Guest article provided by: By Chuck Bates, CCFC at Stegent Equity Advisors
Are you overwhelmed by the college financial planning process? Do you assume college debt is a rite of passage? Are you worried that it is too late to make any real impact?
These are three things I hear all the time. College planning and funding seem to be more intimidating than buying a house or paying taxes. Maybe that is because people have CPAs or realtors to help with those tasks.
You can overcome all these concerns with some relatively easy planning. I will break it down into a few simple steps.
Determine your resources.
For example, what do you have in 529 plans? Can you fund some from cash flow? If your college-bound student was involved in family financed activities such as travel sports or competitive dance, can these funds be redirected toward education? Do you expect help from a relative? If so, how much?
What is your family’s opinion on loans? Will the student borrow? Will the parents borrow? If you borrow, set a maximum amount you are willing to borrow. A good suggestion is to borrow less than the first-year salary of your expected career.
If you cannot fund college from savings and cash flow, I believe 33%/33%/33% from savings, cash flows, and loans is a healthy option to consider.
Sum the total of available resources. Try to shop for schools within your available resource number.
Find your Effective Family Contribution or EFC (soon to be SAI).
You can do this at the Stegent Equity Advisors, Inc. website. Alternatively, you can use one of the many EFC Calculators available via Google Search. EFC is an estimate of what schools and the government think your family can afford. It will vary from school to school, but this number is critical in determining aid.
Create a school list and find your net-cost for schools of interest.
Every college is required to have a net cost calculator on its website. These will give you an idea of the net-cost (after need or merit aid awards). You can use the Free College Money Report at Stegent Equity Advisors, Inc. to get the net-cost for your top 3 schools.
Make sure you compare “apples to apples” and shop based on each college’s net cost after need or merit aid.
Finally, if you have more questions or want more help, find a Certified College Financial Consultant (CCFC). Just like there are CPAs and realtors to help with the big-ticket items like taxes and homes, CCFC’s are experts on the in’s and out’s of college funding.
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