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.

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.

Disparity In College Financial Aid Offers

Good news! Financial aid awards are starting to arrive in student’s in boxes. The bad news, unfortunately there is a lot of disparity in college financial aid offers due to the fact that the format of awards are dictated by each school so many factors and questions come into play when reviewing and comparing offers.

First the family needs to know if the initial offer(s) is a fair one. That’s tough because generally parents doing this for the first time don’t have anything to compare to.

Second, what methodology is the college is using? There are three possible formulas. There is the Federal Methodology (FAFSA), the Institutional Methodology (CSS Profile), and the Consensus Methodology (CSS Profile). If the CSS Profile is required, the college will calculate a EFC (Estimated Family Contribution) which many times will not appear on the award. So it would be difficult for a family to know how much of the true need was met. If the college requires only the FAFSA, the family will see their EFC (Expected Family Contribution) on their Student Aid Report (SAR). In this scenario, they will have a good idea if the award is fair and will be less difficult to compare with other offers.

Third, the family needs to know what is the college including or not including in their total college cost or comprehensive fee. Every college is different in what they include or don’t include which can make an offer look good on the surface when it is not.

In conclusion some good news. Our staff with 26 years of experience are here to advise you accordingly. If you would like us to confirm and clarify if your child’s award is appropriate, please contact our office.

College Financial Aid Awards Are Starting To Arrive

Financial Aid Awards Are Starting To Arrive

College financial aid awards are starting to arrive earlier this year due to the FAFSA  timeline change. Don’t worry about this because it’s a good thing!  Immediately you should be asking yourself are these award(s) fair for my college student? The answer is unless you are awarded 100% of the total college cost you wouldn’t know.  If you filled out the FAFSA and CSS Profile you might have interpreted the question incorrectly.

The reality is that many families will simply take what is originally offered therefore will spend more for college than they need to, sometimes into the thousands of dollars more.

If you are reading this you must have questions and be looking for the best answers.  Just like a good tax accountant it pays to have a professional who knows how to accurately interpret the questions and provide the best answer based on your situation to receive more financial aid. College Aid Consulting Services brings 26 years of experience, our clients are assured, in the end, that they will receive the best aid package possible. Since we have worked with the majority of 4 year state schools and private colleges in the U.S., we know what to expect from a given college. If you would like one of our staff to review your awards letters and information that was submitted, please contact our office.

Amazon Prime Student Loans. What You Need To Know.

Amazon is stepping into the student-loan marketplace with Wells Fargo to offer discounts to customers of the online retailer as Amazon Prime Student Loans.  A student-loan discount will be offered to Amazon Prime Student members. The online retailer has entered into a partnership with San Francisco lender Wells Fargo& Co. in which the bank’s student-lending arm will offer interest-rate discounts to select Amazon shoppers.

Before considering private loans for college, families should always utilize all  Subsidize Federal Loans (Stafford and Perkins) offered. With that said, if a family still needs additional educational loan assistance, they should shop around at various lending institutions large and small  for the best terms.  Over 70% of families borrow less when their financial aid forms are filled out correctly. Unfortunately the majority of families who do not retain professional guidance will make mistakes. Please contact our office to lower your out of pocket cost for your child’s education.

Amazon Tiptoes Into Banking Business Through Student Loans
News Source: Wall Street Journal

Do You Know Your College Tuition Expected Family Contribution?

Do you know what your Expected Family Contribution (EFC) is? Most families don’t. Did you know that there are three EFCs in the financial aid process? Most families don’t.

The EFC(s) represents the families’ ability to pay for a college education. The Expected Family Contribution (EFC) is calculated via the Free Application for Federal Student Aid (FAFSA) and the Estimated Family Contribution (EFC) is calculated via The CSS Profile under one of two formulas. The Institutional Methodology or the Consensus Methodology depending on the college. Families need to know that the three EFCs could vary widely. Moreover, many families are not told what their EFC is under the Institutional and the Consensus Methodologies by the college(S).

If you would like our staff to calculate your true EFC(s) and learn how to increase your financial aid eligibility, please contact our office.

FAFSA Changes 2017-18

Starting with the high school graduating class of June 2017, the timetable and tax year associated with the FAFSA changes 2017-18. The high school class of 2017 will be eligible to file the FAFSA starting on October 1st, 2016, three months earlier than in previous years. They will use 2015 Federal income tax returns (known as Prior-Prior Year (PPY)).

Take special note there is some uncertainty for the high school class of 2017. For example, the deadlines for institutional aid may change at some colleges. Also, students may initially receive estimated financial aid packages because college costs for the coming year may not be finalized and/or because state grant data may not be available. If this is the case, the families will subsequently receive confirmed financial aid packages. In addition, financial aid is based in part on the family’s income, and if that changes during that two-year period, the family could either lose money or have to file an appeal and go through a lengthy process to retain it. Instead of streamlining it, for a small portion of people, it adds an extra step if their circumstances change. Many things can happen in a year.

One thing that parents need to know is that they have the option to utilize their 2016 tax information to file FAFSA and the CSS Profile and they should if there is less income reported compared to 2015.

If you would like more information on FAFSA Changes 2017-18 and information on how to increase your financial aid options, please contact our office.

High School Junior Students Need To Plan For College Now

Financial Aid Awards

Any high school student that is junior needs to start a plan now to reduce the cost of college.  Beginning this summer, here are five things you should be doing to get ready for college:

Research & Visit Schools

If you haven’t already begun visiting colleges, you should get started. The summer is a convenient time to explore colleges and universities. You should also visit school web sites, attend college fairs in their area and talk to their guidance counselors about potential schools.

Continue Taking Challenging Classes

The most important factors that colleges weigh most heavily when evaluating an applicant is your grade point average and the caliber of the courses that you take. Your GPA is a greater predictor of college success than standardized test scores.

The grades that you receive your junior year will often carry more weight than earlier ones. However, you should not take classes just to get a weighted grade or that would be too difficult. You are not going to impress anybody by getting a “C” in AP Calculus.

Know What College(s) You and Your Parents Can Afford

Sit down with your parents to discuss what is going to be expected from you and them in affording a particular school(s). Knowing ahead of time what your family can really afford will allow a more efficient college search.

Check Out Net Price Calculators

When researching schools, use a school’s net price calculator, which is located on the institution’s website keeping in mind the majority of calculators are not totally accurate. However, they will give you a sense of what to expect.

Take the SAT and or ACT

If your score for the ACT and or SAT are disappointing, consider looking at schools that are test optional. About a third of the nation’s 100 top liberal arts colleges are SAT and ACT optional.

Next Steps

If you would like more information on any aspect of your college pursuit, please contact our office. With our 26 years of experience, we are able to inform you on what you should expect from a particular 4 year state or private university in the United States.

What Do Colleges Consider When Deciding Financial Aid Award For Students?

Financial aid awards have many factors that come into play at various colleges when determining how much a student will receive.

First, what is the true need of the student based on the formula(s)? There are one or two of three formulas that will come into play. You have the Federal Methodology, Institutional Methodology, and The Consensus Methodology that will determine the true need based on the information provided on the FAFSA, CSS Profile, and or the college’s own institutional form.

Second you have the academic side. Colleges will offer scholarships based on a GPA and or the ACT and SAT results. In addition, because the admission game has changed over the years, if a college appreciates the student’s abilities, talents, and background, they will be desirous for that student to be a part of their incoming freshman class and therefor will offer more gift-aid.

Then you have the leverage component. If a student was offered a magnanimous award from another school other than their first choice, they may have the opportunity (if done right) to negotiate for a better award.

If you would like more information on how to retain a better financial aid package, please contact one of our experts.

Do Not Make Mistakes On The CSS Profile

This time of the year I have the opportunity to review many CSS Profile forms for parents who learn of our firm and are seeking valuable advice. In 99% of the Profiles I review, I will find mistakes that the parent made resulting in less financial aid and more importantly less grant money. For example, I just reviewed a Profile for a parent that completed but did not submit it and found five mistakes that would of cost them around $12,000 in financial aid eligibility. Needless to say, this family is now our client.

As I have stated many times in the past, the Profile is an institutional form. So with that in mind, the college(s) can and will ask for more personal information on Profile compared to FAFSA and some of the information requested on the Profile does not need to be disclosed. Another point here in regards to completing Profile and all other financial aid forms correctly is the correct interpretation of the question(s). If you would likeus to review your Profile or any other financial aid form that is required, please contact our team.

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