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You’ve Saved for College, Now What?

Kim_ButlerCollege Planning 201

As college acceptances are coming in, we thought it would be a good time to talk about financial aid and school selection. When the kids are little, the focus is normally on saving as much as possible each year for their postsecondary education expenses. However, as they become high schoolers, the reality starts to set in that there are many additional decisions that need to be made for their college education beyond the savings that have been accumulated. These decisions can seem overwhelming for both you and your teenager(s) but there are several resources available to assist you in your college planning.

Financial Aid – Make sure you apply!

Many wealthy families think that they will not be eligible for any need-based financial aid and therefore do not file a FAFSA. This may result in missed opportunities for financial aid.  There are many factors that determine your Expected Family Contribution (EFC), such as how many children you have in college at the same time, what kind of assets you have, etc. For example, retirement savings do not count as assets in the EFC calculation. To get an idea of what your EFC will be, click here to access the EFC calculator on The College Board website.  For more information about the FAFSA process, see our previous blog:  Obama Announced Changes in the FAFSA Filing.

Don’t Dismiss Private Colleges

Have you already decided that your kids will not be attending a private college due to the much higher cost? Well, it is important to evaluate some private schools that your child may be interested in vs. some of their public school choices. When you actually do the numbers, you might be surprised by what you find. Although private schools come with a much higher price tag, they are also normally much more generous with their gift aid. By gift aid, we are referring to the amount the college will give a student in the form of grants and scholarships. Public institutions are less likely to give a lot of gift aid and more likely to offer financial aid in the form of “self-help” aid (loans and student employment).

Another difference between public and private schools is that private schools have higher four year graduation rates than public schools. This is huge because it could save you a year or two of additional tuition. To research the graduation rates by state, visit the Chronicle of Higher Education. When you take all of this into consideration, the private institutions may be the same net cost or even more affordable than a public institution!

How to Get Started

To get started on your college planning journey, we would recommend visiting the BigFuture website by The College Board. This website provides numerous articles on how to find colleges, grants and scholarships, testing, etc. We also like the SavingForCollege.com website. When you are ready to file the FAFSA, make sure you visit the official site here. Other sites offer to file the FAFSA for you and may charge you a fee so make sure it is the official site when you file. For additional information on college saving, visit our previous blog: Planning For Their Future.

Kim Butler, CFP®
Associate Financial Planner

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