7 Ways To Pay For College If You
Did Not Receive Financial Aid… Or
If Your EFC is Too High

Week 10 of 12

You fill out all of the forms, you meet all of the deadlines, and then you wait. You wait to receive your Student Aid Report (SAR). The most important part of your SAR is just beneath the processing date on Part 1. This is where you’ll find your Expected Family Contribution (EFC). This is the amount of money that the financial aid administration believes you can afford to spend on college tuition during the next year. If that number is a string of zeroes, you’ve hit the jackpot: no one expects you to pay anything (although it is important to remember that not all schools will be able to pick up the entire tab for you).

Of course, a zero EFC is fairly rare. Most families find themselves looking at a much larger figure than they think they can afford. The financial aid administration doesn’t just consider your family income when they calculate your contribution; they also factor in any assets you might have and they may expect you to pick up some loans to cover the shortfall. Here’s an important point to remember:

It’s Not As Bad As It Looks!

If you’ve been wondering how on earth you’re going pay such a huge amount of money every year that your child is at college, don’t panic. There are ways. Some of them are fairly complex and may only apply to a small number of families; others are worth looking at regardless of your financial situation. I’ve listed seven very useful methods that you can use below. If you want any more information about any of these—or if you feel that none of these methods apply to your situation—then give my office a call at (908) 857-4200, and we’ll be happy to help. We’ll take a good look at your particular situation and come up with a strategy that works for you.

A college education is the best investment anyone can make. The thousands of dollars you might have to pay over the next few years will generate hundreds of thousands, if not millions, of dollars in extra income for your children over the course of their working lives. For now though, you’re still left with a bill that looks unpayable. It isn’t. Here are seven ways to meet the cost:

Way #1 – Correct Your SAR

The first method is very simple. It’s fairly common for mistakes to sneak into the EFC calculations. In particular, decimal points can end up in the wrong place, giving you a bill ten times higher then necessary! The first thing you should do is check your report carefully. If you do find a mistake, then you can simply correct the mistake and resubmit the form.

People often find that the tax estimates they made when they first completed the form turn out to be different than the amount they end up actually filing. Again, an amended Part II should help correct the error and could cut a few dollars from your contribution. Another common mistake is to overestimate the size of the family income or the value of the family home. If you have underestimated your tax liability, an amended form can have a dramatic effect on your EFC.

Way #2: Choose Your Schools Carefully

One of the first decisions that many parents make when they see the EFC is simply to start looking at cheaper schools. But you might not have to do that for the entire four-year course. If your student is willing to attend a community college for the first year or two, they might be able to transfer to a more expensive institution for the last two or three years. The first couple of years at college mostly consist of general courses that are the same everywhere. Simply attending a cheaper school for four years might not be the best solution for your child.

In fact, a school that looks expensive on paper might still turn out to be the most affordable. Although private colleges tend to have the highest costs, they also have the largest endowments and will actively seek out grants, scholarships and low interest loans to help qualifying students meet the higher tuition costs. A private school could actually end up costing you less than a state school!

Way #3: Benefit From Your Child’s Skills

Every parent is aware that if their child can hoop like Lebron James, they’re going to get a full scholarship to college. But being good at sports isn’t the only way a student’s skills can save money on college expenses. If your child can take Advanced Placement (AP) courses in high school and score 3.0 or higher, many colleges will count those classes towards their degree. A student earning an A or B in AP English for example, might be excused from taking English 101 in their freshman year of college. Some students walk into college with an entire semester worth of credits already in the bag. High school classes are free. Why pay for them at college?

Way #4: Use The Federal Work Study Program

If your child is planning on working while at college—and many students do—either to help meet the cost of going to college or to help fund their social life, then it’s worth looking at the Federal Work Study Program. Unlike other sources of income, the money earned in the Federal Work Study Program will not be counted as “current income” when your EFC is calculated. A few hours a week working in a restaurant could raise your EFC; a few hours a week answering phones in a college office could simply bring in extra income.

And the jobs that your child will find through the Federal Work Study Program are often easier than those they’ll find off campus! They’re usually government subsidized desk jobs that let the student work alongside their professors and teaching assistants. That will help their education, let them study at the same time, and ensure that they have hours that don’t clash with exams and deadlines. A campus job might not suit your child though, and you will want to talk it over with him or her to see if it fits the package you’re trying to build.

Way #5: Look AT NON-Need Based Loans

Every year, thousands of families across America find themselves in exactly the same position as you. As a result, a whole range of different loans have been created for the specific purpose of helping families such as yours find the money they need to pay for their children’s education.

These include Signature Student Loans, Federal Parent Loans for Undergraduate Students (PLUS), EXCEL Loans and revolving lines of credit provided by some banks. There will be a credit test for these loans though, so depending on who is taking the loan, either you or your child will need to have a good credit score in order to qualify.

You can also look at Subsidized Federal Direct Student Loans and the Federal Stafford Loan Program. These are federally subsidized loans designed for families who can show a demonstrated need and come with a number of attractive benefits: in particular, the government agrees to pay the interest on the loan while the student is still in school so that payments only really become due when the child has graduated and is earning a graduate’s salary. The loans are also available in a non-subsidized package in which interest begins building as soon as the loan is taken out.

One of the best methods is to use a special funding concept that I’ve developed. This is particularly good for higher income, higher net worth families who want pay their college costs on a “tax-favored” basis. If you’d like to find out more about this special college funding plan, please call my office at (908) 857-4200.

Strategy #6: Ask The Army

If your child is considering the US military either as a career option, for a few years’ service or even just as a way to contribute to the country, then it’s worth looking at the excellent programs that the military uses to make college funding very easy.

Again, to learn more about the options provided by each of the different branches of the military, you can call my office at (908) 857-4200. We should be able to find a plan that suits your child.

Strategy # 7: Apply For Private Scholarships

In addition to the government loans and subsidies available, a number of private foundations and organizations also provide scholarships and grants to help students pay for college. You can find interest-free and low-interest loans, and even “integrity loans” that you can pay back if you want, but don’t legally have to.

But do not count on private scholarships to pay for college.

Private scholarships are few in number, hard to win and give small awards, often as low as $200. In the best case scenario, you can put a few of these together to help knock your EFC down to a more manageable size, but don’t bank on these awards as being a complete solution to your problem. That’s pretty rare. Also, many scholarships are for one year only.

If you do want to apply for private scholarships, take a look at the various groups and organizations that you belong to: service clubs, civic groups, chambers of commerce, youth clubs, religious and cultural groups or other non-profit institutions and organizations. If your child already knows which major he or she intends to study, you could also ask professional organizations in your area if they have a program for local students: nursing, teaching, engineering and other professions often have professional groups prepared to offer support. Your company might have scholarships available. Ask your personnel department for information.

If your child is a senior, there’s a good chance that the deadlines for most private scholarship will already have passed. That doesn’t mean you shouldn’t apply for the following year or apply to those scholarships that are still open.

If your child is a junior, then this is the time to begin applying for these private scholarships. It’s also worth remembering that this year, the year before your child applies to college, will be your base financial year. Your income, assets and taxes this year will be used to determine your child’s financial aid. This is the time to begin maximizing your chances for getting as much financial aid as possible.

For more information about how to receive maximum aid or learn more about the special funding strategy that I’ve developed which helps some families pay for their college costs on a “tax-favored” basis you can:

1. Call my office at (908) 857-4200 to schedule a FREE Diagnostic Evaluation to look at your family’s financial situation;

2. Or, if you’ve already taken advantage of the FREE evaluation, move forward with a Customized College BluePrint. It’s guaranteed to save you far more than it costs. You can’t go wrong if you call now.

Time flies in the junior and senior year. Your child is already making plans for making that giant step into a new life at college. We’re here to help make sure that you’re ready for it too.

Until next time,

Best wishes,

Ian Welham, CCPS
Certified College Planning Specialist
(908) 857-4200
Email: Ian@CompleteCollegePlanningSolutions.com

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Haven’t read earlier articles in the series?

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Ian R. Welham, Certified College Planning Advisor  -  Tel: 973.467.0101