Valuable Tips For Funding Your Child’s College Career – From Year To Year (Part 2)
In Segment two of this post, we will discuss the 3 Tips for the last year of high school. So without further ado, here are your tips.
SEGMENT TWO: Three Tips For The Last Year Of High School
Tip #1: THIS Is Your “Base Financial Year…” Craft It Wisely
This is an almost overwhelming year with regard to the reams of forms and applications you will need to fill out over the coming months. These forms are crucial because colleges will use them to review your income and assets as they determine the makeup of your college financial package. In short… your Base Financial Year starts NOW. If your child will graduate and begin college in 2008, know that your 2007 figures will be the ones that make the difference. This means that there are consequences to all your financial changes this year. Any purchases, such as a new car or home, new business expenses, pay raises, or changes to your asset portfolio will have an effect on the funds that your student can receive as part of their “need-based” aid package.
Obviously, then, families need to thoughtfully consider any financial move this year. However, that knowledge should not paralyze you when it comes to financial matters! We recommend that you arrange your finances so that you minimize out-of-pocket college expenses. If done correctly, the structure of your tax plan, placement your assets, and planning of your savings can all collectively boost your child’s education fund.
Tip #2: Start Your Student Thinking About College Options
For many high school juniors, college is a rather distant concept obscured by the present reality of the upcoming senior year! Still, this is the ideal time for students to start thinking about different colleges. Parents can request school catalogs and applications to introduce juniors to various campuses, and some families use vacations and other trips to visit schools of interest in a particular geographic area. Students who become interested early in a certain school may also find extra motivation to maximize their academic performance during their senior year.
In order to improve the odds of being accepted to at least one school, we recommend that students apply to six or seven colleges and universities. Receiving acceptance letters not only boosts your child’s confidence, but multiple offers can give the family additional options in negotiating with schools over aid packages! Certainly, the more options you have, the better.
Tip #3: Tell Your Own Future… Predict Your EFC
As mentioned above, your Expected Family Contribution (EFC) is the amount that the federal government expects you to pay for your child’s education. Regardless of where your child attends college, the EFC amount remains the same. Now, there are two ways in which the EFC is calculated; Federal Methodology and Institutional Methodology. Interestingly enough, not all schools utilize the same method for calculating this important number!
The Federal Methodology is used by most state schools, while the Institutional Methodology is usually used by private institutions. The systems are not the same… the Institutional Methodology is based on assets not included in the other system, like the value of your home. However, it also considers expenses that the Federal Methodology will not. Although these two calculation systems can be detailed and somewhat complicated, understanding them can literally mean thousands of dollars toward your child’s education.
Now, please remember that even people with higher incomes can find it a challenge pay their EFC. For many of these families, our “tax-favored” strategies can make a huge difference! If you would like to find out more about these plans, please take a look at our College Funding Guide.
