College admissions has always been an important topic for American families. More recently it has been front page news as individuals have sought to game the system through connections, false narratives, or bribery. While not as sensational as this spring’s scandal, we hope to provide interesting, concise, and timely insight into the college financial aid process.
Our most typical influence on a client’s plan towards their child’s admission into college is goal setting and execution of a college savings plan. Most commonly that is done through a 529 College Savings Plan. Some states also have a pre-paid plan which can be used to pay tuition, and which combines well with a 529.
A 100% fully funded 529 plan for many families is difficult to achieve, with other goals or obligations (such as retirement) taking priority, so financial aid can play an important part in supplementing funds that a family has saved for its child’s education. Financial Aid can take the form of loans, grants, scholarships, or work-study jobs.
The first step in determining financial aid for a potential student is review of their FAFSA (Free Application for Federal Student Aid). Completion of this form will determine a family’s Expected Financial Contribution (EFC) or the amount that a family would be expected to contribute towards its child’s education. FAFSA is formulaic, as would be expected, given that is completed for thousands of prospective students. As such, there are some steps that one can take to enhance a prospective student’s eligibility for financial aid. These steps, outlined in the attached article, most commonly often involve reduction of countable assets through payment of household debt or reducing student owned assets. These steps also have to also make sense for your full financial plan, not just the FAFSA snapshot. A prospective student will also complete a CSS Profile, which collects similar information, allowing for the college to help determine eligibility for the student’s own financial aid directly from the college. This Institutional aid will come in the form of need or merit-based financial assistance. We often engaged by our clients to provide advice on how to improve their eligibility under the FAFSA formulas or simply to help our clients gather the information needed.
Ultimately, a prospective student may have several competing financial aid packages to compare. The student’s decision of which college to attend requires the student to carefully weight the merits of the particular college and the student’s personal goals against the attendant financial considerations.
We encourage our clients with college bound students to review the attached article “Financial Aid Primer” in advance of starting their financial aid application process. It distills a very complex process into eight pages and will save multiple Google searches and potential misinformation. We welcome any and all questions as it applies to your individual situation.