Paying for college is on everyone’s mind and it is one of the main pain points of the college search process for parents. Getting into the right financial mindset is essential for families as they start to navigate finding a college that is the best financial fit. Timing is everything and starting the process earlier rather than later will help families in the long run. We invited Jack Wang to share his financial aid tips and guidance for families.
Three important questions to ponder before a student attends college are :1) What is a family’s EFC?, 2) What can a family actually afford?, and 3) What do parents actually want to pay for college?
Universities allocate financial aid based on income which is determined by a families most recently completed tax return.
The financial aid measuring period begins during the spring of a student’s sophomore year, and it is important not to artificially increase one’s income during this period as that decreases the likelihood of receiving sufficient financial aid.
The financial aid formula may count certain items as income that the IRS does not (ex. capital gains, child support, cashing in an old 401K).
There are differences in the federal and institutional financial aid formulas. Families should review the pros and cons to both methodologies to determine whether the federal or institutional financial aid would benefit them more.
Schools calculate an expected family contribution (EFC), which is what the school thinks a family will be able to afford per year.
Families can always ask for more financial aid, but it is important to have a legitimate reason for the request (ex. someone lost a job, a family member passed away, etc.) or else the school will likely deny additional aid.
Important Resources and Links:
Meet Jack Wang
Jack is a noted expert in helping US-based families with middle to high school age students navigate the complex, stress-inducing financial aid system in order to (1) lower the cost of college, and (2) pay for it efficiently while still being able to maintain their lifestyle. He’s helped hundreds of families and students (including his own two children) navigate financial aid, student loan options, and payment strategies in the context of overall family finances and retirement plans.
He’s been mentioned in publications such as Forbes as well as college planning sites such as College Covered, and was a panelist on an episode of the Money Tree Investing podcast. Additionally, he is a frequent guest and contributor to various other podcasts and online publications. Over 40 times per year, you can also find him speaking to employees of large organizations, such Harvard University, City of Boston, New England Aquarium, New England College of Optometry, Mercer Consulting and Ocean State Job Lot.
Thank you Jack for joining us today. Paying for college is on everyone’s mind. Families can and do need to be strategic, thoughtful and willing to discuss ahead of time what they are not only able to afford but are willing to pay for college. There are different aid formulas families need to be aware of. Creating a college list should take into account FAFSA and CSS profile requirements. Questions to think about are: 1) What is a family’s EFC?, 2) What can a family actually afford?, and 3) What do parents actually want to pay for college?