How do I know whether or not I can afford a school?

The college or university you should apply to is: any one you want! There is absolutely no reason to make cost a primary consideration in choosing where to receive your degree!

What you need to focus on is cost of attendance rather than the tuition and room and board charges.

The cost to attend is not the amount of the tuition, room and board and textbooks; the cost is what you will pay out of your pocket. This is how it works.

First, you need to file your FAFSA (Free Application for Federal Student Aid). When you receive a reply, you’ll be given a number that represents your EFC or Estimated Family Contribution.

This figure is what you are expected to pay toward the cost of your higher education. If your EFC is $15,000.00, and the tuition at your local college is $20,000.00, the college’s student aid program could cover about $5,000.00 of the cost.

If you attend a prominent technical school that charges $40,000.00, your EFC doesn’t change! You are still expected to pay $15,000.00, but now the student aid might pick up $25,000.00. There is no incentive to go cheap on the choice of your college! Set your sights as high as you want!

If you get admitted to a prestigious institution that costs $75,000.00, your EFC stays the same. Your student aid would potentially cover $60,000.00.

Now, there is a caveat to these examples. Each scenario assumes that the college or university aid program will meet 100% of your financial need according to the FAFSA calculation. Most state run schools do not pay the full 100%, and whatever they don’t pay becomes your responsibility. That means that you may have to find other funding, such as taking out additional student loans.

Keep in mind that private colleges and universities are not in the same position as public institutions. Many private universities won’t require you to pay any percentage of the cost that exceeds your EFC. That means that you can get a more expensive education at a prestigious school for less than you would pay to attend your local college.

So, it’s crucial to look at the net cost of attendance after financial aid rather than at the initial cost of attendance of the college or university. That will give you a more realistic picture of whether or not you can afford to go to the college your looking at.

I learned all of this information through personal experience consulting with high-achieving college-bound students and their families. Many students can get a less expensive education from the most exclusive and expensive institutions in the United States than they could at a state school. It’s all because of how student aid works.

Colleges look at many different factors in deciding which students to admit. To complicate matters further, these factors, and the weight given to each, differs from school to school. However, in general terms, colleges are looking for students who have the academic ability to succeed at their school. They begin that process by looking at the courses taken in high school, the grades received, the student’s standing relative to their classmates, and their test scores. Once they have determined that a particular student could succeed academically, many schools will look at a variety of other factors. Some of the other factors are discussed below.

In general terms, larger state schools tend to rely more on grades and test scores. The smaller the school and the more selective the school, the more factors are generally considered in deciding whether to admit a particular student. To determine what factors for admission are looked at by any particular school you should ask an admission counselor from that school.

Academic Achievement Reviewed

Your transcript

The colleges will look at the level of difficulty of the courses you took and the grades received in those courses. They will also be looking to see if you challenged yourself by taking advantage of the AP and accelerated courses that are available.

Class rank

The colleges will review your GPA and where you rank in your class Standardized Test Scores

SAT I, SAT II and ACT. How well did you do on the standardized tests compared to the average candidate to that school. Teacher and counselor recommendations

Most schools have forms that they ask your teachers and counselor to complete. These forms provide specific information about strengths, accomplishments, areas of improvement and recommendations

Achievements/Awards/Scholarships

What academic awards have you received.

Academic interest (major)

Some schools have a reputation in a particular area of study. At such schools, it may be easier to gain admission if you are planning on studying a major for which they are not known.

Personal Achievement Reviewed

The list of factors a particular college is looking for in a student in a particular year varies widely. Listed below are some other factors that may be considered:

Extracurricular activities

The college will be looking at the amount of time you spent in your activities and whether you held a leadership role. The more time involved and the greater the involvement (i.e. captain of a team), the more impressive your activities will look. Remember that colleges are not looking for the well-rounded student; they are looking for a well-rounded first year class.

Character traits

What traits do you possess that reflects on your leadership, fellowship, inspiration, discipline or determination?

Interview

The interview can give put a face to your application and might highlight a special talent or problem in your record.

Recommendations

What sort of person and student do your teachers and counselor think you are?

Summer experiences

What have you done in the summer and how has that influenced your life/perspective? Don’t worry if you haven’t had any great experience during the summer. Most schools are impressed by someone working during the summer to save money for school. It reflects a certain level of maturity to be able to hold a job.

Other Considerations

The list of factors a particular college is looking for in a student in a particular year varies widely. Listed below are some other factors that may be considered:

Gender

Many schools try to achieve as close to a 50-50 balance between men and women as possible. Depending on the school, this may give one sex or the other an advantage if the school needs more men or more women.

Family background, race or ethnicity

Students who are the first in their family to go to college are often given additional consideration. This is also true if you are of an ethnic background that school seeks for diversity.

Residence Schools are often looking for geographical diversity in their students.

Special talents

If you are particularly talented in some area (art, music, writing, athletics, etc.) you may be given more consideration.

Area of interest

If you have a particular interest that is very unusual and to which you have devoted a great deal of time, you may get additional consideration.

Legacy status

Many schools give preference if one of your parents or siblings has previously attended the college to which you are applying.

Financial need

Some schools make admission decisions based on whether you are seeking financial aid or not.

Disciplinary issues

If you have been disciplined by your school, the colleges will look closely at what occurred.

The following websites are excellent sources of additional information for college planning and savings:

General College Information

529 Plan Web Sites

www.savingforcollege.com	Overview of All States 529 Plans
www.independent529plan.org	Select Private Colleges 529 Plan
www.vanguard.com	Details on 529 Plans Serviced by Vanguard
www.tiaa-cref.org/college/	Details on 529 Plans Serviced by TIAA-CREF
www.fidelity.com	Details on 529 Plans Serviced by Fidelity
www.troweprice.com	Details on 529 Plans Serviced by T. Rowe Price
Upromise	Savings Rebate / Reward Program

Student Aid / Loans Web Sites

With all the research and paperwork that goes into college planning, it is very easy to become confused, even disoriented, with making sure the right forms are submitted at the right time to the right people.  The following timeline was provided by Tamara E. Holmes from Bankrate.com and is an excellent resource for parents of high school seniors preparing for college.

September

• Look for scholarship opportunities. Some employers offer scholarship money to children of employees. Sometimes local organizations have scholarship programs for high school seniors. Meet with your high school counselor to get information on scholarships. Check the local library and search the Internet to see if you can find other scholarship opportunities and tell everyone you know to send scholarship information your way.
• Request applications and financial-aid information from colleges you’re interested in.
• Register to take the SAT or ACT and enroll in an SAT or ACT preparation course since test scores are often among the criteria used to determine scholarship winners.
• Although it’s too early to complete a FAFSA (Free Application for Federal Student Aid) use an EFC calculator to get an early read on your eligibility for financial assistance.

October

• Attend college fairs and financial aid workshops. These might be sources of additional information about scholarships, grants and other types of financial aid.
• “Early action” or “early decision” applicants applying for financial aid usually are required by this time to complete aid applications using estimated income figures.
• Visit college campuses. Compare costs of colleges so you get an idea of how much money will be needed.
• Buy a college-planning calendar and each time you find out a scholarship or financial aid deadline, schedule it.
• Continue to contact prospective colleges and find out their deadlines for scholarship and financial aid applications, as well as any paperwork you’ll need to submit. Also, request application forms from them and schedule deadlines on your calendar.

November

• Request a PIN (personal identification number) from the Department of Education. Your PIN will significantly reduce processing time on your FAFSA.
• Work on applications for admissions, scholarships and grants.
• Complete applications for early decision programs first.
• Request transcripts and letters of recommendation, which are often needed to complete applications.
• Continue looking for additional sources of money.

December

• Start getting family financial information in order if you plan to apply for financial aid. Among the items you’ll want to gather are bank statements and records of benefits from government agencies such as the Social Security Administration.
• Make sure you get a FAFSA application from your high school counselor’s office before school closes for winter vacation. The FAFSA of course, can also be filed online. If you are planning to file online, visit the site and begin to familiarize yourself with the site and the application.

January

• Complete family taxes as early as possible because you’ll need to submit the tax return for the previous year with your FAFSA.
• As soon as tax returns have been filed, submit the FAFSA on-line.

February

• Continue filling out financial aid forms for prospective schools, as well as scholarship applications according to your deadline calendar. Though you have already filled out your FAFSA, some colleges have additional paperwork you must submit to request financial aid.
• As you submit these forms to various colleges, follow up to make sure all paperwork has been received.
• Keep looking for more scholarships. Churches, civic organizations and philanthropists could be possible sources of funding.
• Check in with a high school guidance counselor to see if more scholarship opportunities have come in.

March

• Follow up on any scholarship applications submitted in the fall if you have not yet received an award notification.
• By now you should have received your Student Aid Report (SAR), which summarizes the data you reported on your FAFSA. Check it to make sure it is accurate.
• If there are mistakes or if you have not received your SAR, contact the Federal Student Aid Information Center.

April

• Continue to follow up on scholarship and financial aid applications you’ve submitted. Look out for responses to applications in the mail.
• Look for acceptance deadlines on any scholarship or financial aid awards. The student might have to formally accept the scholarship or financial aid by a certain date.
• Compare the amount of financial aid awarded to the cost of tuition.

May

• Fill out student loan applications if loans are part of the student’s financial aid package.
• Continue following up on scholarship applications if you have not yet received notification.
• If you do receive additional scholarships, let the student’s chosen college’s financial aid office know about them. They might adjust the financial aid package that they offer accordingly.

June

• Keep looking for scholarship opportunities being awarded by local businesses and groups.
• Get a summer job to generate more money for college.

July

• Continue looking for last-minute scholarship money or look for scholarships that can be applied for in the fall to help pay for the student’s second year of college.

August

• Look for back-to-school sales to help pay for school supplies.
• Start packing.

Even if you are still a few years away from the first college tuition bill, there are a few steps you can take, some seemingly counterintuitive, to increase the chances of receiving some sort of financial aid.

About two years before your child is expected to attend college consider how you might reposition your assets so they are more favorably viewed on the applications for financial assistance.  Why start so soon?  The amount of aid you’re eligible for in a given year is based on the previous year’s income.  Controlling your assets and the receipt of income will have a significant impact on your aid eligibility.

For example, capital gains count both as an asset and income and could have a devastating impact on your eligibility.  If you are able to defer income at work, consider doing so for the years your child is in college.  Another option is to reduce your reportable assets.  It may not make sense to pay off that car loan or credit card balance when tuition bills are on the horizon, but it may actually be a wise decision.

Why?  By paying off that car or credit card you simultaneously lower your reportable assets, such as stocks and cash holdings, and increase your financial need.  Parents with $20,000 in the bank and a $10,000 credit card debt will appear to have more resources than parents with $10,000 in the bank and no credit card debt.  In the end, the parents have the same amount of money, but to the financial aid people they have less.Another strategy to increasing your aid eligibility is to pay attention to who owns what assets.  Asset ownership is critical in determining how much financial aid a student receives.  College-aid officials assess up to 35% of a student’s assets versus only 5.6% of a parent’s holdings.  Therefore, make sure your 529 Plans, Coverdell plans, etc. are in the parent’s names.  Prior to 2006, prepaid tuition plans, including the Independent 529 Plan, were considered an available resource to students and therefore had a more negative impact on financial aid eligibility than a 529 Savings Plan.  However, recent laws passed by Congress treat all 529 plans as parental assets.  Now, no more than 5.6% of your 529 college savings will be sued to assess need if you apply for financial aid under federal guidelines.

It always pays to save, but just be careful how you do it.