White teen with braces smiling at older parents on laptop doing family finances

4 Tips for Families to Maximize College Affordability

For families looking for ways to cut college costs, it's important to think outside the box. Here, an expert on college affordability shares his strategies.

As we approach the end of the year, there are a series of events that many college-bound students and their parents will face. This can be a very stressful time for many, and the best college decision needs to include a proper analysis of academic programs, campus environment, and financial aid. The increased cost of college has made the issue of college affordability a growing concern for many families. At the same time, paying for a college education has become more complex. It is one of the most complicated financial decisions parents and students will make in their lifetime.

To lower a family’s cost of education, you need to bring together the financial aid process, merit aid opportunities, college saving plans, education tax strategies, various financing options, and student loan repayment. Due to increased complexity, college financial aid offices are legally unable to answer some of the questions a family may have about maximizing their financial resources. So here are a few strategies that may help you avoid costly mistakes and make college more affordable.

1. Think beyond your EFC

Your Expected Family Contribution (EFC) is an important number for creating a college funding strategy. Many parents forfeit other cost-saving opportunities because they don’t understand the details of their EFC, but a broader financial view will help them identify other college-saving opportunities that would contradict the normal EFC theories. For example, taking all the assets out of the child’s name is not always a good recommendation. Depending on the parent’s part of the EFC calculation and the cost of each school, a family may not want to liquidate the student’s assets. If the parent’s part of the EFC calculation is higher than the cost of the college, removing the asset will have a zero impact on their financial aid position. This decision has both legal and tax consequences, and parents need to plan for the liquidation since it is legally the child’s money.

Related: What Does Need-Blind Really Mean With Financial Aid?

2. Know that timing is critical

The school’s financial deadlines are important, but there are three major timing issues in the college affordability process: financial aid positioning, family timeline, and FAFSA submission.

Financial aid positioning

When the school year and tax year do not match, it can be a very confusing issue for many families going through the financial aid planning process. The best time to review a family’s financial aid position is when the student is in their second semester of sophomore year of high school and first semester of junior year. This is the last tax year before the financial information is used to complete the FAFSA.

Family timeline

If the family has multiple children, college affordability issues can be more important. By creating a family timeline, you can see how having multiple children in college will affect your financial aid position. By matching this with the various colleges’ gifting policies, a more expensive college may become affordable due to the change in a student’s financial need. This is another reason to create a four-year plan. Proper planning for the financial outcome of the education is often overlooked in the college planning and decision process.

FAFSA submission

The last timing concern is the FAFSA submission process. With the FAFSA/IRS verification process, colleges can verify financial information much more easily. By late February, entering freshman and transfer students should try to have a final FAFSA submitted with actual tax information. This minimizes the family’s risk of the financial award letter changing after the verification process. Parents should be aware of this risk early on so that they can properly plan for the FAFSA submission.

3. Consider your family structure

For families where there is a divorce or separation, having the student on the correct tax return is important. The student should be on the tax return of the parent who is submitting the financial aid forms. Now that the FAFSA form and the IRS information are linked, colleges are better equipped to find inconsistencies in the financial aid forms. It is also important for the parents to have different addresses if they are separated or divorced. There’s still an area of uncertainty for non-traditional families. Since the financial aid process is highly dependent on the IRS system, financial aid submission will vary based on the state such families live in.

4. Maximize your family’s resources

The increased cost of education has created a need for a variety of financial strategies that can help families find better ways to pay for college. These strategies vary by family and depend on their financial strength and the colleges the student is considering. For middle- and upper-income families, these strategies can generate the most benefit since they are expected to pay the most for college.

Related: How to Pay for College When Your 529 Plan Takes a Hit

The financial aid process can seem overwhelming for college-bound students and their families. But with proper planning using tax strategies, college savings plans, and various financing options, you can save thousands of dollars per year. That's worth it, don't you think?

Visit our Financial Aid section to learn about other college funding strategies, and use our Scholarship Search tool to help your student find free money for college. 

Like what you’re reading?

Join the CollegeXpress community! Create a free account and we’ll notify you about new articles, scholarship deadlines, and more.

Join Now

Tags:

About Fred Amrein

Fred Amrein is the founder of Amrein Financial and PayForEd, a suite of software solutions that helps employers, financial advisors, and individuals navigate student loan and repayment decisions. He earned a Bachelor of Science with dual majors in Accounting and Marketing as well as an MBA in Finance from Saint Joseph’s University in Philadelphia. Fred attained the Chartered Financial Consultant (ChFC) designation from the American College of Financial Services. He is also the author of the book Financial Aid and Beyond: Secrets to College Affordability.

 

Join our community of
over 5 million students!

CollegeXpress has everything you need to simplify your college search, get connected to schools, and find your perfect fit.

Join CollegeXpress

College Quick Connect

Swipe right to request information.
Swipe left if you're not interested.

SUNY Oneonta

Oneonta, NY


Rana Slosberg

Rana Slosberg

Slosberg College Solutions LLC

My favorite part of CollegeXpress is the 800+ lists which have all kinds of hard-to-find information. These lists are helpful when I’m creating college lists, and I also use them to give students a feel for a particular college or university.

Melanie Kajy

Melanie Kajy

High School Class of 2021

CollegeXpress has helped me tremendously during my senior year of high school. I started off using the college search to find more information about the universities I was interested in. Just this tool alone gave me so much information about a particular school. It was my one-stop shop to learn about college. I was able to find information about college tuition, school rank, majors, and so much more that I can't list it all. The college search tool has helped me narrow down which college I want to attend, and it made a stressful process surprisingly not so stressful. I then moved to the scholarship search tool to find scholarships to apply for because I can't afford to pay for tuition myself. The search tool helped me find scholarships that I was eligible for. The tool gave me all the information I could ever need about a particular scholarship that was being offered. The CollegeXpress scholarship search tool is so much better than other tools offered, like the Chegg scholarship search. Thanks to CollegeXpress, I was able to apply to tons of scholarships in a relatively easy way!

Courtney Smith

Courtney Smith

High School Class of 2022

CollegeXpress has been a huge help! The website is very organized with finding the right scholarship for anyone and anything. With CollegeXpress, I've been able to find many scholarship opportunities to apply for. Not only that, I'm also able to search for the colleges I have interest in and see what’s required and what scholarships they offer. I've learned a lot from CollegeXpress. They've helped me in many ways to achieve my goals!

Jessica Rinker

Jessica Rinker

Student, Fairhaven High School; CollegeXpress Student Writer

My high school counselor introduced me to CollegeXpress freshman year. It has made such a difference in high school, and I plan to continue relying on it in college. CollegeXpress is my go-to because it addresses each aspect of being a student. There are the articles you’d expect regarding college applications and financial aid, but you will also find advice on things like de-stressing and maintaining relationships while balancing a heavy course load. CollegeXpress will also keep you updated on current scholarships through e-mails each Saturday. (They don’t harass you with any product promotion like so many other sites do.) CollegeXpress is a lot like an older sibling who has already conquered the challenges you are facing. Now, they are reaching out a helpful hand. I say take it.

Damian Rangel

Damian Rangel

September 2021 Mini Scholarship Winner, High School Class of 2022

CollegeXpress has helped me tackle college expenses, which will allow me to put more of my time and effort into my studies without the need of worrying as much about finances.