College Funding – Where Do I Start?
Fiscal Fitness – By John Gill
August is the month of numerous beginnings. August is the start of school and the return of sanity for the parents charged with organizing summer activities for school refugees. August is also the start of college football and the associated craziness that goes with it. August is also the milestone month that will see numerous students across our community and country begin their college career.
As many parents with college-aged children know, the transition began last year with college open houses, trips, and other activities to sort through the possibilities and available options. If college is in the immediate future (one to two years) of the students in your life, then now is the time to begin assembling your funding.
Ideally, if your child is going to college in the next couple of years, college funding should have begun 16 or 17 years ago. The use of a tax advantaged 529 plan or the purchase of a Prepaid Tuition Savings plan would have been the start of a strong college funding foundation. Add to that foundation a mix of grants, scholarships, and loans and the student would be on their way. Of course, as simple as this sounds, the fact of the matter is that life gets in the way of the best-laid plans.
So, your student is a year or two from arriving on campus and the full funding picture is not complete. What should you do?
First, decide what school or schools fit the budget. To determine this you must gain an understanding of the true cost of attendance so that a comparison can be made on an apple-to-apple basis between schools. This comparison is called the net price. The net price includes all of the costs associated with college attendance.
According to the College Board, the net price is a college’s full cost of attendance minus the grants and scholarships you may receive. The cost of attendance includes tuition, fees, and housing as well as other important costs like books, supplies, and transportation. The net price you pay for a particular college is specific to you because it’s based on your personal circumstances and the college’s financial aid policies.
Once an understanding of the cost is gained, funding must be secured. This starts with the completion of the Free Application for Federal Student Aid, FAFSA or the CSS/Financial Aid Profile. The FAFSA is the most widely completed financial aid application and is used by most colleges and universities. The CSS/Financial Aid Profile is used by approximately 400 private colleges and universities. Chances are both will have to be completed. These financial aid instruments calculate an Expected Family Contribution, EFC. According to the Adventures in Education website, the EFC a measure of how much the family or student will be able to contribute toward college expenses for one academic year.
With an understanding of the Net Price and Expected Family Contribution, the next step is to collect the funds. Between the money saved in a 529 plan and/or prepaid tuition and other contributions, there will probably be a need for additional funds. Based on the results of the FAFSA and the Profile, the college or university may provide scholarships and loans. You may also want to seek out other sources too.
Fastweb (Fastweb.com) is an online site that provides one-stop shopping for loans, grants, and scholarships. There are other online tools as well and the student’s high school might have a college resource center that has information on college scholarships and other funding opportunities.
For a general overview of the college funding process check out this website:
Smart college funding will keep you sane on the path to fiscal fitness.
If you have questions, comments, or an area of financial interest you would like to see discussed in The Park Press please call John at 407-353-0594 or send email to FiscalFitness@ymail.com. Follow John on Twitter, @john_gill1.