Families constantly ask me, what should we be doing now, what do we have to do next month, what about after that?
This is the time to get a head start on tackling those challenges. If your child will start as a high school senior in September, then the coming year will be filled with college applications and visits as well as all the financial aid paperwork. You’re going to have to meet with a Certified College Expert, complete the forms and do everything you can to help your child get into a great school—and at a price you can afford.
If your child is now enjoying his or her last summer before heading off to college, then remember that you’ve still got some big tuition fees to pay—and that all the things that you already did this year to lower your Expected Family Contribution (EFC), you’ll have to do again in the coming year.
Your financial aid forms must be submitted each year your child is in college!
Now, you don’t have to do anything right now. You can just kick back and enjoy the summer. It will give you more work to do later on, it could mean that you miss some of the funds available or it might lead the colleges to believe that you can pay more than you’d like. But it’s up to you.
Of course, there’s an alternative. You and your child can get ready to get the ball rolling, giving yourself a much easier application process and improving the chances that you’ll get the maximum amount of financial help.
Here are three things that you can do now to help your child win acceptance to the right college—and a generous funding program:
1. Build Your “Base Financial Year”
Of all the figures that are going to be important to you this year, none will be more important than your Expected Family Contribution (EFC). It’s going to be more important to you than the size of your tax rebate, the interest on your mortgage and even the fluctuations in the price of gas.
Your EFC is the amount that you will likely have to pay that year for your child’s college education. The financial aid administration calculates your EFC based on your income, but they may also factor in the value of your home and will definitely factor in any savings, investments and assets in your portfolio.
They want to make sure that if you can afford to pay for college yourself, you will.
Of course, just because the financial aid administration thinks you can afford to pay x amount of money for college doesn’t mean that you’ll agree with them. You might not consider your retirement fund or the value of your home as relevant to your child’s college education. That won’t help you. If your child is attending a private school, they can still be factored into your EFC and could give you a figure that’s much higher than you think you can afford to pay out of your income.
The only way to be certain that your EFC is even close to a realistically affordable amount is to prepare your finances carefully. No one sends off their tax returns without careful thought and consultation with an accountant. No one should enter their base financial year without talking to an experienced college funding advisor.
There’s no better time to do that than now, before you start filling in the forms and before the start of the new academic year.
If you can complete all your financial preparations this month, the next year will be much easier—and your child’s college years will be a great deal cheaper!
2. Find An Easier Way To Pay Your EFC
Talking to a certified college expert like myself could help you to minimize your EFC. But that doesn’t mean it will be zero or an amount that you think is at all affordable.
Often, it will be expected that you will take a loan or change the way you live in order to fund your child’s college expenses. You might be prepared to do both. You could take out a loan from the bank or raid your retirement plan, if that’s what you want to do. But these “solutions” can just create more problems in the future. There are less painful ways to find the extra cash.
One of the best ways to raise the extra money might be to take out a home equity loan. In contrast to taking a conventional loan or tapping your retirement funds, home equity loans are often tax-deductible and penalty-free. It might also be an efficient way to counter the attention the financial aid authorities will have paid to your house value.
Now, this method doesn’t work for everyone, and you should meet with a qualified College Funding Representative to make sure that it is right for you. Your advisor will tell whether you qualify and also which programs and loan packages are best suited for your needs.
3. Encourage Your Children To Study
Arranging your finances and looking into using home equity as a tax-preferred method of paying college fees are all important ways to make the next year easier, financially speaking.
But it’s not just up to you to make all the correct moves this summer. Remember that your children will be the ones who benefit the most from a spot at a good school and they can start doing their part to pay for it now.
That doesn’t mean they have to raid their piggy banks. But it does mean that they should hit the books.
The higher the grades that your child receives in his or her last year at high school, the better the choice of college they’ll have. That’s clear. But they won’t just get offers from better schools; they’ll also get offers of better award packages from those schools.
All colleges want the best and brightest students they can find. A student who gets high grades and builds an outstanding career brings glory—and donations—to his or her alma mater. They encourage other smart students to apply and that helps the college meet its goals.
That’s why colleges are prepared to offer grants, scholarships, loans and all sorts of aid to the smartest applicants. If your child can earn high grades in his or her final year at school, you’ll be rewarded with better aid packages. In fact, you could even find yourself with more than one college bidding to give your child a place.
I’m not saying that your child shouldn’t make the most of the summer sun before heading off to college or starting the final year at school. But he or she shouldn’t completely abandon the books.
There are lots of summer tutoring options available and these can be very helpful for those areas where your child needs the most help. Try to get a head start on next year’s syllabus and all those exams and tests will look much less frightening.
You and your child can relax this summer and enjoy the heat or you can use these weeks to prepare for the college process. One thing’s for sure: once the academic year begins, you’ll find it much harder to find the time to review your finances or help your child study harder.