Published by Robert J Falcon, CFP®, CPA/PFS, CCFC®, MBA

As part of the Covid relief package passed by Congress in December 2020, the Free Application for Federal Student Aid (FAFSA) Simplification Act makes significant changes to the FAFSA form beginning with the 2024-2025 school year.

The good news is that more low-income families will qualify for full Pell Grants, and there will be a significant reduction in the number of questions.

However, middle-class families entering college today must be prepared for potentially significant cuts to their aid packages beginning with the 2024-2025 school year.

EFC/SAI Primer
The income and assets of parents and students on the FAFSA drive the calculation of the Expected Family Contribution (EFC), which represents the minimum amount families are expected to pay each year for college. Most families pay much more than the EFC, and since the term was seen as misleading, the EFC term is being replaced in this law by the Student Aid Index (SAI). I’ll refer to this number hereafter as the “EFC/SAI.”

Families should calculate the EFC/SAI as the first step in their college search if they do not want to overpay for college. The EFC/SAI reduces the total Cost of Attendance (COA) at a school to determine your financial need.

For example, if a student attends a college with a COA of $75,000 and the family has a $60,000 EFC/SAI, the family has $15,000 of financial need. Colleges typically “meet” 50% to 100% of that need, and they may do so with grants (free money), loans, and work-study. So, the lower your EFC/SAI, the greater your financial need and aid.

Changes Hurting Middle-Class Families

Unfortunately, there are two significant changes that will negatively affect middle-class families that do not qualify for Pell Grants and who do not have a minimal EFC/SAI.

Multiple Siblings in College
Current Rules: Today, it is beneficial to have multiple kids in college at the same time. Why? Because under current FAFSA rules, you get to divide your EFC/SAI by the number of students you have in college that year.

For example, if a family today has an EFC/SAI of $60,000 and has 3 kids in college, each would get a prorated share of the EFC/SAI equal to $20,000 ($60,000 ÷ 3 students). If one of them attended a school with a COA of $50,000, that student would have $30,000 ($50,000 – $20,000) of financial need.

New Rules:  The proration of the EFC/SAI will be eliminated starting with the 2023-2024 school year. Applying the new rules to the example above, each of the 3 students would have an EFC/SAI of $60,000.  The student attending the school with the COA of $50,000 would pay the full cost as the COA ($50,000) does not exceed the EFC/SAI ($60,000).

Divorced Families may pay More
Current Rules: Today, the spouse with which the student lives the majority of the time (> 183 days) is responsible for filing the FAFSA and reporting their income and assets. The income and assets of the other birth parent are ignored. The terms of a divorce decree or the parent providing the most financial support are irrelevant in determining which parent files and reports their income and assets on the FAFSA.

Example: Assume that a student splits her time between her divorced parents. The student spends all weekdays during the school year plus some weekends (say ~200 days/year) with Parent #1, who is a teacher making $60,000/year, has minimal assets, and rents an apartment. Parent #2 is a professional making $150,000/year, owns a condo at the beach, and is responsible (under the divorce decree) for child support of $15,000/yr. The student vacations with and spends most of the Summer at the beach with Parent #2 who provides the greater portion of the student’s support for the year.

Under the current FAFSA, Parent #1 would file the FAFSA and report their assets and income (including the $15,000 of child support received) since the student lives with them more than half the time.

New Rules: Starting in 2024-2025 school year, the divorced parent who provides the most financial support for the student must file the FAFSA and report their income and assets (Parent #2 in this example). Therefore, this family’s EFC/SAI (and the net cost of college) will be much higher than it would be if the custodial parent (Parent #1) filed the FAFSA.

But this is a good and equitable change, right? Maybe not. Consider the following situations:

Situation 1: Many divorce decrees stipulate how college costs are to be shared between the birth parents (e.g., 50%/50%, 25%/75%). Since the result of these new rules is a decrease in financial aid, the family’s total cost of college will go up. This means Parent #1 (who makes a lot less than Parent #2) will need to pay more than under current FAFSA rules.

Situation 2: Parent #2 just got remarried, and their new spouse also makes $150,000 per year. Under current (and new) FAFSA rules, the income of the new step-parent must be included on the FAFSA filed by Parent #2. Now, Parent #1’s share of the college costs will go up considerably simply because their ex-spouse got remarried. Wait, it gets worse….

Situation 3: What if the divorced couple had 2 or 3 children in college simultaneously? Then, the increase in the cost of college triggered by the change in the divorce rules is made much worse because the family doesn’t get to split the EFC/SAI amongst the siblings.

A Caution to High School Seniors
Families with high school seniors will soon select the college they will attend. They need to determine if and by how much their 4-year college costs will increase due to these changes, and possibly choose a less expensive school to attend for all 4 years.

If the family waits until their costs go up in the Fall of 2024 before addressing these changes, they will then need to make some uncomfortable decisions that may include (a) taking out parental PLUS loans, (b) asking their student to take a gap year to earn money to finish college, or (c) asking their student to transfer to a lower-cost college. Do not conclude that a college is affordable based solely on your Freshman financial aid award.

Options to Consider
These changes to the FAFSA do not affect the aid given by many private colleges that require the CSS Profile in addition to the FAFSA. The CSS Profile still permits the EFC/SAI to be prorated between multiple siblings in college simultaneously, and it treats the income and assets of divorced parents (and their new spouses if remarried) differently than the FAFSA.

While CSS colleges generally have a higher COA, they also typically award higher amounts of gift aid compared to public colleges. Families should consider CSS schools to see if their net 4-year cost is lower than at FAFSA-only schools.

The post Middle-Class Financial Aid Cuts Coming in 2024 appeared first on How to Pay for College.

Published by Robert J Falcon, CFP®, CPA/PFS, CCFC®, MBA

As a result of the December 2020 Free Application for Federal Student Aid (FAFSA) Simplification Act, colleges that use the FAFSA to distribute financial aid will be changing how they calculate and award needs-based aid beginning in the 2024-2025 school year. That year, today’s high school seniors will just be starting their junior year in college. If the high school Class of 2022 families do not plan for these changes today, their kids could face significant reductions in financial aid, increased parental and student loan debt, gap years, and a possible transfer to a more affordable college.

I have laid out below the steps and strategy you can take today to protect yourself from being negatively impacted by these FAFSA changes.

What Families are Impacted?

Families with Multiple Students in School Simultaneously

Under current FAFSA rules, you get to divide your Expected Family Contribution (EFC, the minimum amount families are expected to pay each year for college) by the number of students you have in college that year.

For example, if a family has an EFC of $80,000 and has 2 kids in college, each would get a prorated share of the EFC equal to $40,000 ($80,000 ÷ 2 students). If one of them attended a school with a total “all in” cost (Cost of Attendance, or COA) of $70,000, that student would have $30,000 ($70,000 – $40,000) of financial need. (Note that the EFC term will be replaced with SAI, or Student Aid Index beginning with the 2024-2025 school year. For simplicity, I will use the EFC term here.)

The proration of the EFC will be eliminated starting with the 2024-2025 school year. Applying the new rules to the example above, both students would have an EFC of $80,000.  The student attending the school with the COA of $70,000 would pay the full cost as the COA ($70,000) does not exceed the EFC ($80,000).

Families with Divorced Parents may pay more
Today, the spouse with which the student lives the majority of the time (> 183 days) is responsible for filing the FAFSA and reporting their income and assets. The income and assets of the other birth parent are ignored. The current advice we give to these families is to make sure the student lives the majority of the time with the parent with lower income and assets. (Note that the terms of a divorce decree are irrelevant in determining which parent files and reports their income and assets on the FAFSA.)

Starting with the 2024-2025 school year, the divorced parent who provides the most financial support for the student must file the FAFSA and report their income and assets. Regardless with whom the student lives most of the time, this family’s EFC (and the net cost of college) will be higher than it would be under current FAFSA rules.

But this is a good and equitable change, right? Maybe not. Consider the following situations:

Situation 1: Parent #1 is the custodial parent but makes significantly less than Parent #2, who provides the most support. Their divorce decree stipulates that Parent #1 must pay 33% of college costs and Parent #2 67%. Since Parent #2 must file the FAFSA, the financial aid award will be lower. As a result, the family’s total cost of college will go up and both birth parents will pay more for college. Parent #1 (who makes a lot less than Parent #2) will need to pay more than under current FAFSA rules.

Situation 2: The parent providing the most financial support (Parent #2) gets remarried, and their new spouse also has a 6-digit salary. Under the FAFSA rules, the income of the new step-parent must be included on the FAFSA filed by Parent #2. Now, Parent #1’s 33% share of the college costs will go up even more simply because their ex-spouse got remarried. (Talk about adding some gas to the fire, no?) Wait, it gets worse….

Situation 3: What if this divorced couple had 2 or 3 children in college simultaneously? Then, the higher EFC that is triggered by the change in the divorce rules is compounded by the fact that the family doesn’t get to split the EFC amongst the siblings. Each sibling gets the new higher EFC!

A Caution to High School Seniors
Families with high school seniors will soon select the college they will attend. They need to determine if and by how much their 4-year college costs will increase in their junior and senior years due to these changes. They can find a cheap 2024 prom dress online to stick to the budget. If the family fails to plan and waits until their costs go up in 2024 before addressing these changes, they will then need to make some uncomfortable decisions that may include (a) taking out parental PLUS or private loans, home equity loans, or running up credit card debt, (b) asking their student to take a gap year to earn money to finish college, or (c) asking their student to transfer to a lower-cost college. A better option is to measure the impact these FAFSA changes will have to their financial aid over the full 4 years of college today and to plan and react accordingly.

Should the Colleges Be Warning Parents?

It remains to be seen if colleges will proactively warn parents of these financial aid changes over the upcoming months. I am sounding the alarm now because I know how the hearts of 17- and 18-year-olds can become fixated on a specific school, especially one they know is affordable under the current rules. At a minimum, I hope colleges will warn students that large changes are coming to the FAFSA in 2024-2025 (perhaps when they send out their award letters). But, I am also aware that colleges are businesses fighting for their survival.  Finally, if colleges do disclose these pending changes, I hope that the disclosure is more than a footnote in a financial aid award letter.

What Can Parents Do Now?

All families should check today to see if they could be negatively impacted by these changes. They have a number of options at their disposal:

• Families with students accepted to schools where their aid could be decreased may want to engage in a dialogue with the financial aid office before enrolling at the college. If the family knows their cost of college may go up under the new rules, they should appeal to the college to:
  1. Grandfather the family’s aid calculation methodology to remain the same as the current FAFSA methodology for the student’s full 4 years, or
  2. Keep the dollar amount of gift aid equal to the student’s freshman and sophomore year award (i.e,. prior to the FAFSA rules change).
• Consider attending one of the schools that utilize a second financial aid form called the CSS profile. The schools that utilize the CSS are mostly private schools that administer a considerable amount of their own institutional aid. So far, the CSS schools have not adopted the proposed FAFSA rules revoking the splitting of the EFC. This may make CSS schools more attractive to families with multiple students in college at the same time. Divorced families may or may not get more aid under the CSS as its calculation of EFC often (but not always) includes both birth parents’ income and assets. The CSS also includes a portion of home equity as a parental asset in its EFC calculation.

The financial aid rules today are overly complicated, and that is before these new rules are considered. If you are overwhelmed or not comfortable with these rules, seek the help of a professional college professional financial advisor who is a fiduciary. If you choose to do nothing today, you may be kicking the can down the road and your inaction may come back to haunt you and your student. If these FAFSA rule changes are enacted as currently written, expect an outcry from many parents when they realize the impact to their wallet and their family in a few years.

Please share this information with your friends and schools and please reach out to me if you need help or have questions.

The post FAFSA Changes Force Class of 2022 to Pay More appeared first on How to Pay for College.

Enjoy my Q&A and discussion with Moriah Kofsky of CollegeVine from February 2021.

https://www.collegevine.com/livestreams/3890/interview-q-a-with-a-college-financial-advisor

The post Interview with CollegeVine – Feb 2021 appeared first on How to Pay for College.

Published by Robert J Falcon, CFP®, CPA/PFS, CCFC®, MBA

As part of the Covid relief package passed by Congress in December 2020, the Free Application for Federal Student Aid (FAFSA) Simplification Act makes significant changes to the FAFSA form beginning with the 2024-2025 school year. The good news is that more low-income families will qualify for full Pell Grants, and there will be a significant reduction in the number of questions. However, middle-class families entering college today must be prepared for potentially significant cuts to their aid packages beginning with the 2024-2025 school year.

EFC/SAI Primer
The income and assets of parents and students on the FAFSA drive the calculation of the Expected Family Contribution (EFC), which represents the minimum amount families are expected to pay each year for college. Most families pay much more than the EFC, and since the term was seen as misleading, the EFC term is being replaced in this law by the Student Aid Index (SAI). I’ll refer to this number hereafter as the “EFC/SAI.”

Families should calculate the EFC/SAI as the first step in their college search if they do not want to overpay for college. The EFC/SAI reduces the total Cost of Attendance (COA) at a school to determine your financial need. For example, if a student attends a college with a COA of $75,000 and the family has a $60,000 EFC/SAI, the family has $15,000 of financial need. Colleges typically “meet” 50% to 100% of that need, and they may do so with grants (free money), loans, and work-study. So, the lower your EFC/SAI, the greater your financial need and aid.

Changes Hurting Middle-Class Families

Unfortunately, there are two significant changes that will negatively affect middle-class families that do not qualify for Pell Grants and who do not have a minimal EFC/SAI.

Multiple Siblings in College
Current Rules: Today, it is beneficial to have multiple kids in college at the same time. Why? Because under current FAFSA rules, you get to divide your EFC/SAI by the number of students you have in college that year.

For example, if a family today has an EFC/SAI of $60,000 and has 3 kids in college, each would get a prorated share of the EFC/SAI equal to $20,000 ($60,000 ÷ 3 students). If one of them attended a school with a COA of $50,000, that student would have $30,000 ($50,000 – $20,000) of financial need.

New Rules:  The proration of the EFC/SAI will be eliminated starting with the 2023-2024 school year. Applying the new rules to the example above, each of the 3 students would have an EFC/SAI of $60,000.  The student attending the school with the COA of $50,000 would pay the full cost as the COA ($50,000) does not exceed the EFC/SAI ($60,000).

Divorced Families may pay More
Current Rules: Today, the spouse with which the student lives the majority of the time (> 183 days) is responsible for filing the FAFSA and reporting their income and assets. The income and assets of the other birth parent are ignored. The terms of a divorce decree or the parent providing the most financial support are irrelevant in determining which parent files and reports their income and assets on the FAFSA.

Example: Assume that a student splits her time between her divorced parents. The student spends all weekdays during the school year plus some weekends (say ~200 days/year) with Parent #1, who is a teacher making $60,000/year, has minimal assets, and rents an apartment. Parent #2 is a professional making $150,000/year, owns a condo at the beach, and is responsible (under the divorce decree) for child support of $15,000/yr. The student vacations with and spends most of the Summer at the beach with Parent #2 who provides the greater portion of the student’s support for the year.

Under the current FAFSA, Parent #1 would file the FAFSA and report their assets and income (including the $15,000 of child support received) since the student lives with them more than half the time.

New Rules: Starting in 2024-2025 school year, the divorced parent who provides the most financial support for the student must file the FAFSA and report their income and assets (Parent #2 in this example). Therefore, this family’s EFC/SAI (and the net cost of college) will be much higher than it would be if the custodial parent (Parent #1) filed the FAFSA.

But this is a good and equitable change, right? Maybe not. Consider the following situations:

Situation 1: Many divorce decrees stipulate how college costs are to be shared between the birth parents (e.g., 50%/50%, 25%/75%). Since the result of these new rules is a decrease in financial aid, the family’s total cost of college will go up. This means Parent #1 (who makes a lot less than Parent #2) will need to pay more than under current FAFSA rules.

Situation 2: Parent #2 just got remarried, and their new spouse also makes $150,000 per year. Under current (and new) FAFSA rules, the income of the new step-parent must be included on the FAFSA filed by Parent #2. Now, Parent #1’s share of the college costs will go up considerably simply because their ex-spouse got remarried. Wait, it gets worse….

Situation 3: What if the divorced couple had 2 or 3 children in college simultaneously? Then, the increase in the cost of college triggered by the change in the divorce rules is made much worse because the family doesn’t get to split the EFC/SAI amongst the siblings.

A Caution to High School Seniors
Families with high school seniors will soon select the college they will attend. They need to determine if and by how much their 4-year college costs will increase due to these changes, and possibly choose a less expensive school to attend for all 4 years. If the family waits until their costs go up in the Fall of 2024 before addressing these changes, they will then need to make some uncomfortable decisions that may include (a) taking out parental PLUS loans, (b) asking their student to take a gap year to earn money to finish college, or (c) asking their student to transfer to a lower-cost college. Do not conclude that a college is affordable based solely on your Freshman financial aid award.

Options to Consider
These changes to the FAFSA do not affect the aid given by many private colleges that require the CSS Profile in addition to the FAFSA. The CSS Profile still permits the EFC/SAI to be prorated between multiple siblings in college simultaneously, and it treats the income and assets of divorced parents (and their new spouses if remarried) differently than the FAFSA. While CSS colleges generally have a higher COA, they also typically award higher amounts of gift aid compared to public colleges. Families should consider CSS schools to see if their net 4-year cost is lower than at FAFSA-only schools.

The post Middle-Class Financial Aid Cuts Coming in 2024 appeared first on How to Pay for College.

Published by Robert J Falcon, CFP®, CPA/PFS, MBA

Years ago, my wife and I built the house we still live in today. As the son of a sheet metal worker, I was intent on upgrading the builder-grade materials with my own hands. I spent a lot of time upgrading the baseboard throughout the house from 3-1/2” to 5-1/4” (and yes, I cope my corners). I trimmed out the windows with casing, and I even installed crown molding in the dining room.

But this all came at a “price.” I was slow, so the work was extremely time-consuming. I also made some mistakes which increased the cost of materials, and I was obviously not nearly as efficient as a professional carpenter. Years later, when we decided to have crown molding installed in the rest of the house, we hired a professional carpenter who did an excellent job at a fair price and completed the whole project in just a few days. With 2 active boys, stressful jobs for both parents, and no free time, it just made sense to utilize an expert. DIY College Financial Planning Doesn’t Work I contribute free advice on a few social media pages dedicated to helping do-it-yourselfer parents to navigate the financial aid process. In mid and late-summer, many parents are still seeking “the best” private lenders or asking if they should take out a PLUS loan for the Fall term. These parents clearly did not do a great job of planning or “DIY-ing” it. Taking a little break and enjoying some entertainment, like แทงบอล ufabet, can also be a fun way to relieve stress during the busy planning season. Online casino sites like lemon casino canada lets you enjoy an exciting casino experience from the comfort of your own home.

With college being as expensive as it is, it is critical to “get it right” if you don’t want to overpay. Hiring a professional is the only way you will know that you maximized your aid, your educational tax credits, and minimized your college debt, while you can also use other services like indices trading UK to make even more money. In addition, dividends are becoming attractive for investors looking to generate income, you may want to check out this thiscrf dividend here for more info!

Answer these 5 questions to see if you understand the College Financial Aid Process

1.  You should visit as many schools as you can as soon as you can. Worry about your net cost at those colleges later.

A: False. Have you ever test drove a BMW 5 series, then subsequently test drove a Toyota Corolla? To an 18-year-old, the dopamine hit they will feel from the BMW (expensive private school) will elevate their desire to attend there and they will scowl at the suggestion that the Corolla (the less expensive but reputable in-state flagship school) should even be considered.

They don’t care if you can only afford the Corolla, because the frontal lobe area of the brain is nowhere near being completely developed at that age. They will tell you that everybody takes on debt and they will deal with it later. Call Kiplinger Magazine today and book an interview for 5 years in the future when your student gets their first monthly student loan bill.

2. My family doesn’t have a lot of money or assets. Therefore, we should only consider our in-state public schools.

A: False. Low-income families have greater financial need than middle or upper-income families. State schools often “meet” or pay for only a low percentage of that need, typically 40% – 60%, and often this aid is in the form of loans and work-study. Expensive (private) schools meet 80%, 90% and sometimes 100% of need, and these are grants (not loans) that come from their endowments.

Low-income students should search for schools (a) where their credentials are strong enough so they can get accepted and (b) that meet/pay for a significant percentage of financial need. Buying a $70,000 Lexus at a 90% discount is cheaper than buying a $25,000 Toyota at a 50% discount.

3. My son or daughter is so smart that they will get merit aid (scholarship) no matter where they apply.

A: False.  Many of your elite schools do not offer traditional merit aid. You may see that schools like Stanford and Notre Dame award “merit aid” to 5% or 10% of students, but most of this is really athletic scholarships.

If you need merit aid to cover some of your college costs, check first to see if the schools on your list provide merit aid to 20% or more of incoming freshman, and make sure your student’s grades and test scores are in the top 25% of incoming freshmen (check this on www.collegedata.com). Otherwise, if you do not have financial need, prepare to pay sticker price at these elite schools. It’s all about supply and demand.

4. Attending a public school in a neighboring state is still a lot cheaper than attending a private school.

A: False. The (COA) Cost of Attendance (Tuition, Room and Board, Books, Fees, etc) of an out of state public school rivals that of many private schools. For example, the non-resident COA at the University of Michigan ($61,932) and University of North Carolina ($49,994) exceeds that of many private schools, and they generally offer minimal if any aid to out-of-state students. On the contrary, private schools are generous with needs-based aid and many small and mid-sized private schools offer merit aid for top students. Additionally, online courses at pnclearning.com provide affordable alternatives to traditional education, catering to a wide range of learners seeking flexible and accessible learning options.

5. I don’t need to understand how I will pay for each of the 4 years of college down to the penny. I will “figure it out” as I go.

A. Maybe. But you risk subjecting your son or daughter to major heartbreak if they do get accepted to that “dream” school but can’t afford it unless both the student and parents take on enormous debt. If the parents say no, the tears will flow. If the parents relent, the family may burn through the college savings in the first 2 years. The student must then transfer to a less expensive school or the parents will take on debt that they will take to their graves. The student also takes on excessive debt, struggles financially after graduation, and may have to move back home. I’ve watched this movie too many times. Why would loving parents take this risk? College planning is not unlike financial or retirement planning. A solid plan upfront will eliminate uncertainty and minimize the surprises that occur later. With college and retirement, some families ignore planning and “hope for the best.” Most of the time, this doesn’t work, and when it does, the outcomes are not as favorable as they could have been with professional planning (yes, even after the fee)! When was the last time you committed to a $100,000+ purchase but did not know how you were going to pay for it? What makes you think that college is any different? If you want to afford a quality education for you or your children, it might be of aid to win some cash on sites like 벳엔드.

The post Why are You are Overpaying for College? appeared first on How to Pay for College.

This article originally appeared on Road2College website.

If you are still with me after Part 1 and Part 2 of this series, pat yourself on the back. Parts 1 and 2 are full of details that may have made your head spin, and are akin to a College Finance Training Bootcamp. You’ve already made it through the tough part. In Part 3, we put the pieces together and show you a proven strategy for getting a great college education while minimizing your costs. 

But first, let’s put some context behind paying for college and how we got to where we are today.

The Way it Used to Be

When the Baby Boomers and even Gen X went to college, applying to college was simple:  You applied to a handful of colleges (safety schools, reach schools, and some in between) and enrolled in the best school you got into. It was so easy! Any loans you incurred were manageable, and nobody got hurt financially.

Unfortunately, many parents today still think college is the same way it was back when they went to college. Their students work hard, take AP classes, participate in extracurricular activities, and perform so much community service it would make Mother Teresa blush. They apply to elite schools and get accepted, only to get an inadequate financial aid package. The parents are then trapped….it’s Spring of their student’s senior year, and they either have to take on crushing parent (and student) debt, rely on scholarships, or break their student’s heart and tell them they can’t go to their dream school. This is where a 補習中介 could potentially help, offering assistance in finding alternative educational options or scholarship opportunities. Students should also explore training programs from schools like Melbourne Training College that could be helpful in landing high-paying jobs. Those who are looking to start a government construction project should keep in mind that a a contractor performance bond ensures the job gets finished properly, so make sure to secure this one.

What Comes First, the College or the Aid?

To avoid this situation today, families must approach and analyze the college purchase like any other major purchase. They need a budget. Regardless, they typically take one of two differing approaches:

Approach 1 (Traditional)  – You’ve already picked your colleges, and now you are trying to figure out how to maximize aid and minimize your net cost at each school. You approach college as others did in the 70’s and 80’s.

Approach 2 (Godfather): “It’s not personal. It’s strictly business.” You keep an open mind about your college selection and do not fall in love with a school before you know if you can afford it.  Your goal is to attend a school that is a good fit for you, get a great education where you can graduate in 4 years with a marketable degree, and get lots of financial aid and incur minimal to no student loan debt. For comprehensive insights into loans, visit KreditFinanzcheck and expand your financial knowledge.

From a financial security standpoint, it is OK to use the Traditional Approach with respect to some schools, buy only if you are also using the Godfather approach.  After all, if finances are not unlimited, you must realize you are making a financial purchase which will range from over $100,000 (4 year Cost of Attendance (COA) at in-state public school) to $200,000 (4 year COA at private school).

With costs this high, you should first make sure you can afford to make this purchase, just as you would if you were making any other purchase (condo, townhouse, etc) in the same amount. You also need to communicate with your student before they apply their dream colleges (Traditional Approach) that those schools will be off limits if the aid received is not adequate. When looking to save while at college, consider getting a cheap phone and internet plan at https://www.circles.life/au/plans.

But College is Worth the Debt, Isn’t it?

Sometimes. If the debt is reasonable and does not exceed the student’s post-graduate starting salary, that is a reasonable amount of debt. Despite what those in your social circles may be telling you, smart kids that attend a more selective college do not earn higher earnings than those that don’t attend a very selective college. Learn about debt consolidation singapore to be able to pay all your debts and become financially free. Economic studies, including those done by Dale and Krueger show that there is no difference in earnings 5 years post-graduation between those with equivalent high school SATs who attend a more selective school vs one that is not as selective. (First generation students and minorities are exceptions to this rule.) As an example, if 2 students with 1450 SATs apply to engineering school at University of Penn but only one is accepted, Dale and Krueger discovered that 5 years after graduation the student that did not get accepted to Penn and got their engineering degree at (say) University of Pittsburgh was making the same amount as the Penn grad. The top econs tuition IGSCE center can help students get a higher mark. Please read Frank Bruni’s eye-opening book “Where you go is not who you’ll be” for a more complete discussion of criteria you should be using to select a college. You can also check out sites like www.calc.edu/programs/ to see if they’re within your budget and if they provide aid.

So let’s get started in the analysis to determine the most effective strategy for you.

Step 1 – Calculate EFC

Calculating and minimizing your EFC for both FAFSA and CSS Profile is a critical first step in your effort to save on the cost of college.  My favorite calculator is the College Board’s calculator, because it calculates EFC under both methods. The FAFSA4Caster is also a popular way to estimate EFC. Don’t forget to leverage the ideas we covered in Part 2 to minimize your EFC!

Step 2 – Where do you stand?

Once you have your EFC, compare it to the COA of the types of colleges you are considering. You will likely fall into one of these 3 categories, but you have options in each:

1. The Good – Your EFC is lower than most in-state public colleges.
2. The Bad – Your EFC exceeds most private schools.
3. The Ugly – Your EFC is lower than private schools but higher than public colleges.

So where do you find the COA and other admissions and financial aid info for your target schools? My go-to source is Collegedata.com. If you have a few target schools, key them in and see where their COA stands relative to your EFC.

Using College Match

While there are many ways to search for your target schools, my favorite tool is Collegedata’s College Match. Here, you can search for schools by over 15 different criteria, including geography (individual states or regions), major, size of student body, 4 year graduation rate, percentage of financial need met, and percent of students receiving merit aid. Do not initially put too many filters into your search and do not get too specific on your selected major, as you may inadvertently eliminate an attractive school. Initially, you will want to capture the schools that meet your most important criteria, and then filter them out one by one if you are sure they are not a good fit. If you want to start a career in the healthcare industry, you may need to undergo a training program and earn a certificate. This website compares physical therapy assistant programs and what they offer to start your career in physical therapy. Trust Los Angeles medical malpractice attorneys to offer skilled representation and personalized attention, securing the best outcomes for victims of malpractice.

For example, schools that have what you might think to be an excessively high cost of attendance are also the types of schools that might meet 90% or more of need. Don’t eliminate schools with high sticker prices up front, as a $70,000 per year school that meets 90% of need might be less expensive than a $40,000 state school that meets 50% of need. Also, don’t select “Operations Management & Supervision” as your major, as that is too narrow. Select the broader category of “Business Administration, Management, and Operations” instead.

Step 3 – Strategy for The Good, The Bad, and The Ugly

“The Good” Strategy: EFC is Lower than In-State Schools

Congratulations. If you are in this category you have the most flexibility of the three options, but your net cost of college will depend on the academic strength of your student.

If your student is a high academic achiever, he or she will be a very attractive candidate and colleges will award a lot of aid to attract him or her. With a very low EFC and high academic achievement, search for schools in College Match that meet a high percentage of need (start at ~85%, then drop lower if necessary) and have a 4 year graduation rate over 50%. As a distant secondary consideration, if these schools also offer merit aid, and your student’s SAT/ACT and GPA are in the top 25% of the incoming freshman class, you are well on your way to minimizing your cost of college. (See “EFC Exceeds Most Private Schools” below to see if your student is in top 25%).

If your student is not a top achiever, you still have options. Most schools that meet 85% or more of need are private schools that are listed in College Match as “Most” or “Very” Difficult to get accepted into. If your student isn’t in this category, search instead in College Match for “Moderately” or “Minimally” Difficult Schools and gradually lower the “percentage of need met” until you get enough colleges in your results. Be careful here. Make sure that these less selective schools have 4-year graduation rates over 50% by setting the Graduation Rate pulldown box appropriately.

Finally, don’t forget about your in-state public schools. In general, they are not as generous and won’t likely meet a high percentage of need, but their COA is much lower to start with, so your net cost may be lower at your state school compared to a private school.  Be wary of out-of-state public schools, as they tend to be priced similar to a private school but offer little merit or needs-based aid. As families tour campuses and attend events, www.fastfirewatchguards.com helps keep school facilities safe and secure.

“The Bad” Strategy – EFC Exceeds Most Private Schools

If your EFC is exceptionally high, you will pay sticker price unless you get merit based aid. Many parents make the mistake and assume that their bright honor students will get a scholarship (merit based aid) no matter where they apply, and are in shock when they get their financial aid package that includes no aid at all. Elite schools like the Ivys, Northwestern, Amherst, Cal Tech, Stanford, and Notre Dame do not offer merit aid because they can attract top students without “paying” them to attend. (These schools are terrific with needs based aid, however).

If you don’t want to pay sticker price, and your student is academically strong, deploy the Godfather strategy and consider some of the “lesser-known” schools (e.g., Furman, George Washington, University of Miami) which offer merit aid to over 50% of students. These schools are trying to compete for the same students looking at Notre Dame and Boston College, but realize that high school students (and parents) may need a financial enticement to attend. In College Match, select the appropriate “Entrance Difficulty” filter by clicking on the “?” next to the “Entrance Difficulty” label. Also, select schools that offer merit aid to at least 20% of students in the merit aid pulldown, and check the box “Include only students without financial need.”

Once you have the list of schools from the above search, check the “Admissions” tab for each school on the list to see if your student’s SAT/ACT/GPA is in the Top 25%. (Since the range reported is 25% -75%, the higher number shows the cutoff for the top 25%.) If your student’s credentials are in that top 25%, you likely will get (at least) the average merit aid award at that school. Go to the Money Matters tab, and under the Profiles of Financial Aid – Freshmen section, look at the last line which is for Merit Based Gift. If your student’s academic numbers are well above that 75% percentile, you may get more than the average reported on CollegeData.

If a student in a high EFC family has average grades or lower, look again at your in-state public schools. If you are paying sticker, paying $25,000 per year leaves your family with an extra $180,000 over 4 years over that “prestigious” $70,000 per year private college. That would make a nice graduation gift, wouldn’t it?

“The Ugly” Strategy

The “Ugly” strategy is named as such because you need to deploy a little of the Good and the Bad strategies. It’s messy and ugly, and there is no quick and easy approach, but you need to develop the approach based on the COA of the schools you are targeting.

For the expensive private schools you are looking at, search for schools that meet a high percentage of need and who also offer some merit aid. On College Match, set the appropriate Financial Need Met percentage, and also set the pull-down on Merit Aid to at least 20% but do not click the box to “Include Only Students Without Financial Need.”  If the list is not showing many schools, delete the merit aid requirement and shoot to maximize needs-based aid.

For the schools where your EFC exceeds the COA, your only financial aid play is to search for merit aid (see “The Bad” strategy above). If your search comes up empty, you may want to focus on your in-state public schools if their COA is low enough for you to afford.

Multiple College Students?

The discussion to this point assumes you have only one student in college at a time. If you have 2 or 3 students in college at the same time, your strategy may need to be adjusted. Under the FAFSA, you split your EFC by the number of dependents in college at the same time. If a younger sister will also be in college during your oldest student’s Junior and Senior years, a $30,000 EFC becomes $15,000 for each student. If you blindly followed the advice above, you would deploy “The Ugly” strategy for 2 years, then “The Good” strategy for the last 2 years. But since you don’t want to plan on switching colleges 2 years in, your analysis of the net cost of attending a private school would include determining if the additional aid from the lower EFC in the student’s Junior-Senior years would make it worthwhile to pay a little more the first 2 years. You have to run the numbers, as there is no clear answer.

Summary

The college selection process is no picnic, and has become excessively complicated over the years due to the rising cost of college. Unlike days of old, significant planning must be done before you even apply if your goal is to minimize the net cost of college. Keep in mind that regardless of the degree or the school attended, there are very few happy endings when the student graduates with debt over $100,000 and has to start making $1,000+ monthly student loan payments. By estimating your EFC and net cost of college before your student applies, you can eliminate those schools that will put your student’s future and your retirement in financial jeopardy.  Too much work or don’t have the time to do this? Get some outside help from a college financial expert who is a fiduciary.

The post How to Select Colleges That Cost You Less appeared first on How to Pay for College.

1. Make your 529 contributions now

If your state permits a deduction for contributing to a 529 plan, why not make that contribution before the end of December? Each dollar contributed will reduce your state taxable income and your state income taxes. While a $10,000 contribution to a 529 in either December or January will save you the same amount on your taxes, you get a bigger tax savings payoff from a time value of money standpoint by making it in December as you will collect a bigger tax refund just a few months later, if you would like more information then click here.

Remember, the main benefit of 529 plans, which may be similar to those children’s savings bonds, is that the increase in value will not be taxed if it is used for qualified educational expenses. If you are fortunate and don’t need to use the 529 money for college (student secures a scholarship, grandma surprises you with a big 529 account of her own, etc), you will not owe any penalties on withdrawals from the 529 plan. You can let your student use it for graduate school, or you can name a younger sibling as the beneficiary. Alternatively, the student can withdraw the proceeds after graduation and use them as a down-payment on a townhouse after paying income taxes on the growth of the account. Looking to find $5 bill ATMs near you to withdraw your funds? Our easy-to-use locator helps you identify nearby ATMs that give $5 bills and other small denominations.

2. Pay Private K-12 Tuition Through Your 529

The Tax Cuts and Jobs Act (2017 Act) which was signed into law in December 2017 includes provisions specific to education that can decrease your taxes. One big change opens up the use of 529 proceeds to pay for private K-12 education. Be careful here, as you do not want to exhaust most of your 529 money and end up with a shortfall of funds for college. Use UFABET เข้าสู่ระบบ สำหรับการพนันออนไลน์ที่ดีที่สุด and experience premier online betting.

Families that are paying private or Catholic K-12 tuition from their checkbooks directly to their schools are likely paying more state tax than they should. The 2017 Act permits families with students attending private K-12 to use up to $10,000 from their 529 to pay for private K-12. If your state permits a deduction for contributing to a 529 and it allows distributions from 529s to pay for private K-12, you should be routing your tuition through your 529. For example, if you have a student attending private high school here in Pennsylvania, you can save $307 in Pennsylvania taxes if you route $10,000 of their tuition into the 529 plan, then pay the tuition to the high school from the 529 plan. (This technique assumes that you are not already maximizing your 529 funding for each student.) If you have multiple children in private school, your tax savings can multiply. What Christmas presents (or how many dinners out) can you get with an extra $307?

3. Used Savings Bonds to Pay College Costs Tax Free

Families with students in or nearing college can also take steps now to save taxes. In addition to making tax deductible 529 contributions, you can sell certain US Savings bonds without paying tax on the interest if the proceeds are used to pay qualifying educational expenses. If your student is in college in 2018 and you have EE and I bonds, see if you meet the criteria to cash out those bonds without paying tax on the interest.

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4. HS Sophomores & Juniors Can Maximize College Financial Aid Now

Is your student currently a high school junior (Class of 2020)? If so, you probably don’t realize that the income you report on your 2018 income tax return will be used as the basis for calculating needs-based financial aid on the FAFSA for your students’ freshman year in college. Few parents understand that when needs-based financial aid is calculated, income is weighted up to 8 times more heavily than assets. Parents with high school juniors should defer income (defer stock option exercises, bonuses, Roth IRA conversions, etc) and increase deductions (charitable contributions, expenses for business owners, etc) in December. Having trusted resources like 먹튀검증 can also give families added confidence when making important financial planning decisions.

If you have some mutual funds or stocks that are showing paper losses, sell them and take up to a $3,000 net capital loss if appropriate. Further, you may want to refrain from purchasing certain mutual funds in December, as many of them distribute their accumulated dividends and capital gains during this month. These distributions will not only increase your 2018 income taxes, but your Expected Family Contribution (EFC) will increase as a direct result of these distributions. (Your EFC is the minimum amount that a family is expected to pay for college).

There are other year-end tax planning tips that CPAs typically recommend that unfortunately will not lower your EFC.  Tax planning techniques such as maximizing your 2018 401(k) or IRA contributions may very well decrease your 2018 federal income taxes, but they will actually increase your EFC on the FAFSA. Looking beyond tax moves, exploring top UK investment strategies can help create more effective long-term financial benefits.

Those of you with high school sophomores (Class of 2021) should begin now to plan to minimize your income in calendar 2019! For sophomores, calendar 2019 income will be used to calculate the family’s EFC for the student’s first year of college, so the family should plan to keep 2019 income as low as possible. That means that December 2018 is the last opportunity the family has to increase or accelerate income (take a bonus, exercise stock options, etc) without harming their ability to obtain needs-based financial aid.

Let’s face it…tax planning is rarely something families look forward to, especially when it has to compete with the Holidays and having fun with family and friends. But if you adopt just a few of these tips, you could make your Holidays just a little bit brighter.

The post 4 Ways to Save Now on Taxes and Education appeared first on How to Pay for College.

Just after Halloween, I attended a college planning session at a local high school that was put on by two experienced college planning professionals. While the first hour of their presentation was informative, toward the end of the session, misstatements and exaggerations were made and pressure tactics employed to motivate the attendees to act right then and there. As with any big financial decision, parents should get a second opinion on the financial advice they are given by so-called college “experts,” and they should be sure they are getting their advice from a fiduciary who has their back.

Few financial professionals have a fiduciary duty, which means that they must always act in the best interests of their clients. CPAs and CFP^®s have this duty. Most financial advisors and planners and insurance salesmen without those certifications are held to a lesser standard. Based on a review of the presenter’s credentials, neither of these college funding “experts” had a fiduciary duty.

About an hour into the session, I was surprised when one of the presenters (who owns an insurance agency) made the claim that using 529 account funds to pay for college requires you to report the proceeds as income on your financial aid forms. This income would effectively lower the amount of any needs-based aid. The presenter’s statement was, at a minimum, highly misleading. The fact is that parents who pay their child’s qualified educational expenses from a 529 account that they funded do not trigger any income, as long as the withdrawals don’t exceed qualified educational expenses. Some 529 withdrawals do trigger income, such as when money from a grandparent’s 529 account is used to pay educational expenses. But this is not the norm, as Fidelity notes that only 15% of its 529 accounts are held by grandparents. For the presenter to make the general statement that using 529 proceeds to pay for college triggers income is disingenuous and absurd.

The second college planner then presented a frightful hypothetical example of parents incurring $40,000 of parent student loan debt in each year their children were in college. In his example, incurring $40,000 per year per child for multiple children—plus the compounding interest—left the parents with over $1 million of debt and huge monthly payments in retirement. While I agree that parents today are taking on excessive student loan debt on behalf of their children, this gentleman grossly exaggerated the problem, and failed to disclose that the average student loan debt of parents over age 50 is $37,000, not $1,000,000.

Then came the pitch. If you signed up for a meeting right then and there, they would waive the $250 “audit” fee. Rubbish. Don’t fall for these pressure tactics. Instead, look for a CPA or CFP^®with college funding expertise. And if you can’t find a fiduciary with college funding experience, then at the very least get a second opinion to verify what the first college planner has told you. Otherwise, you may wind up with buyer’s remorse and that sinking feeling that the college funding “expert” just took you for a ride.

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