“ Affording College & Solving
the Financial Aid Mystery”
The Education Funding
A National 501 (c ) 3 Non-Profit Organization
Handouts: Does everyone
• FAFSA WORKSHEET
• Evaluation Form
• Who We Are
• The College Cost Environment
• College Facts & Myths
• The differences between the SAT VS ACT
• The Financial Aid Process
• Paying For College?
• Strategies & Programs-Making College a
Who Is The Education Funding
• Federal tax-exempt 501(c)3 non-profit organization.
• Works in conjunction with member colleges,
universities, and organizations/companies.
• Provides HS informational programs to parents of
• Provide the necessary information about - financial
aid, maximizing awards & coping with the costs of
Do You Know What This Is?
Three Most Important Years
Schools use a students first three
years when considering acceptance for
that student into their school.
What they look at:
•GPA and SAT
•AP or Honors classes
•Extracurricular activities (Talent/Skills)
High School - 9th Grade
This is an important year!
• This year lays the foundation for the classes that
the student needs to take in the coming years (the
better the classes the better the chances for
acceptance at the most competitive colleges).
• Take challenging classes in English, mathematics,
science, history, geography, foreign language,
government, civics, economics, the arts AND DO
WELL IN THEM!!
• Get to know your career or guidance counselor as
well as other college resources available in your
High School - 10th Grade
• This is the most important year and often not
considered as such…this is the “qualifying heat”
when determining where to place for 11th grade.
• Become involved in school - or community-based
extracurricular (before or after school) activities
that interest you and/or enable you to explore
• Take the Preliminary SAT/National Merit
Scholarship Qualifying Test (PSAT/NMSQT). You
must register early.
Myth about the PSAT
“Does my child’s score really matter on the PSAT?
I heard the score does not count towards anything.”
Yes it does…
The PSAT is used to disburse National Merit
Scholarships. This is not a test you want to take
HIGH SCHOOL - 11th GRADE
• Meet with your career or guidance counselor to discuss
colleges and their requirements.
• Decide which colleges most interest you. Contact them
to request information and an application for admission.
Ask about special admissions requirements, financial
aid, deadlines and ask if you can see sample essay’s?
• Talk to college representatives at college fairs.
• Visit colleges and talk to students. Consider which
people you will ask for recommendations - teachers,
counselors, employers, etc.
• Investigate scholarships provided by private sources,
talk to your guidance department about local
• Register for and take the SAT’s or the ACT, SAT I-
Subject Tests or any other exams required for
admission to the colleges you would like to attend.
SAT VS ACT
Which one should you take?
The Correct answer is ….BOTH!
How Do These Tests Compare?
What is the Content?
• Math: up to basic • Math: up to Trigonometry
Geometry & Algebra ll
• Science: charts,
• Science: none experiments
• Reading: sentence • Reading: four passages,
completion, short & long one each of Prose Fiction,
critical reading passages, Social Science,
reading comprehension Humanities, & Natural
• Writing: essay & testing Science
grammar, usage, & word • English: stresses grammar
• Writing: essay (optional)
Note: The ACT essay is optional; the SAT essay is not!
About the SAT / ACT
SAT Scoring ACT Scoring
Critical Reading 200 - 800 English 1 - 36
Math 200 - 800 Math 1 - 36
Writing 200 - 800 Reading 1 - 36
Essay 2 – 12 Science 1 - 36
(Will account for 1/3 of English/Writing score) Writing 2 – 12
(Will account for 1/3 of English/Writing score)
• Required for admission by • Used by all U.S. Colleges
most U.S. Colleges. as an admissions
requirement & to award
• It is a reasoning test & scholarships.
requires reasoning skills to
excel. • This exam tests more on
what you have learned in
school from the classes
– Early Action vs. Early Decision
– Nov. 1st – 15th Submission
– Dec. 15th – Jan 10th Acceptance notification
– Jan. 1st – Feb 1st Submission
– March 1st – April 15th Acceptance
– On or around May 1st decision by student
College Fairs / Visits
Great way to get information on colleges you
wish to consider or visit.
• Graduation Rate • SAT and GPA requirements
• Financial Aid • Admission requirements
• Majors offered • Internship programs
• Campus life • Job placement rate
• Cost of Attendance
• Give you a feel of their campus life (do you see
yourself at this school?)
Fear Factor - Control The Fear
• Get Your Forms Done
• Avoid Making Mistakes
• Follow the Admissions Time Line
• Search for Grants & Scholarships
Visit our website for entry to a $10,000
monthly scholarship giveaway!
• Visit a few Colleges
Marketing Opportunity for
Besides tuition colleges have many
money making opportunities…
• Health Insurance
• Credit Cards
• Cell Phone Plans
College is EXPENSIVE !
The $200,000 + Mark!
College / University
George Washington U. Bucknell University
University of Richmond Bennington College
Sarah Lawrence U. Columbia U.
Kenyon College Wesleyan
Vassar College Trinity Coll.
Drexel University UPENN
Chances of Graduating
In 4 Years???
• 2 in 10 from a Public School.
• Less than 1 in 2 from a Private School.
• 65% of enrolled students do not complete a
degree in 4 years.
• 50% do NOT finish where they started.
THIS WILL IMPACT YOUR TOTAL COST!
• Number of HS Grads expected to increase until 2014
(58% women, 42% men)
• 50% of apps filed on-line
• 70% of students file 3 or more apps
• Steady increase in early apps (to 16%)
• 400 apps per admission officer
• 70% of HS’s rank
• Public HS counselor to student ratio is 315:1
• 21% of public HS’s have college counselor
Types of Colleges
In the U.S. there is a higher education opportunity
for every level of student interest and ability.
Register and attend (1900)
Routine enrollment process
Specialty schools (300)
Admit on interest and talent
Meet basic standards (1500)
Admit more than 75% of applicants
Admit from 40% to 75% of applicants
Admit fewer than 40% of applicants
For students who have a very specific career interest
and don’t need the typical college experience.
• Culinary arts: Johnson & Wales
• Aeronautics: Embry-Riddle
• Art, design, fashion: Art Institute of Philadelphia
• Technology, engineering: Webb Institute
• Business, accounting: Babson
• Performing arts, music, dance: Julliard
• Military academies: West Point
Competitive and Selective
• 5-year grad rate:
– 50% or more for publics
– 80% or more for privates
• 50% or more of freshmen have SAT over 1200, ACT
• 3.5 average high school GPA
• 1/3 or more from top 10% of H.S. class
• They are the types of colleges where good admission
planning is needed.
• They tend to be more expensive and information
about how to pay, with or without aid, is important.
Personality and Career
• As a first step in the admission process, it
may be a good idea to make a connection
Areas of interest
College courses, majors, and schools
• Collegeboard.com - Myroad.com
Increasing Pressures on
Middle Class America
INCOME IS DOWN DEBT IS UP
And Parents are busier than ever!
* Parade Magazine – April 2006
The Cost of College
2008 – 2009
Annual Total Cost ** Pre-tax
Cost $ Needed
University of Maryland $37,218 $200,297 $266,395
RUTGERS U. $24,500 $138,109 $183,685
NYU $52,290 $294,763 $392,035
BOSTON COLLEGE $48,934 $267,108 $355,254
VILLANOVA $48,530 $273,568 $363,845
GEO WASHINGTON U $53,760 $303,050 $403,056
*Assumes 6% Tuition Increase Annually.
**Assumes 33% Federal Tax & NJ State Tax
What is Financial Aid?
How is it Dispensed?
– Other Talents
• Financial Need
– Family income
The Goal of Financial Aid
Assist students in paying for college and achieved by:
• Evaluating family’s ability to pay
• Distributing limited resources in an equitable manner
• Providing a balance of gift aid and self-help aid
Meeting a Student’s
• Choose your college wisely, because:
• Not all will meet 100% of need
• Private colleges generally:
• Meet a higher percentage of need
• Award a higher percentage of gift aid
• Work Study
• Many students can attend a private college for
the same cost as a public university!
Need Based Formula
Based on a "needs analysis" formula
Total College Costs (COA) $30,000
Expected Family Contribution (EFC) – 12,000
“Financial Need” $18,000
What is the "Expected Family
• How much the family is expected to contribute,
based on the “FAFSA” or “PROFILE”
The Cost of Attendance
Tuition and Fees
Room and Board
+ Cost of Computer
= Cost of Attendance COA
2007 – 2008 EFC Calculations
Based on Parent Income and Family Size
Methods Used to Determine EFC
• Federal Formula (FM)
• Institutional Formula (IM)
• Used by all accredited public and
private colleges and universities
• Used to disburse Federal financial
• Does not assess home or family
farm equity or retirement accounts
(including annuities and cash-
value life insurance)
• FAFSA form is used to collect the
FAFSA on the Web:
To Register for a PIN:
• Brokerage Accounts, Savings Accounts
• In Parent and Student Names – includes:
Mutual Funds, Stocks, Bonds, etc.
• 529 QTP*
Note! Section 529 plans can CAUSE A LOSS OF
FINANCIAL ELIGIBILITY. Value is based on Parents
accessibility formulas and no longer assessed as a
student asset. However, all children 529 accounts are
included in formula.
• Used by some private
colleges to distribute:
– Endowment funds
• Assesses the home and
family farm equity
• Assesses a fee to
complete the application
• PROFILE® form is used to
gather the information
CSS Profile Application
Schools & Scholarship
on PROFILE awards
non-federal student aid
Pay a fee to register &
submit to each specific
school or program
on CSS / Profile
Bonds Mutual Funds
529 QTP Sibling Assets
Home Value Retirement Plans
Note! Some Schools may ask for the values of Non-
Retirement Annuities, Cash Value Life Insurance, the
value of Family Cars and Personal Property.
Two in College
Having more than one student in post-secondary
school at one time will lower your EFC per student
Two Students Three Students
Be careful of Gapping!
Errors made in completing the FAFSA and/or
supplemental forms may delay application processing
and result in the loss of financial aid funds.
Common FAFSA Errors
• Divorced/remarried parent information
• Not Obtaining Two PINs
• Untaxed income
• U.S. income taxes paid
• Household size
• Number in post-secondary education
• Real estate and investment net worth
Meeting a Student’s
• Choose your college wisely, because:
– Not all will meet 100% of need
• Private colleges generally:
– Meet a higher percentage of need
– Award a higher percentage of gift aid
• Many students can attend a private college for the
same cost as a public university!
PUBLIC vs. PRIVATE
University of Cornell University
Total Cost $39,235 Total Cost $50,384
EFC - 11,000 EFC - 11,000
NEED $ 28,235 NEED $39,384
% Need Met 45% % Need Met 100%
Financial Aid Eligibility $ 12,705 Financial Aid Eligibility $39,384
Gift Aid (42%) $ 5,336 Gift Aid (81%) $31,901
Self-Help (58%) $ 7,369 Self-Help (19%) $ 7, 483
“Out-of-Pocket Cost” $ 26,530 “Out-of-Pocket Cost” $ 11,000
(Total Cost – Financial Aid (Total Cost – Financial Aid
“True Cost” $33,899 “True Cost” $18,483
(Total Cost – Gift Aid) (Total Cost – Gift Aid)
* “Out of State” Public School
Federal Loan Programs:
(Subsidized and Unsubsidized)
• Subsidized Stafford: Must demonstrate “need”
• Unsubsidized Stafford: Need is not a consideration
• Parent Loans: Helps parents cover the complete cost
of their child’s education, less any financial aid
received (Not based on income or assets…even Bill Gates
– Federal Loan Consolidation: programs that takes
multiple loans and folds them into one entity with
fixed rates & extended payment terms
» Lowest Rates in 38 year history of program
» Lower interest rates than other consumer
options (Credit Cards, Home Equity, Private
» Flexible repayment terms and options for
students and parents
» ***Remember NEVER go into debt without a clear plan to pay
Deficit Reduction Act of 2005
• $39 billion in cuts to student loan
• Stafford limit increased from $2,625 to
• Stafford interest rate increased to a fixed
• Plus loan interest rate increased to 8.5%
• Academic Competitiveness Grants $750 to
Home Equity Loan PLUS Loan
• Potentially lower • Can borrow the cost of
interest rate attendance less
financial aid award
• You can borrow • If you sell your home,
more than the cost you do not need to pay
of attendance this off
• If you sell your • If death or total
disability occur, loan is
home, you must
pay back home
Know the System!
• Aid doesn’t necessarily go to the most needy…
• It goes to those with the most KNOWLEDGE!!!
The Secret Weapon
Financial Aid Leveraging
• Financial aid now used as a tool to
attract affluent and high-scoring
• Data-mining and pricing techniques
from the airline and marketing
The Sure Things
• Schools use detailed data to
systematically cut aid to students
whose behavior shows they are likely to
accept admission anyway.
***Source: The Atlantic Monthly, November 2005 Author: Matthew Quirk
Financial Aid Leveraging
• Financial aid leveraging allows a school
to buy, within certain limits, whatever
class it wants.
“It’s a brilliantly analytical process
of screwing the poor kids.”
– Gordon Winston, economist at Williams College
• A $20,000 merit-based scholarship
• Break into four $5,000 merit scholarships to lure
• School reaps an extra $240,000 over four years
• Windfall used to buy more rich students – or
gifted students to improve the school’s profile
• Schools intentionally gap poor
• The school knows they can’t afford
• Keeps poor students out claiming it
doesn’t consider a student’s
finances when making admission
• Since 1990, average discount on “sticker-
price” has risen from 26.5% to just under
• Proportion of students not paying full
price has grown from 62.5% to 80%
• Shifting from need-based to merit aid,
increases a school’s average SAT by 50
points and revenue 162%
There comes a moment in every
Parent’s life when it becomes clear….
is no longer an appropriate funding
plan for college.
Parents Need to Solve the
These are important & obvious concepts that need to be
examined & solved before settling on any specific school or
giving the student carte blanche to attend any specific school.
College is Paid with
Five-Year College After-Tax Cost
Tax Public Private Elite
Brackets $107,000 $202,900 $270,500
25% $155,200 $294,000 $392,00
28% $162,200 $307,400 $409,80
33% $175,500 $332,600 $443,40
35% $181,500 $343,800 $458,400
*Assumes additional 6% state and local tax and a 6% college
inflationary increase & only ONE child’s college expenses
Actual dollar amounts are higher---we rounded down!
College Cash Flow
Typical Family Plan of Action
Use of Parent Loans to Pay the College Expenses
*Based on $25,000 plus loan
Cash Flow for
• Can cash flow be increased?
• Can you save a comfortable
• Which strategies to increase
1. Decrease discretionary
2. Debt consolidation
Understanding HOW to make
for college a NON-EVENT!!!
Identification of all appropriate financial strategies
which may include:
• Income Shifting
• Asset Reallocation
• Tax Concepts
• Academic Strategies
• Detailed action plan with instructions for
implementation of all appropriate strategies to effect
the most beneficial financial snapshot to enhance,
both financial aid eligibility as well as long-term wealth
• Long term wealth planning: Retirement
College Dollars Spent
Retirement Dollars Lost
Four Year Costs (2006-2009)
Years Until Public Private Elite
Retirement $ 90,000 $150,000 $235,000
15 $285,495 $475,825 $745,459
20 $419,486 $699,143 $1,095,324
Assumes 6% investment rate, one child in college, after tax dollars
Let the IRS Help Pay for Your
Child’s College Education
• Deduction may be the same as scholarship
• Higher your tax bracket, the greater the benefit
• IRS rules allow you to keep more $$$
NOTE: All tax strategies MUST be reviewed with a tax advisor
Income and Asset Shifting
• Accomplished by putting income-producing
assets in a child’s name
• Creates income and estate tax savings
• Gifts of appreciated assets during college years
can reduce certain taxes.
• Compensating the child can reduce certain taxes.
• Gifts of highly appreciated assets prior to college
years can be an effective strategy.
What Are your Options?
• Do it yourself.
• Utilize the knowledge of
a Certified College
working in a little
known but very
No matter what…have a game plan!!!
Important Internet Sites
• Financial Aid:
• Scholarship Searches:
• College Resources:
For College Funding
When you need advice:
Certified College Planning
Financial Aid Expert
Complete Evaluation Form:
Check YES for a Personalized
Thank you for coming!
The Education Funding Consultants
National 501(c ) 3 Non Profit Organization
866-597- EFCA (3322)