Developing Your Plan

Poor planning will result in poor outcomes. That’s true of just about any endeavor you undertake. With college, poor planning will have a life-long impact on you and your future. Do it right.

Your plan must have two parts: financial and action.

The financial part should determine:

What is the real cost of the college (include transportation, personal expenses, books, etc. if the college has not.

How much your family can afford to pay on a monthly basis (cash).

How much and what type of financial assistance you will receive.

Any shortfall between the cost and what the family can afford plus assistance.

How much debt can be handled if loans are required (4 years worth).

Any alternative means of funding (assets, equity, etc.)

Don't just discuss the numbers, write them down on paper. Consider all options and calculate the end result. If it's going to put the family in a bind financially, then look for a less expensive school.

If there's a second and third child to educate, consider putting a portion of the family's "monthly college payment" toward an investment which will grow and provide some cushion for handling the cost of the next college education. A loan could be used to defer payment of the remaining cost for the first student until after graduation while the investment grows in value.

Compare loan rates and payment plans, including current rates on equity lines of credit.

Don't forget to project how your financial decisions will affect the family's EFC for subsequent years.

The financial situation will change from year to year based on new financial aid awarded, changes in the family's finances (or another student in college). Having a well thought-out plan will provide a good guide and keep spur-of-the-moment decisions from being made.

Even if good prior planning resulted in sufficient money to pay for college, wouldn't it be nice to keep some of it if there are alternatives? Finding out what the family's EFC is and how it can be lowered prior to the base year (remember that would be the previous tax year) could save hundreds, even thousands of dollars.

The action part of the plan should:

Outline how colleges and universities will be chosen (financial aid policies are critical facts).

Have a time-line with milestones for completing important actions. See the financial aid calendars below.

Have financial planning beginning no later than the fall of the junior year of high school.

Call for private scholarship research during the junior year as well. There are outside college scholarships even high school freshman and sophomores can apply for.

The plan should ensure earlier completion of taxes to beat deadlines.

Aside from the obvious educational considerations in choosing which schools to apply to, such as the cost and quality of the academic program the student wishes to pursue, consider also choosing schools which place the student in the top 25% of the freshman class. This will put the student in the running for merit-based aid. Also, choose colleges that are similar. Being accepted by competing colleges provides good leverage when negotiating award packages..