Saving and Investing

College savings are meant to fill the gap between the cost of college and whatever financial aid the student might receive. How does Campus Financial capture this information? We combine the traditional savings calculator with the needs analysis process.

Using the traditional calculator, we determine what college will cost X number of years from now.

Based on a given annual cost of living adjustment and appreciation rate, we calculate what the parent’s income and assets will be at that same time in the future.

Using an Estimated Family Contribution (EFC) calculator, determine the student’s EFC.

Then we compare the future cost of education to the EFC. If the EFC is less, subtract it from the cost. The difference is need-based financial aid eligibility, and the remainder is the family’s cost. If the EFC is greater than the cost, there is no need-based aid in the student’s future.

This information allows us to make some judgment calls. First, the remainder would be their dollar goal for investing—the family’s cost after aid. Based on this, they can go back to the traditional calculator to determine their monthly savings goal. And it is just that, a goal; they should not put retirement savings at risk. Parents want financial options when it comes time to pay for college. Even a small educational nest egg is better than none.

Second, and most importantly, it gives parents the guidelines to determine where best to invest their college savings. Parents need to remember that whatever investment strategy they choose will ultimately have consequences regarding taxes, rate of return vs. risk, and financial aid eligibility.

Campus Financial can estimate your student’s financial aid eligibility quickly, providing the basis for a practical investment strategy because there are several different financial vehicles for educational savings. Each has its unique requirements and economic consequences.

Talk to us

For expert financial advice, call our team at (804) 937-2288.