“How To Choose Your School And
Keep Your Choice Affordable”

Week 4 of 12

How exciting! Once you filled out all the applications, submitted the FAFSA, completed all of the other forms you will be holding a stack of award letters from a number of different schools. You’ll know exactly where your child could end up studying and you’ll have a good idea of how much it’s going to cost.

Now it’s up to you. You — and your child — will have to decide which school to attend, and which bill to pay.

This is a very important decision. The school your child attends will have a dramatic effect on his or her career options. It will also have a huge impact on your finances. It’s vital that you make the best choice.

Money will certainly play a role in that decision. But it shouldn’t be the only factor — and sometimes the school that looks the cheapest can actually offer the worst aid packages when you read the small print.

Before you make any final decision, read each award letter carefully. You’ll want to be certain that you understand all the information they contain.

The first thing you should notice is the estimate of the school’s total annual expenses. This is a very useful figure. It’s the average amount that a typical student spends on tuition, rent, food, books and social activities. These estimates are usually pretty accurate and they’re updated each year.

But clearly every student is different. If your child eats only organic food, drives an SUV and wants a room to herself, then clearly those figures could be higher. If he or she is going to live and eat at home, the expenses will obviously be much lower. However your child chooses to live, you can use the figures on the award letter as a guide to the true cost of college at that school.

The next amount you should notice is the EFC. You probably know this sum by heart now. It’s the minimum amount that you’ll be expected to pay to the school. You’ll often find that the figure the federal government feels you can afford is often quite different from what you feel you can pay!

Thirdly, you should find a reckoning of your financial need, the gap between the school’s true cost and your EFC. This figure tells you how much the college and the state will pay to help your family manage the college bill. It’s an interesting figure for you, but it’s even more important for the schools. They will use it to estimate the financial aid your child will receive.

Finally, the award letter should also list the scholarships and loans that the school offers to applicants like your child. You should certainly pay attention to the sorts of awards on the offer: whether they’re loans, grants, work/study programs etc. It’s not only the number of the awards available that are important, but also the type of awards that are available.

Once you’ve read all this information carefully on each of the award letters, accept every one of the offers.

You should accept any offer that your child receives, whether you think you can afford it or not. Accepting an offer doesn’t mean that you are obligated to that offer. It just means that you retain the option. It’s also important that you use these offers to negotiate the best package possible.

Anything can happen between now and the time you actually pay the bill: you could get a massive pay raise, win the lottery or discover a way to arrange your assets that frees up the cash you need. That’s certainly possible. If you reject an offer now, it’s gone forever. Make sure that all of your acceptances are sent in before the deadlines — and then begin the process of deciding which school your child should actually attend.

Making Your Choice

Once you’ve sent in your acceptances, you’ll want to sit down and review each of the options very closely.

The first thing that you’ll need to consider here is that money shouldn’t be the only criteria that will sway your decision. The difference between a less expensive school and a more expensive one might be ten thousand dollars or more. But ten thousand dollars could translate into hundreds of thousands of dollars in extra income over a lifetime if your child were to attend a school with a greater reputation or better teachers.

Education is expensive. But it’s always money well spent.

Of course, that doesn’t mean that money won’t play any role in your decision. We’re realistic enough to know that it will. That’s why it’s crucial to make sure that you truly understand exactly what money is available from each of the schools.

School awards come in various forms and some are certainly better than others. Grant money is free money. It doesn’t ever have to be paid back. That makes it a lot more desirable than money from work/study programs (which has to be earned), and loans — even low interest loans or those with deferred payment options.

For example, a school that offers a total of $20,000 in award money could actually be a lot more expensive than a school which offers only $10,000 if all of that money is available as a grant. Before you choose a school with lots of loans, you have to consider the total amount of the interest and the amount of time it will take to pay back those loans.

You’ll also have to consider the real costs of each college. Schools in big cities like New York or Los Angeles are likely to have higher cost of living expenses then those in more rural parts of the country. You will have to add in airfare or travel expenses a few times each year as well. All of these things have to be considered when you’re deciding which school offers the best value for your buck, and which you think you can afford.

For Parents Of Seniors, The End Is In Sight

This is a very exciting time for your family. For months, you’ve been wondering which schools would accept your child and where he or she would finally end up. Now you’re getting a good idea of the options and you can see how much it’s going to cost.

Obviously, we’d be very happy to help you with our professional opinion at this important time. Most importantly, we can also show you some very interesting ways to free up the cash you need and help you pay for college on a tax-favored basis. This method doesn’t work for everyone. If it works for you, it could well be the difference between a mediocre school you know you can afford and a truly great school you only
think you can’t!

For Parents Of Juniors, It’s All About To Start

If you’re the parent of a high school junior, you’ve got your work cut out for you, and this is the time to begin. The right steps now could have a dramatic effect on your EFC, lowering the total amount of money you need to pay for the upcoming four to five years or more.

Why now? Because in financial aid terms, this is the “base year.” The colleges will look at the income that you report at the end of this year to determine the amount that you can pay towards your child’s education.

What you do with your money this year is going to have a huge effect on the money you’ll have in five years’ time. It’s important for you to understand the impact that your income and assets will have on your child’s financial aid future.

With proper planning, we can show you how you can fund your child’s education, pay off your mortgage, continue funding your retirement plan and maintain your current lifestyle—and all on a tax-favored basis.

Most accountants don’t know how to juggle all these things at the same time, especially when you toss in college, but we’d be happy to explain exactly how to do it. You can call my office at (908) 857-4200 to arrange a FREE 1 Hour Diagnostic Evaluation if you haven’t already.

We’ll have plenty more for you next week. Until then…

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

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