Secret College Funding Formula

What is the secret college funding formula? Can you qualify to earn free college or get a full or partial scholarship?Secret College Funding Formula ~ Episode 88

What is the secret college funding formula? Can you qualify to earn free college or get a full or partial scholarship? Jean Burk shares great information about what colleges look for regarding need vs merit.

Visit College Prep Genius for more information for online classes, in-person boot camps, online boot camps, and upcoming membership classes (more information coming soon.)

[Disclaimer: Jean Burk is not a financial advisor or planner so contact your personal consultant for more details] However, this podcast will help you in becoming educated to seek additional help or information.

There is formula colleges use – COA-EFC = Need 

What do these acronyms stand for? COA is Cost of Attendance. EFC is for Estimated Family Contribution

The EFC is income-driven. There are ways to defer income if needed especially when applying for college.

The reality of paying for college is different for each person. The higher your income the higher your EFC is going to be. There are two types – the FSSTA -or the Institutional EFC where each college determines its own formula.

FAFSA: This must be filled out every year and October 1 is the deadline. They have a first come first serve basis on their pool of money. Even if you do not think you qualify, you should do it anyway. There are different types of aid you may be able to qualify for, and under 200,000 annual incomes still can qualify.

Test prep is important and higher SAT, ACT, and CLT scores will help your child in rankings and merit-based scholarships. You need a baseline score for this. You can go on your college board website or ACT tests and get a starting point and this is free online. Remember: every child can beat this test and that is where College Prep Genius can help!

What is your starting point? The EFC and once you find out what that point is and you have a place to start.

What do colleges consider?

  1. Parental income has to do with age as well as income. (Exceptions below).
  2. Parent assets – holding assets instead
  3. Student income / assets – assessed at a rate of 20 percent or 50 percent over 7,000.
  4. How many kids in college

Exceptions that don’t count in income are the retirement fund, equity in homes, etc. If your child has earned income or taxable wages it can be counted as a higher rate than the parent. Money that is saved they can use it up for a computer or car. The beginning of your student’s sophomore year of high school – or two years before going to college. There are things to do to spend your student assets or put it in a fund (college fund) that parents hold in their name.

The College Board website has an EFC calculator.

There are many ways to counter income (which a financial planner can help you with).

You want to have a high COA and a low EFC. There is the need-based aid and the merit-based aid. The need-based is on your income and your family’s ability to contribute. This comes from the government. Merit-based aid is only given from funding from the college regardless of your income level. Merit: SAT, ACT and CLT scores, sports, the arts, etc.

State colleges have a very small pool for merit-based scholarships. Private schools have more assets to contribute. The only private schools (Standford, Princeton, Harvard) that don’t need to use scholarships to recruit. They tend to be generous with need-based aid. If you can qualify to get into Harvard 100K-120K – it could be 12K to go to Harvard, if you can get in you may only need to pay a percentage.

Middle-income levels have the hardest time qualifying for need-based. Your student needs to be above the 75% percentile. There is a common data set you can search online for stats on schools that your student may qualify for.  [Much more on the podcast!]

The financial aid officer has databases of scholarships in house that may be available for more scholarships to apply for, while in school.

 

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