Colleges and universities use a federal formula for determining how much financial aid that students can receive for the upcoming college year. This formula is called the EFC, an acronym for Expected Family Contribution. The EFC is the baseline of financial support your family is expected to provide a college student. Above this baseline, colleges can provide financial assistance or grants to make a degree far more affordable.
However, college aid workers say that almost every reviewed EFC that parents fill out has errors. Meaning that families do not understand the rules well enough as they are filling out the forms. As a result, most families are unnecessarily hindering their eligibility to receive financial aid from the institution when they are applying for admission. For example, you are not required to list any qualified retirement accounts in your asset amount. If you do not know this, you will erroneously include it and receive far less in financial aid than you should be getting.
It important to understand all the rules of financial assistance – up front. For example, did you know that 529 accounts penalize you on getting financial assistance? It is very rare that money in a 529 account is a net benefit for college costs. Also, did you know that you can negotiate your financial aid package from a university or get a multi-student discount?
A degree is one of the largest expenses for any family and very few people take the time or work with an expert to minimize this cost. There is a maze of rules for qualifying and accessing financial aid for college, and if you are unaware of them, then will needlessly overpay for a degree.
There are financial planners that specialize in decreasing college costs with titles like College Aid Planning Specialist. I highly recommend finding one with a history of success and only charges a 1-time fee (normally under $200).