The federal formula for assessing how much a family can pay for college is strictly focused on the finances of parent and child. So 529 plans opened by grandparents go uncounted in the federal calculus. In distributing their own aid, however, colleges often look at all 529 plans that name the student as beneficiary. So even if the strategy works for the federal-aid calculation, it won’t necessarily work for the institution’s own aid assessment. – From Wall Street Journal; December 18th, 2006 Here are a couple of lines taken from CSS Profile, Section Q #521) Enter the total value of assets held in Section 529 college savings plans that were established for the student by someone other than the student’s parent(s) #523) Enter the estimated amount that will be withdrawn for the student for the 2017-2018 academic year from Section 529 plans established for the benefit of the student. If you own a 529 Plan, make sure you have a competent college funding advisor examine it BEFORE you apply for financial aid. One last thought: 529 Plans are often funded with mutual funds and ETFs. A lesson learned during the “lost decade” (2001-2010) is that markets are volatile. The S&P   Read more…

There is so much misinformation surrounding the financial aid that is costing eligible families thousands of dollars every year, some of which is grant or discounted college programs. Separating the myth from reality will reveal opportunities to secure college financing that you may not have considered or even known existed. Shockingly, it is estimated that there is as much as $245 billion in total financial aid available, much of which is untapped. So the funds are out there. To secure your piece of the pie you need to calculate your family need. Once you’ve applied and have been accepted to your college of choice, you need to determine the cost of attendance (COA). The COA includes tuition, books, room & board, etc. Then you need to determine your expected family contribution (EFC). The EFC is comprised of parents and student ‘s earned income, assets, ages, the number of children in school, etc. Then you subtract the EFC from the COA and the result is the aid your family is eligible for. The four main sources for college financial aid are the federal and state government as well as college (university) and private sources. The first step is to apply. No   Read more…

There’s an old adage in college planning: You can always go to a cheaper school or skip college altogether. But if those two scenarios are not on your radar, then you need to explore three basic money resources: Savings, Cash Flow and Borrowing. Yesterday’s Money: Savings Excluding emergency accounts, most parents have some short-term monies, retirement accounts and home equity they can access. It may not be the best use of the money, especially borrowing from a 401(k), but if there’s no appetite for student loans and other forms of grant money, then that’s where the money is. Keep in mind that some households have assets that they can sell to generate money, so a thorough inventory of personal property could yield some undiscovered assets. Today’s Money: Cash Flow It’s stunning to realize that most Americans operate their finances without a budget. They don’t even have a handle on their monthly cash flow. But if you create a budget, you’ll be able to review your cash flow, i.e. money left over after essential and discretionary spending. Discretionary spending may be curtailed while the children are in school to free up cash flow for college payments. Downsizing your lifestyle to create   Read more…

Four years of college can cost anywhere from $80,000 to $200,000 for one child. Most families are having at least two children so the expenses may double. The average cost of college continues to grow at 7 to 8%, so the numbers are big and always seems to be getting bigger. There are some creative ways to mitigate student debt, which is at an alarming 1.2 trillion dollars in the U.S. Some high schools have partnered with junior colleges to support associate degrees at no cost to mom and dad. So in affect they are graduating from high school and receiving an associate’s degree at the same time at no additional expense. That’s two years of savings on tuition, room and board! Some students enter the military ROTC programs in college or enlist immediately out of college into the service. The government has programs for both scenarios that can greatly reduce college costs. Some students stay home for their first two years and go to their local community college while working a part time job, resulting in a low cost option for those two years. If your child chooses this option he must be sure the community college credits are   Read more…