ABCs of finance

The ABC’s Of College And Finances

September 3, 2021

It’s that exciting time of year!  Parents of incoming 12th graders will soon become immersed in all things related to applying for college!  And while many like to focus on the fun and excitement associated with applying to college, it’s critically important to not neglect a review of college costs and the financial aid process.

You do not need to necessarily have thousands upon thousands of dollars in the bank for your child to receive a college education but you do need to have an understanding about various colleges, their costs and affordability.  And it’s important for every family, regardless of income and assets, to apply for financial aid.  The reasons are many…

  1. For your family to be considered for need based financial aid, you must complete and submit the federal financial aid form commonly known as FAFSA.
  2. For your student to be considered for merit scholarships, many colleges still want to see the FAFSA application on file with the school.
  3. Work/Study is also applied for through the FAFSA application.
  4. If there should be a future major change in your household finances, perhaps due to job loss or something other, it is recommended to have a FAFSA already on file with the college so that they might be able to review your situation immediately.

Both financial need based grants and/or merit based scholarships may be available to your child!  The key is to be strategic with which colleges your child applies to in order to maximize the various kinds of financial aid that is available.  That’s why planning for college finances, in advance of applying to colleges, is so important.

During the process of planning for college, you will likely come across tons of acronyms: FAFSA, SAR, COA. While reading these for the first time can feel overwhelming, it is important to get comfortable with these terms.  Below is a primer so that you and your child can begin the process of selecting colleges to apply to while you both also prepare financially for college expenses. 

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1. FAFSA – FAFSA stands for Free Application for Federal Student Aid. The FAFSA is the application students fill out in order to determine their financial aid eligibility.  FAFSA needs to be submitted each academic year.  (This form becomes available to the public on October 1.)

2. CSS Profile – The CSS/Financial Aid Profile (often written as CSS Profile), short for the College Scholarship Service PROFILE, is an application distributed by the College Board in the United States allowing college students to apply for financial aid.  The CSS Profile is used primarily by some (not all) private universities.  Some of the same information is needed for FAFSA but the CSS Profile additionally asks many more questions.

3. TAP – The NYS Tuition Assistance Program (TAP) helps eligible New York residents pay tuition at approved schools within New York State. Depending on the academic year in which you begin study, an annual TAP award can be up to $5,165. Because TAP is a grant, it does not have to be paid back.  (Some other states also offer similar programs.) 

4. EFC – One of the most important acronyms you’ll need to know is EFC, which stands for Expected Family Contribution.The financial aid staff at each college starts by deciding upon your cost of attendance (COA) at that school. They then consider your Expected Family Contribution (EFC) based off of your FAFSA. They subtract your EFC from your COA to determine the amount of your financial need and therefore how much need-based aid you should qualify for.

5. SAR – Student Aid Report.  After you submit FAFSA, you will receive your Student Aid Report (SAR). The SAR summarizes the information you provided on the FAFSA, and indicates the Expected Family Contribution (EFC).

6. COA – The financial aid staff starts by deciding upon your cost of attendance (COA) at that school. They then consider your Expected Family Contribution (EFC).  A college’s cost of attendance (COA) is the total direct and indirect costs of a year of college. The cost of attendance may also be called the student budget or the sticker price. Direct costs are costs that are paid directly to the college, such as tuition and fees.  What’s Included in the COA? As dictated by Congress, the COA is the average cost to attend for one academic year (fall through spring). It includes tuition and fees, books and supplies, room and board, transportation, and personal expenses. Colleges adjust the COA yearly to reflect changes to these costs.

7. NPC – Net Price Calculator. Net Price is the amount that a student pays to attend an institution in a single academic year AFTER subtracting scholarships and grants the student receives. Scholarships and grants are forms of financial aid that a student does not have to pay back.  A Net Price Calculator should be available on every school’s website.

8. ED – If your child applies Early Decision to a school, those plans are binding — a student who is accepted as an ED applicant must attend that specific college unless there is true financial hardship that is acknowledged by the academic institution.

9. EA – Early Action plans, however, are non binding — students receive an early response to their application but do not have to commit to the college until the normal reply date of May 1.

10. RD – Regular Decision is the normal process by which students apply to the colleges of their choosing by published deadlines, with the promise of receiving an admissions decision no later than April 1 of their senior year.on is the normal process by which students apply to the colleges of their choosing by published deadlines, with the promise of receiving an admissions decision no later than April 1 of their senior year.

At College Financial Prep, as both financial aid pros as well as experienced parents, we understand the many emotions as well as the overwhelm of planning for our children to attend college.  We pride ourselves on helping parents and students navigate this crazy maze towards college with a focus on financial aid, college list development, scholarships, student loans, divorce and college, negotiations and appeals! Now, with a better understanding of the lingo and the importance of considering financial aid early on in the college process, you will be able to make better, more financially informed decisions.

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Vicki Vollweiler, Author

Vicki Vollweiler, MBA, CDC is the founder of both College Financial Prep and Preparing4College. She is a divorced mom of two children, one of whom is now a Graduate student. She is a proud member of such organizations including Females & Finance, The National Association of Divorced Professionals and the NYS Financial Aid Association. For more information on strategically planning for and applying to college to maximize merit and/or need based aid and scholarships, financial aid form preparation, student loans and more, contact College Financial Prep today at 516-225-5224. We look forward to sharing in your family’s success

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