By Sonia K. Wagner, Executive Director
SoMD CAN / College Access Network
Anxiety is up, the financial market is down, and for some of us on the brink of sending a child to college – well, stressed is the one word that can sum it all up.
Having been in the Financial Aid field for the past 18 years, I have found it challenging this past year to guide parents and students onto a best course of action for financing their college education.
The question we should be answering from the early stages of knowing that your child is college-bound is “how much am I going to be responsible for?” That early stage could be as early as elementary school or even the beginning of senior year. Hopefully, you are catching this earlier rather than later.
The key acronym to introduce here is “EFC”, the expected family contribution. The EFC is the dollar amount that the U.S. Department of Education expects the family – the parents and the student – to be able to contribute toward the cost of education at any higher education institution. The EFC is derived from the calculation called the Federal Methodology, which is computed when a family files the FAFSA (Free Application for Federal Student Aid) during the student’s senior year of high school and each subsequent year engaged in higher education.
There are several free calculation websites out roaming the vast plains of the wild, wild web, but the one this author most often recommends is the www.finaid.org calculator for estimated EFC. I like this calculator the best because no information is stored and you can play around with income and asset scenarios without obligating yourself to stored data – such as at www.fafsa4caster.ed.gov . Although the latter website is useful if you are calculating your EFC for a student who is a high school senior, I’m just not comfortable with having my social security #’s and all my previous year’s tax information held in cyberspace! The usefulness of the fafsa4caster site is that the information will subsequently be downloaded into your FAFSA when you initiate that process.
Why is it a good idea to get an early read on your expected family contribution? Because you then have an idea of what the US Dept of Ed is going to expect you to pay for education whether that is at a community college or at an Ivy League institution. Each college has a budget for their cost of attendance, which is going to include tuition and fees, room and board, books and supplies, transportation expenses, and personal expenses.
When your budding genius is still in diapers you can calculate what is expected from you and what is going to be offered to you from that Ivy League college you have your eye on. It’s really not as cut and dry as that, but determining your EFC early does give you a clear indication of what you should be saving for college.
There’s a simple formula, not without its own perils, that can give you an idea of your “financial need” at a particular institution. COA (cost of attendance) – EFC (expected family contribution) = Unmet Need (or financial need). So, if you have gone through an estimated EFC calculator and your estimated EFC is calculated at 24750 (the estimated EFC will not show you dollar signs or have commas – I think this is to throw you off and not give you arrhythmia) and you have two colleges in mind, you have the numbers you need to make an estimate of what your financial need at those two institutions is going to be. Example, Community College A has a COA of approximately $8,900 and Elite College B has a COA of approximately $47,500, with your estimated EFC of $24,750 you can expect a negative financial need at Community College A and an unmet financial need of $22,750 at Elite College B. Depending on the financial aid packaging policies at Elite College B, you may receive a hearty amount of grant monies and most definitely offered student loans.
Knowing how to interpret your contribution, the costs at the colleges of interest, and the financial aid packaging policies at said institutions is a valuable piece of knowledge. It may not increase your odds of receiving higher aid awards, but it can increase your ability to make sound decisions regarding the foundation of colleges you and your student put together.
Next installment will be College 101: Part III: Is There Any Financial Aid Out There?