Make too much for need based aid? There are other ways to save money…

It is true, some parents just make too much money to qualify for need based aid, but there are other strategies that can be used, such as knowing how to increase your tax credit dollars or decrease your income tax paid to the IRS during college years.

This brief video highlights tax saving tips for parents with high school and college aged students.

Maximizing financial aid is not always about saving money for college, but saving on the overall cost of college. Proper planning is key to ensuring your student gets the most aid possible at the college or university of their choice.  If you have questions about planning, contact us or schedule your free consultation today!

**Tips in this video should be discussed with your tax adviser prior to implementing them.

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Which Colleges Provide the Best Financial Aid Packages?

Through this video series we have discussed the difference between saving for college and saving on college.  The most important factor to saving on college is knowing which colleges will provide the best financial aid package for your family’s financial situation.  But you don’t know how much financial aid will be awarded to you until after you apply, are accepted and receive your aid package from the college in the early spring, right?


When planning for college you should know what your EFC will be calculated to be, how much your need will be at each college (remember: Your Need = Cost of College – Your EFC) and what percentage of need each college historically meets.  But you can’t just call up the college and ask how much need they meet, they won’t tell you.   This is a service that a financial planner can provide to help your family save money.  Watch this short video to see how it is done:


Want to know what your EFC will be or how much need a college will meet for you?  Call us today at 866-305-2321 to schedule your Free 1 Hour Consultation or click here to request a meeting.  A college education is one of the biggest investments you will make in your life- make sure you’ve done the legwork to ensure it is a good investment.

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Why do some Middle Class Parents Pay so Little for College?

Many families miss out on thousands in financial aid dollars each year while their children are in college because they believe they will not qualify for aid and do not bother applying.  This is the number one- biggest mistake– any parent could make when sending their student to college.

Yes, it is true that some parents do make too much to qualify for aid, but for many it is simply a matter of planning for college and ensuring your finances are in line before applying for financial aid.

This short video will unlock the secret of why some families pay so little for college, while others (who earn the same) may pay thousands more:

Be sure to check back next week for secret number 2 in this 7 part series: Why High School Financial Aid Nights can be Hazardous to your Wealth. 


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College is a Big Investment

College is expensive and the price keeps going up. The national average cost of attending a four-year public college is over $20,000 per year, and the average cost of attending a four-year private college is now over $42,000. Even the average cost of attending a two-year public college has nearly reached $15,000 per year.

And those are today’s prices. The table to the right projects those costs for future years assuming a 6% annual increase in the total cost of attendance.

Yes, college is a big investment, but fortunately there are strategies to reduce the cost of college and make it more affordable. However, understanding all of the strategies and determining which ones apply to your family’s situation can be quite confusing. College funding involves multiple areas of personal finance such as: taxes, investing, borrowing, cash flow and financial aid. Consequently, college funding requires knowledge of all of these areas and, more importantly, how they affect one another for education funding purposes. For example, when applying for need-based financial aid, you and your child need your tax information from the previous year. A change in your income, the sale of an investment or refinancing a home can all affect your taxes, which in turn can affect your child’s eligibility for need-based financial aid. College funding isn’t merely about financial aid; it’s about your financial life.

Regardless of whether your child qualifies for financial aid or not, your family still needs to figure out how to use your income and assets to come up with your share of the cost of college, an amount that will likely be different from one college to another. So, how are you going to pay for college? Will you rely on your income, assets, student loans and gifts from grandma?  If so, how will that all work?  Will you be eligible to claim one of the education tax benefits?  If so, which one will impact your child’s financial aid eligibility the least?  These kinds of big questions and the vast number of variables and possibilities can make the whole process overwhelming unless you have a knowledgeable advisor that can help eliminate the stress and complexity of it all, and determine what your Best Strategy is.

The basics of what you need to know about paying for college are summarized in the points below.

  • The out-of-pocket cost of college is a function of the sticker price (projected in the table above) of the college, and the total financial aid (need-based and merit) that the student receives to help pay for it


  • Need-based financial aid eligibility is based on the income and assets of the parents and the student.  However, not all assets are counted against the family. Retirement assets and home equity are not included in the federal financial aid formula.


  • It’s free to apply for federal student aid, and you should do it. You get a PIN on the federal aid website, and then your child picks some colleges that she wants the information sent to, you both (parent and child) complete the FAFSA (Free Application for Federal Student Aid) online and the aid processing center will crunch the numbers and arrive at an Expected Family Contribution (EFC) toward the cost of college. A Student Aid Report containing your EFC will be sent to you and to the colleges your child selected. Each school will then compare your EFC to their cost of attendance (COA), and if your EFC is lower than their cost of attendance then the child demonstrates a Need for financial aid.


  • If your child is eligible for need-based financial aid she may be awarded anything from grants and scholarships to student loans and work-study. Yes, loans and work-study are considered “aid.” If your childdoesn’t qualify for need-based aid she might still get merit aid for academic, musical, athletic or other achievements. So there are two types of financial aid: need-based is based on your family’s ability to “pay” and merit is based on your child’s ability to “play.”


  • Unfortunately, before you can pay the out-of-pocket cost of college you have to pay taxes on your income first. Fortunately there is one more form of aid that we haven’t discussed yet – tax aid. You may be able to claim one of the education tax credits (American opportunity Tax Credit, the Hope Tax Credit or the Lifetime Learning Tax Credit) or the tuition and fees deduction, each of which will reduce your federal tax bill if you qualify..


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Hedging Your Investment


Here’s a leading question: Would you rather put your money in something that had a 70% chance of paying off or an investment that had only a 25% chance? Without knowing the four, five and six year graduation rates of the colleges your student is considering, you could be backing a losing horse! You might be awestruck to learn that many parents are sending their children to colleges with a four-year graduation rate of less than 25%.  I’m not going to show you the worst of the worst so let’s assume that your student has an SAT score between 1090 and 1300 Math and Verbal, or an ACT composite score between 24 and 31.  Here are some public and private institutions where they would have a good chance of being accepted and their four and six year graduation rates:When comparing apples to apples you can see that choosing the right college means graduating sooner for less money.  If you wish to discuss graduation rates with admissions, I’ve found it productive to ask what steps your student can take to increase the chances of graduating in four years rather than asking why the four- year rate is low (or low compared to others).  Here are some top reasons why a student might not graduate in four years:

•    Transferring to another college

•    A change of direction or major

•    College not offering enough classes each semester

•    Completing a double major

•    Failing too many classes

•    Artificially raising GPA to keep scholarships by withdrawing from too many classes

•    Low GPA

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