opportunities with the FAFSA and CSS Profile.

Register now at
https://www.collegeweeklive.com/event-schedule/paying-for-college

Top 12 College Scholarship Myths

These are the top 12 scholarship myths of 2017. Read these to help dispel misinformation about the college financial aid process.

  1. My child won’t get a scholarship(s) because there is too much competition. Not true
  2. My child needs a 4.0 to retain a scholarship(s). Again, not true
  3. The scholarship search starts during the senior year in high school. Big mistake! Start in your junior year
  4. Scholarships will pay for every portion of college. For the majority of students, not true
  5. The Scholarship process is a one-time thing. If I don’t get one the first time I will never get it. Not necessarily
  6. Scholarship applications take too long to complete. False, many don’t
  7. Merit-based scholarships are only awarded to students with high GPAs. Not true.
  8. Receiving a scholarship(s) will mean less financial aid from a college. Maybe but not always
  9. Only students with high academics don’t need to apply for scholarships
  10. A large amount of scholarship money goes unclaimed. False, only a small amount do
  11. Scholarships are just for students that could not otherwise afford to go to college. Not true
  12. Many scholarship amounts are to small and not worth the time. Maybe. However, what if you retain 4-7 scholarships. They add up!

I continue to advise my students and parents that searching for scholarships is like the lottery, if you don’t play you will not win.

If you would like more information or further clarification on any of the above, please contact our office. We do provide our clients with a list of proven sources of scholarships that has benefited many students.

Top 5 Tips For High School Sophomore Parents Looking For College Financial Aid

Sophomore Financial Aid

These are our top 5 tips for high school sophomore parents looking for college financial aid.  If your child is a sophomore in high school, you may be able to save yourself thousands of dollars on college tuition if you take this advice before the end of this year.

We feel the sophomore year is when you should set the stage for college financial aid under changes adopted recently. If you get busy with the holidays and slide towards New Year’s Day without examining and adjusting finances, you could lose an opportunity for aid that won’t return once 2017 arrives. College could end up costing you thousands more than it would if you were alert early enough.

Most people have inaccurate assumptions about getting financial aid. They figure if they need aid they will get it if they simply fill out the financial aid forms required, which includes the Free Application for Federal Student Aid (FAFSA) and the CSS Profile. By the time they sit down to do the forms, they’ve taken actions with their money that permanently will undermine the aid they will get and they are shocked when the college sees them as a lot wealthier than they are.

By Jan 1st, much of your fate will be sealed because your tax return for the 2017 tax year will become the key factor for computing aid. And just as people try to adjust income so they get as many tax deductions as possible, financial aid takes the same diligence.

Please be aware that many of the adjustments you make to enhance financial aid are the opposite of those you use to cut your taxes. So if you go to a tax expert, make sure it’s one of the few who understand the unique financial aid formulas that leads so many families off course.

It is important to get an early preview of your 3 EFCs, Expected Family Contribution and the (Estimated Family Contributions). These 3 calculations are an estimate of what the family will be asked to pay for the year. Families should get an accurate preview from a trained expert.

Here are top 5 tips for high school sophomore parents looking for college financial aid.

  1. Shift Your Income

    If aid is likely, try to move any income you might have coming in 2017, or during the college years, into the remainder of this year. That’s easier said than done. But this is the last year you can have a sizable income and not lose financial aid. In 2017 and during the college years, you want to keep your income as low as possible not by turning down work, but by being as savvy about financial aid as you are with tax deductions.

    So if, for example, you are going to get a big bonus at work next year or get a big payment from your business, you will want to try to get that done in 2016.

  2. Plan Investments

    If you’ve planned to sell stocks, bonds, mutual funds or other investments to pay for college, this is the last year you will be able to do it without cutting into your financial aid. By the time your child is a junior in high school, capital gains from selling investments will increase your income unless you can sell other investments at a loss large enough to wipe out the gain. So consider selling investments while your child is a sophomore. However, please note there could be tax and investment consequences from this action, so get advice from an expert who understands the entire picture including financial aid. And remember, don’t start selling investments if your calculation shows you won’t get aid.

  3. Max Your 401k

    Although you cut your taxes when you put money into a 401(k), 403(b), IRA or other retirement saving account, the savings can work just the opposite for financial aid. If you stash money into retirement savings accounts during your child’s high school junior year or during the college years after that, your taxes will be low, thus making it look like you are able to pay more for college. As a result, colleges may cut back your aid.

    So for those families who aren’t going to be able to maximize their retirement savings each year and handle college costs too, they may want consider stuffing retirement savings accounts as full as possible during your child’s sophomore year rather than later. Also,

  4. Give To Charity

    Rather than giving to charity each year, give a big chunk this year, telling the institution it’s for now and the upcoming years.

  5. No Accounts In Student’s Name

    Any investments or savings in an account that belongs to your child will poison financial aid eligibility. That is why families that need financial aid shouldn’t use Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. One can move money out of these accounts and save instead in 529 plans kept in parents’ names. Parents may be able spend down UGMAs on a high school student’s immediate needs like computers, upcoming summer camp or private high school expenses, while adding equivalent savings to 529 accounts. But please be warned, parents need to handle this cautiously since the money does belong to the child.

    Here is why UGMAs and UTMAs are not good. Under the unfair financial aid formulas, colleges except a student can use almost anything they have saved for college, so the college taps 20 percent of the student’s savings right off the bat or 25 percent at private colleges. But the identical savings in a parents’ name only would be tapped up to 5.65 percent.

The logic behind this may seem sound: Parents have many expenses to cover and not just college. Yet, students should contribute money to their education. The problem with this logic is most families don’t have nearly enough saved for college and if they’ve made the mistake of saving for college in their child’s account rather than their own, they will have to pay a lot more.

Consider parents with a $40,000 college fund saved in their own account. The college would require them to use up to $2,260 for the first year of college. But if the same account is in the child’s name, the college would require $8,000 be spent that year for college. Aid would be cut substantially because the family would appear to be able to spend $8,000 that year for college.

So a parent would have to dig more than $5,000 extra out of their pocket to pay for college that year, compared with what they would have paid if they’d saved in their own account. And $40,000 is a modest example when four years in college can easily top $100,000.

If you would like more valuable information and calculations on your family’s EFCs, please contact our office.

Why Student Campus Visits Are An Important Factor In Choosing A College

Student campus visits are a key part in deciding which college or university is a good fit. There is a feeling that a student experiences here. I have been told by many students over the years that they love a campus, or do not love a campus when they first arrive. While a student can find out basically all he or she needs to know about a campus via the Internet, until a student takes a trip to that campus, they will not know the real feel of the campus setting. The feeling once a student arrives is very personal, and it is one all students need to have experienced before deciding which school is right for them.

A campus visit allows the student to experience the trip involved to get to the school, the people who are there, and the actual learning environment on campus. Seeing the dorms and dorm rooms, the library, the career center, the fitness center, the bookstore, tasting the food, walking around the campus. All of these factors are important to understand if a student will actually be happy once he or she is a student there.

If you would like more information on how to take a quality campus tour, please contact our office.

When Students & Parents Don’t Agree On College

In our years of helping thousands of students and parents we see it’s very common they don’t always agree on college should attend. Some reasons include the cost, location, the student has a friend(s) attending a specific college, academic reasons, the student wants to attend a prestigious school that may not be appropriate or benefit them etc.

One of my suggestions is that the parent(s) and the student take a “time out” and agree to discuss the topic again in the near future. But before doing so, I recommend both the parent(s) and the student take a piece of paper and draw a line down the middle and at the top on one side write Pros and on the other side Cons and list all that come to mind. In their next discussion it becomes more clear to both sides on how to make the best common sense decision.

If the disagreement is over the cost of a certain college, it is the parent’s responsibility to educate the student on the amount of debt he or she will graduate with. Also, the student should be responsible for some of the cost. I have found that the more the student is involved in paying for their education, the more serious they are to achieve the best in their education.

New FAFSA Changes 2017

New FAFSA Changes 2017 are effective as of Saturday, October 1st 2016 now allow families to file their 2017-18 FAFSA and the CSS Profile using their 2015 tax information. It is called prior-prior year (PPY). Many families are being encouraged to file their FAFSA and CSS Profile forms as soon as possible.

However, there can be a problem with this advice is the new timetable when people have changing income levels year to year. The financial aid amount will be based on their older financial data that does not reflect their current economic reality because of either job changes (i.e., losses) or a drastic drop in the value of assets. Financial aid decisions will be based on out of date bank and brokerage account balances, not to mention previous income levels.

Families do have options here. If you would like more information on this topic and or would like the appropriate advice for your family, please contact our office.

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