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.

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.

I was at a pharmaceutical networking event a few months ago discussing college financial planning with pharmaceutical executive. She was boasting to me that she had just “invested” in an insurance policy recommend by her “advisor,” and as a result, her son was going to qualify for thousands of dollars in needs-based financial aid. Really? This situation was extremely uncomfortable, because my options were to tell her she likely made a huge mistake or to smile and say nothing at all. First, let me give you a little context. People can check out Utilitysavingexpert.Com, if they need the best  insurance information.

Needs-Based Financial Aid Primer

Financial aid is awarded by colleges primarily for academic achievement (merit aid) and for financial need (needs-based aid). People consider CWPP solution online for financial security. My friend was trying to increase the latter. To get needs-based aid, families need to fill out the FAFSA (Free Application for Federal Student Aid) form, and the output from the FAFSA is the Expected Family Contribution (EFC). The EFC is the starting point for what the family is expected to contribute for college, but the actual amount is almost always higher. So if you want to maximize your needs-based aid, you will want to minimize your EFC.

Here’s how a needs-based award is calculated: If the total cost of attendance at a particular college is $45,000 and your EFC is $20,000, then you have $25,000 of financial need. A college will typically meet only a portion (40% – 70%) of that need with a combination of grants, loans, and work study. So for every dollar you lower your EFC, you get only a fraction of that back in financial aid, and most or all of it could be in the form of loans and work study. In this example, a college that meets 60% of need would provide $15,000 of “aid” in the form of grants, loans, and work study. The family’s bill for college will be (at a minimum) the $20,000 EFC plus the “unmet” need of $10,000 ($25,000 – $15,000).

How Buying Insurance Lowers EFC

The EFC calculation is very complex, but it includes 5.64% of the parent’s assets plus 22%-47% of the parent’s income. (A portion of the student’s income and assets is also included, but that is not relevant to this discussion.) Assets such as cash, stocks, bonds, mutual funds and other investments (including 529 assets) are assessed at 5.64%, while 401(k)s, IRAs, and retirement assets are not assessed. Cash value life insurance and annuities are also not included, and here is where the insurance salespeople make their pitch. If you have a family, a business, or others who depend on you, the life insurance benefit of a whole life policy acts as a financial safety net. Get a free quote at Life Cover Quotes’ website that can be found here.

Life insurance policies offer a unique combination of investment and protection that can be beneficial for families looking to secure their financial future. Unlike term life insurance, whole life insurance with guarantees provides lifelong coverage, ensuring that your beneficiaries will receive a death benefit no matter when you pass away. This type of policy also accumulates cash value over time, which can be borrowed against or withdrawn if needed, making it a flexible financial tool for managing unexpected expenses or funding long-term goals.

Moreover, the cash value component of whole life insurance grows at a guaranteed rate, providing a reliable and stable investment option. This can be particularly appealing for those who are risk-averse or looking to diversify their financial portfolio with a conservative asset. Additionally, whole life insurance policies often include dividends, which can further enhance the policy’s value and provide additional financial security. Contact an insurance company if you’re looking for insurance policies for you and your family.

For every $100,000 my pharma friend moved into the insurance product, her EFC would drop by $5,640 and she would have additional financial need in the same amount. But here is what she missed:

1. The insurance agent failed to take into account the executive’s salary, which approached $200,000 per year. According to Edvisors.com, EFC is increased by approximately 30% of the executive’s income over her $26,000 income protection allowance. Therefore, her $200,000 salary alone would trigger an EFC of over $50,000.
2. The insurance salesman has no idea how much of my friend’s financial need would be met by the colleges the family was considering, or if the need would be met through loans or grants.
3. Since she sold investments at a gain to buy the insurance, her EFC would rise even higher by 30% of the taxable gain.
4. The cost of attendance still must exceed the EFC for the family to have financial need. If her EFC dropped from (say) $90,000 to $84,360, she still would not have any financial need because the cost of attendance at college does not (yet) exceed $84,360!

Very intelligent professionals can make very big financial mistakes if they don’t have all the facts. Get financial advice from a professional who is a fiduciary and who legally must put your interests ahead of their own. Needless to say, insurance agents don’t have a fiduciary duty to their customers.

Should I have told my pharma friend she made a mistake in this social situation? Doing so would not have remedied her situation, so I held my tongue. However, by sharing this story, I hope that I can prevent others from making a similar expensive mistake.

The post Insurance Purchases Don’t Increase Financial Aid appeared first on How to Pay for College.

In the 1970s, I have a clear memory of my father (a sheet metal worker) coming home from a construction site on a bitter Pittsburgh winter evening. As he came in the back door into the kitchen, his face beet red from windburn, he turned directly to me saying, “Bobby, get good grades and go to college so that you don’t have to freeze your [part of anatomy] off.“

Back then, going to college was easy: you applied to a handful of colleges, including one or two “reach” schools, and attended the reach school if you got accepted. The price of college was an afterthought. No matter where you went to school, your student loan debt at graduation was manageable, as most financial aid was for students with need, and merit aid was not nearly as prevalent as today.

Funding college is no longer a given. Even after adjusting for inflation, the cost of a four-year degree today is more than three times what it was in 1980 (see graphic). While students with significant financial need can still get considerable help from most colleges, students with little or no need who attend a “reach” school will end up subsidizing the education of students in the top of the class.

Universities fill freshman seats similar to the way airlines sell seats on an airplane—nobody pays the same price. In most private universities, merit aid is awarded to those students in the top (say) 25% academically. These students are rewarded for propping up the average SAT and GPA scores, which helps the school rank higher in the college ranking publications, and this helps to recruit the next freshman class.

Students must be accepted to fill the rest of the seats, but those with below-average credentials drag down the averages and are not especially attractive to the college. However, the school is willing to forgive and accept them if they pay sticker price. As they say in “The Godfather,” “It’s nothing personal….just business.” Yes, despite the not-for-profit status of colleges, they are businesses.

One bigger potential problem is that paying a sticker price of $60,000 per year or more will likely cause the “reach” student and his parents to take on stifling student loan debt. In the bottom 25% academically, “reach” students run the risk of struggling in their academics, are less likely to take on leadership positions, may take five or six years to graduate, or may even drop out. As a financial advisor, I encourage these students to seek a school where they are top dog, where they are in the top 25%, and where they can find some other student to subsidize their education.

In the 1970s, people smoked cigarettes in restaurants, disco was playing on the radio, and long gas lines were a way of life.  Thankfully, this has changed. Similarly, families need to change their approach to selecting a college, as attending “the best school you can get into” today may leave you with large student loan debt and disposable income equal to that which you had in college!

The post Attend Your Reach School appeared first on How to Pay for College.

A college education is likely one of the most significant purchases a young person today will make, ranking behind their first house, but probably more than their new car. This was not always the case. Like many other children of the WW II generation, we were able to go wherever we wanted to college and could take on student loans to make up any shortfall. Many of my fellow moms and dads think this is still the case, but as you will see below, such assumptions could cripple the student’s finances and derail mom and dad’s retirements.

As the last of seven children in a blue collar family (circa 1980), there were no college savings in place when it was my turn to go. However, I was able attend Villanova University and “pay” for the entire cost of a private education by taking out Guaranteed Student Loans (now Direct or Stafford loans), National Direct Student Loans (now Perkins Loans), Pennsylvania State grants (PHEAA), and cash from my summer jobs (as a roofer, and delivering beer in a Michelob van). I was fortunate to graduate from Villanova (annual cost including room and board ~ $5,600/year) with $11,500 in student loans, and my starting accounting salary in 1982 was $17,700.

Fast forward to today. A similar student taking the same unprepared approach to attend Villanova would come out with crippling debt. Villanova is now nearly 12 times the cost ($66,000), and the average hourly wage has risen less than four-fold, so I would have needed even more help from outside of my household to attend. My 2017 Expected Family Contribution(based on my dad’s inflation-adjusted salary) would be ~$12,200/year, and since Villanova meets 80% of need (on average), they would provide over $172,000 to me over four years in grants and loans. In the best case (100% of Villanova aid in grants, $3,500/year work study), my family and I would incur $78,000 in loans. If Villanova covered 20% of the aid with loans, total loans would approximate $112,000. My starting salary in accounting would be about $54,000 (NACEweb.org). Either way, student loans would exceed my starting salary, setting me up for a tough start and monthly loan payments of $700 to $1,100. Ouch!

For fun, I utilized Money Magazine’s Best Fit calculator to see which non-urban small- to mid-size accounting schools would be a better fit for me today. Villanova ranked 27^th on my list. Two Virginia colleges (Washington & Lee and William & Mary) were in my top three, but I would likely need to take an SAT review course to raise my chance of acceptance. W&L’s net cost was cheaper, as it (a private school) meets 100% of need. W&M (a public school) is a bargain for Virginia residents, but was only $10,000 less per year than Villanova for non-Virginia residents. If I was seriously shopping, I would further identify the accounting schools on the list where my SAT scores were higher than the average to see if I might qualify for merit-based scholarships.

This by no means is a critique of the cost of attending my beloved alma mater, but a call-out to parents and students to use your head and not your heart when making the college decision. Calculate your family’s expected student loans when your child is a freshman or sophomore in high school (hopefully before they become emotionally attached to a school), and only apply to those schools that you can afford. Do not put yourself in the position where your hard-working teen is standing in front of you with her Stanford acceptance letter in her hand, and you are telling her the family just can’t afford it. Further, parents shouldn’t load themselves down with PLUS loans that jeopardize their retirement.

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