College Finances: Why It's Not Too Late to Plan for College

Families know they should plan for their children’s college education. They know it’s going to cost them a significant sum, and most realize this significant sum could largely impact their future financial plans and goals.

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Still, many families find planning for college a stressful experience. For many, it can be an overwhelming burden, thinking of the hundreds of thousands of dollars that this process can require. This often results in families feeling anxious and, in some cases, essentially throwing up their hands and saying it will be what it will be.

As is usually the case when it comes to planning, the earlier you get started, the better. However, this doesn’t mean that once your child reaches a certain age it’s too late to do anything. Perhaps it can be too late to put money into a college savings vehicle, but don’t despair—there are other ways families can strategically plan to put themselves in the best position when applying for financial aid.

This is the case not only for families with children in middle school, but also for those with children in high school. In fact, you can make changes that will improve your financial aid eligibility all the way up to the point when you must complete your FAFSA (Free Application for Federal Student Aid) and/or CSS Profile (College Scholarship Service Profile), which is in your student’s senior year of high school.

Again, while it’s always preferable to begin the planning process as early as possible, this doesn’t preclude planning even when your child is in high school.

Here are some points to consider on college financial planning: 

Don’t be fooled by the sticker price.

It’s well known that the cost of college has skyrocketed over the past decade or so. It’s not uncommon to see schools with yearly price tags in the $50,000 to $60,000 range. Unfortunately, these daunting price tags often lead families to rule out schools that would otherwise be a great fit socially and academically. Families then turn to less expensive state and public schools with yearly prices in the seemingly more reasonable $20,000 to $30,000 range.

I will preface the next few sentences by saying that I never encourage families to take on something that doesn’t make sense for them financially. I don’t believe everyone can afford to pay $60,000 or even $20,000 out of pocket annually, and I also don’t believe it makes sense in all cases for students and families to take out tens of thousands of dollars in loans to finance the college experience.

That being said, I hate to see families rule out schools simply based on the sticker price. If you think that everyone attending an expensive private school comes from a family with the ability to pay the full tuition out of pocket, you’re wrong. What is important to know is that more expensive schools tend to have resources available in the form of merit- and need-based aid, while public and state schools do not have these same resources available. For this reason, it is not uncommon to see the actual out-of-pocket expense and eventual cost of public and private schools being nearly equal.

Know what is impacting your financial aid eligibility.

Again, after a point families may not be able to catch up with their college savings. If you have a junior in high school and you’re just beginning to save for college, there is only so much you can put away for the pending cost. However, there are still opportunities for you to organize your finances to maximize your financial aid eligibility, all the way up to the point of filling out the FAFSA and/or CSS Profile.

In order to learn more about these opportunities, it is a good idea to meet with a professional who is knowledgeable about what impacts your financial aid eligibility and what doesn’t. There are programs and specialists that can walk you through financial aid forms such as the FAFSA and CSS Profile in order to show you how your expected family contribution, known as EFC, is determined. From that point families often have options and can be presented ways in which they can maximize their financial aid eligibility.

This service differs from working with someone in the financial services industry who can help you shelter money by moving it from one place to the other, oftentimes resulting in money invested in a new financial vehicle that provides the individual commission. What I am referring to is working with someone who knows the ins and outs of financial aid and can review your individual situation to let you know what is impacting your financial aid eligibility.

Planning is required even if you don’t qualify for financial aid.

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I meet with a lot of families who do not believe they will qualify for financial aid. In some cases they are correct. However, they won’t know that for sure unless they go through the process of determining their EFC. While some of these families don’t qualify for state or federal grant programs, they are often surprised to find that they do qualify for some portion of need-based aid extended by private schools.

All incoming freshman qualify for financial aid. While this aid may not be in the form of need-based grants or merit-based scholarships that don’t need to be paid back, there is aid available simply for completing the FAFSA: direct student loans. This program isn’t something that everyone is aware of. You can check out my blog to learn more about direct student loans.

Even if parents or grandparents are planning to pay for college costs out of pocket or through other means, it is important to speak with financial professionals who can help guide you through the pros and cons when it comes to the potential impact on retirement and the opportunities for tax savings.

In sum, know that until you are filling out the FAFSA or CSS Profile, it is not too late for college planning. Know that there are resources available to help you navigate this process.

Related Articles: 

5 Simple Tips for Negotiating Financial Aid Packages

5 Steps to Navigate College Savings and Financial Aid

About the Author: Blaine Blontz is the founder of Financial Aid Coach, http://financialaidcoach.com/. He is located in the Philadelphia area, but he also works remotely with families across the country.

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