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Health & Fitness

Class of 2013 - College and How to Pay for it

College funding mistakes and how to avoid the them.

As a leader in college planning and funding I thought I'd share some common college funding mistakes and how to avoid them.

MISTAKE #1: Most middle and upper-middle class parents assume they won’t be eligible for financial aid because they own a home and/or make more than $75,000 per year. 

REALITY: Most families with incomes ranging from $50,000 – $150,000 per year who own homes are eligible for some form of financial aid. There is more than $150 billion available each year from the federal government, the states, colleges and universities, and private foundations and organizations. It’s often a matter of knowing how to get your “fair share.” Unfortunately, most parents give up before they even start – and assume they won’t be eligible. Don’t make this mistake! If you fall into this category, make sure you apply; you’ll probably be eligible for some financial aid. 

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MISTAKE #2: Focusing your time and energy on a private scholarship search instead of spending your time trying to qualify for “need-based” financial aid.  

REALITY: Private scholarships only make up roughly three percent of the money available to you to help pay for your child’s college education. The other 97 percent comes from the federal government, the state you live in, and the colleges and universities your child is applying to. Therefore, you are much better off spending your time and energy going after the 97 percent. That is not to say you shouldn’t pursue private scholarships, but it is vital to recognize where majority of the available financial aid comes from. 

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MISTAKE #3: Assuming only minority students, athletes, and academically gifted students get financial aid.

REALITY: Nothing could be further from the truth! “Need-based” financial aid is solely awarded based on “financial need,” which is calculated by taking the cost of attendance at a school and subtracting the expected family contribution (which is the minimum amount the government feels you can afford to pay based on your income and assets and your child’s income and assets). Whatever is left over after you subtract these two numbers is your “financial need” — or eligibility for financial aid at a particular school. This has nothing to do with a student’s ethnic background, athletic ability, or grades. It’s purely based on this simple formula:

COA (Cost of Attendance) - EFC (Expected Family Contribution) = FN (Financial Need) 

MISTAKE #4: Picking colleges and universities without paying attention to where your student stands in comparison to the rest of the student body. 

REALITY: To increase your chances of getting the best possible financial aid packages, it is imperative that you pick schools where your child lies in the top 25 percent of the incoming freshman class with respect to their GPA and SAT/ACT scores. Although schools give financial aid based on your calculation of “need” at their school, they will definitely give preferential packaging (i.e., more FREE money, fewer loans) to students who lie in the top 25 percent of the incoming class. The reason they do this is to attract the better students to their school. Use this to your advantage and if applicable, try to apply only to those schools where your child would fit into the top 25 percent category.

These are just some mistakes I thought would be of interest. There are many more, which I'll put in a future post. In the mean time, if I can be of any assistance call me at 678-456-4227 and visit my website www.smartcollegefunding.com to watch the two minute video "A Lesson in Paying for College." 

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