The Art of College Cost Planning

Parents are “freaking out,” and well they should be about the costs of sending a child to college. College costs are rising much faster than inflation in general and the projected costs for 4 or 5 years are staggering…over $125,000 for public schools and over $250,000 for private schools.

Well, you’ll be glad to know there is help and even people with relatively high incomes may still qualify for some financial aid. There are two, free, informational Workshops this week – Wednesday May 16th at the Carrillo Recreation Center, and Thursday May 17th – at the Goleta Public Library, where interested parents and students can learn how to navigate through the confusing maze of college funding.

Most college needs-based financial aid comes from government which last year made available over $110 Billion, and added to that, was over $80 Billion of institutional money. In addition, there are many millions of dollars of aid for students with academic, artistic and athletic talent.

In order to get any needs-based aid, the family must complete the Free Application for Financial Student Aid (FAFSA) form which calculates a family’s need based on factors such as a family’s income, assets and number of children in college. Each family is assigned an Expected Family Contribution (EFC) which is the portion of the total Cost of Attendance that the family is expected to pay. Money held in retirement accounts, 401-k plans, annuities and permanent life insurance are not counted as available assets, nor is home equity. There are strategies for repositioning assets, thus, reducing the EFC so that a student could be more eligible for financial aid.

Often families will accumulate money for college in the child’s name, in UGMA accounts, and children take summer jobs and put money aside for college. It is a surprise to many when they find that those assets in the student’s name count over three times as much as assets in the parent’s names and can result in markedly smaller awards of financial aid. Again, there are smart strategies that can be utilized to maximize the financial aid package.

The FAFSA form can be submitted to those colleges where your student has applied right after January 1st and the final deadline is June 30th. However, timely filing is important as many schools require the form earlier in the year and awards are given on a “first come, first serve” basis.. The FAFSA form was “created in 1992 to simplify applying for financial aid and it has become so intimidating – with more than 100 questions – that critics say it scares off the very families most in need, preventing some teenagers from going to college.” NY Times 02/22/09.

We are Senior Advisors for 123 College, an organization which, since 1994, has been helping parents and student plot a course through the complex maze of obtaining student financial aid. We have the largest database of college financial aid data and in addition to helping parents with the timely and correct filing of the FAFSA forms we have extensive knowledge of schools with the most money to give. Oftentimes parents are surprised to find their child can attend a private college for less money than a public school because the private schools have access to institutional money from endowments that public schools do not.

We also help to analyze award packages from competing schools. It is important to evaluate what portion of the financial aid package is in the form of grants, which never need to be repaid, as opposed to certain types of loans. Some government subsidized loans defer interest until graduation whereas others start accruing interest right away even if repayment is delayed until after graduation. Most student loans are given to the students; however parents may also borrow to help with the costs of college.

The two workshops mentioned above are targeted to the parents of today’s Sophomore and Junior students. Students and parents from any school may attend. Each event starts at 7 PM and will be over by 8:15 PM. At each event you’ll learn:

1) How to navigate through the confusing maze of college funding;

2) How to lower your out-of-pocket costs and get the maximum amount of money from each school;

3) The “do’s and don’ts” of FAFSA preparation;

4) How to pick colleges that will give you the best financial aid packages.

In addition you’ll meet Cindy Cole who was formerly the head counselor at Dos Pueblos High. She’ll be discussing ways to make your child stand out among the other outstanding candidates for admission.

To read more, please click here.

If you’d like to attend either workshop, RSVP by calling 569-7666 X 6, or you can email matt@andersonfs.com.

Brent R. Anderson CLU, ChFC is the CEO of Anderson Financial Solutions & Insurance Services, located in Santa Barbara. He’s a 40+ year veteran of the financial services industry and a frequent speaker at financial forums, seminars and workshops. His last child is just about to graduate from Sac State University.

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