College Financial Aid 101 – A Primer

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You can run but you can not hide. It is time to face the (college) Finance. I promise it’s not as gruesome as you fear … The principles are based financial aid is surprisingly simple:

COA – EFC = Need

looks simple, now the English translation, and this is where it gets a bit more complicated.

COA = Cost of Attendance, or what it costs to go to a particular school. COA has two main parts, hard costs and soft costs.

Hard costs + Soft costs = Cost of Attendance (COA)

The hard costs are fixed expenses such as tuition, fees, room and board (or T, F, R, B). You can look at almost home Each school (or the complete collections of college golf information as collegeboard.com) and find these hard costs in mere minutes.

soft costs are other expenses you will have to bear but that varies from student to student. These items include books, supplies, travel, and personal expenses. Because these amounts are very different, choose a school average amount to use. Although you may have to dig and find this information on the web, you can not know it without asking for it separately. Many schools use the model in the $ 1500- $ 2000 neighborhood. Do not rush to do this, however, it may or may not be necessary for you.

The basic equation, our COA-EFC = NEED, EFC is the Expected Family Contribution (or what your family is expected to contribute to the education of the child). However, it is not what you think you can contribute, that’s what Uncle Sam thinks you can contribute, and that, as you might surmise, may or may not have any connection with what you think is realistic.

In order to get EFC (and to be eligible for any federal, state and institutional financial aid), families must file the FAFSA (free application for Federal Student Aid). This form can not be submitted before 1 January of that year that the student enroll in college (so 1/1/2011 for students who want to go to university in September 2011). FAFSA deadlines vary by school, but it happens only placed once, so it is very important to know the earliest deadline for FAFSA will be. It is the day you have to work. Many institutions (especially private ones) may be a deadline in February for prospective students.

Filing the FAFSA is significantly easier if you complete a tax return for completing this program. If you have a tax, much of the FAFSA is simply a matter of looking up the reference line on your taxes and filling in the blanks … mostly.

If you are to meet February deadline have completed tax may have the same odds and defying Newton’s law of gravity, then Plan B is not nearly as neat and clean as Plan A. Plan B Easiest option is to take the last tax return, your N 2 or your final paystub for the year and try to assess the tax, taking out the old income information and replace it with the current year. Two figures often do not differ significantly. The FAFSA will give you the ability to indicate the numbers that you are submitting an estimate and you will (relatively painlessly) be able to upgrade them once actual figures have been confirmed.

There are two ways to submit FAFSA data. You can use the paper FAFSA which can be obtained from high school guidance office, or you can submit your FAFSA electronically http://www.FAFSA.gov . Using the online application has many advantages, including speed of processing and the ease of making changes / corrections. Using online applications will let you know if the photo has been submitted correctly and gives you the Expected Family Contribution (your EFC) on site for verification presentation.

So, with examples, let’s just say your EFC comes out to $ 12,000. Your choices are: Private college A which costs $ 45,000 for tuition, fees, room and board (plus another $ 1,500 or so for books, supplies, etc) for the total attendance of about $ 46,500 or

Public University B which costs $ 15,000 for tuition, fees, room and board (plus $ 1,500) for a total of $ 16,500 COA

Private College COA $ 46,500 EFC -. $ 12,000 Total Need $ 34,500

Public U COA $ 16,500 EFC $ 12,000 Total Need $ 3,500

In a perfect world, you would pay the same $ 12,000 to go to either school for it EFC’s website. Private College A would offer you $ 34,500 while Public U would offer you $ 3,500 so your cost $ 11,200 at each school. Reallity? It is a subject for another day which is what happens if you can not afford EFC, how financial aid dollars can be used as a marketing tool and more.

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