The title of this post may sound like an oxymoron, but in reality, there are circumstances in which the more affluent members of our society may qualify for need-based scholarships. Many parents assume they earn too much money and pay the “sticker price” for the best school their student can gain admittance. I’m here to tell you that college is priced like airline tickets and cars, very few pay the exact same amount as their classmates for the exact same education. Oh, and if you don’t consider yourself financially wealthy, the following tips still apply to you. Let’s explore how you may be able to cut the cost of college.

Know Your EFC
EFC is an acronym that may be new to your vocabulary. It stands for Effective Family Contribution which is the minimum amount you are expected to pay for one year of your student’s higher education. The calculation is simple math but knowing what is considered in the calculation is the key. The EFC can range from $0, no ability to pay even $1, to infinity, 100% pay out of your own pocket.

To calculate your Effective Family Contribution, go to the EFC calculator on the College Board website at https:// bigfuture.collegeboard.org/pay-for-college/paying- your-share/expected-family-contribution-calculator. Before completing the calculator, you will need to gather the most recent income tax return, non-retirement investment account statements and savings account balances for both you and your student. Employer retirement plan accounts, IRA, Roth IRA and other retirement fund accounts are not included in the calculation of your EFC.

The EFC calculator will compute two results; the Federal EFC and the Institutional EFC. The Federal EFC is linked to the Free Application for Federal Student Aid (FAFSA) that must be completed to receive any need-based aid. The Institutional EFC is linked to the CSS/Financial Aid Profile used by some of the more elite, mostly private, schools to determine to whom they will award their dollars. Once you know your EFC, you will have a basic idea of what you will be expected to pay at the universities on your student’s short list.

Understand Your Eligibility
Don’t assume that because you earn “too much”, or your net worth is “too high”, that your student will not qualify for need-based financial aid. Need is relative to cost. Based on income, you may not be eligible for financial aid at your state university, but you may be eligible at an elite private university due to the higher tuition cost. The example below illustrates the first-year cost for a Kansas resident Freshman to pursue a Business degree at the University of Kansas as compared to Harvard and their financial aid need at each school. In each case, the family is expected to contribute the same amount towards their students’ education costs.

Example 1:
Cost of 1 Year at Kansas University: $24,364
EFC                                  -35,000
Need $ 0

Cost of 1 Year at Harvard: $67,580
EFC – 35,000
Need $32,580

If you have more than one child attending college at the same time, your need will be greater than a family with identical income and only one child in college. The aid formulas are much more generous when siblings are attending college simultaneously. Generally speaking, private universities are more generous with financial aid than public universities. However, they may determine your student’s need, then offer an award with merit factored in.

Know When to Say No
Sometimes parents need to remember to be parents, and not be their child’s buddy. It’s easy to get caught up in the dream of your child being a Harvard grad, or grad of any other prestigious university. The reality is that a particular school may not be the best fit for your student and you may not be able to afford it. Before getting caught up in the dream and getting your child’s hopes up, run the net price calculator for the universities your family is considering.

The Net Price Calculator (NPC) estimates the net price for your student to attend their school, including possible scholarships and need-based aid that might be available to you. The NPC can be found on each school’s website, although it may be buried somewhere on the site. It is federally mandated that each school make the net price calculator available. However, don’t rely on the federal government’s calculator, or any other calculator that does not take into consideration the student’s major test scores and your assets. Without that information, you will not get an accurate estimate. If you run the numbers and find that there is absolutely no way you would be comfortable paying the net price of a school, then be the parent and tell your child they need to find a less expensive school. The amount that you spend on college is directly correlated to what you can spend in retirement. Don’t sacrifice your financial well-being to appease your child. If your student has their heart set on an elite school, consider them attending a public in-state university for their undergraduate degree, then applying to the elite school for their graduate studies.

You need to take into account many other factors in addition to tuition cost. You know your child’s personality probably better than anyone else in the world. Use that knowledge to help your student make a short list of schools they should consider. For example, if your child isn’t comfortable in large crowds, or is afraid to speak up in front of a large group of people, they may be better suited for a university with small class sizes. Help them find the school in which they will be most successful.

Do Your Research
There’s a reason the affluent are affluent – we do our due diligence! In your business, you wouldn’t make a major purchase without copious amounts of research behind your final decision. Whether you’re a C-level executive or an entrepreneur, you will read everything you can find, hire consultants to advise you, and delegate research duties to your staff.

The same process applies in your household when deciding which college your child should attend. Read every blog, book and article you can find about the college funding process and the schools in which your family is collectively interested. Assign research duties to your student and ask them to report the data they collect on tuition costs, ancillary expenses like travel to and from the university, campus organizations they may want to join, graduation rates, etc.

To ensure it is a sound financial decision for your family, hire a Certified Financial Planner™ Professional that is an expert in the college funding process. There are a few of us across the country, and many of us will work with you through virtual meetings making location insignificant. Even if you have a CFP® Professional that you’ve been working with for years, this is a case where hiring a ‘specialist is important. Would you expect your Family Physician to perform an intricate brain surgery if you had a brain tumor? No, you would consult a Neurosurgeon to treat that specific problem, while retaining the relationship with your Family Physician for your general health needs. Your two physicians would collaborate on your case and communicate key information to each other and you. It is the same with college planning. Consult with a CFP® Professional who serves the College Planning niche to ensure you’re receiving all of the information that you need.

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