There are five places where you have a significant opportunity to lower your costs for college. Now I am not talking about how you are going to save money for college. This is not about putting away money for the next 15 years in anticipation of paying for your 1st grader's college down the road. These are actions you can take now when you have a high school student and college is on your doorstep.
1. The place to start is lowering your expected family contribution or EFC. This is the baseline calculation developed by the federal government used to determine how much the schools and the government think you can spend on your student's college education. When you fill out a FAFSA form (free application for federal student aid), you are providing the feds with the information they use to determine your EFC. In a nutshell, your EFC is determined by the student's income and assets, and the parent's income and assets. Now if you know how to manipulate those income and assets, you can lower your EFC... you can lower your baseline. And the lower you get your baseline, the less money you will spend on college.
2. Identify the schools with the generous financial track records. I cannot overstate the importance of this step. Not all schools treat students equally. Some schools are far more generous than others. For example: a student applies to four different colleges and all of the schools have a sticker price or more than $20,000. At school 1, he will pay $10,000. At school 2, he will pay $15,000. At school 3, he will pay $20,000. And at school 4, he will pay $25,000.
The difference is the schools' financial track records. School 1 in this case has a financial track record that is far more generous than any of the other schools, therefore school 1 costs less.
Here is the shocker to most people... the schools with the most generous financial track records are not the public colleges with the lowest sticker prices. In fact, the public colleges often have the worst financial track records around and often wind up costing the most. Because of the way financial track records work, private colleges often have the lowest out of pocket costs. So forget the myth that private colleges are always more expensive than public colleges. It's just not true.
3. Position your student well. You need to have a well thought out strategy as to which schools your student will apply. I always recommend that your student apply to at least 6 colleges, if not 10. One of those colleges should always be a safety school. A safety school is where your student knows they are getting in no matter what. The community colleges are very common safety schools.
4 to 5 of the schools should be core schools. Core schools are those colleges where your student will have a good opportunity for being in the top 25% or 50% of the incoming freshmen class. Just because your student placed in the top 25% of their high school class, it does not mean they will place in the top 25% of their college class. Different colleges are looking for different students. The top 25% of a college such as Northwestern University is going to look very different compared to the top 25% of a college such as Arizona State. You need to match your student to colleges which are a good fit for them.
You may want to include 1 or 2 stretch schools in the mix. Stretch schools are those colleges that you're not really certain that the student can get in, but it would be a real source of pride if they did. Now some students and families may want to include more than two stretch schools, and that is fine. You can include as many as you want, but under no circumstances should you reduce or eliminate neither safety schools nor core schools from the mix. I have seen far too much heartache by pursuing a college mix far too heavily weighted by stretch schools.
4. Know how to negotiate. The official financial awards from the colleges typically show up in March or April of the student's senior year in high school (assuming you are on the ball and get all the paperwork done). Many families believe these official awards are set in stone, but that is not necessarily true. There are many colleges that will negotiate with you if you know how to draft and compelling argument and know how to speak their language.
The number one rule about negotiating with a college is never call it "negotiating". Colleges don't negotiate. Colleges have an appeals process. There is a very big difference between negotiating and an appeals process. "Negotiating" starts with an "N". "Appeal" starts with an "A."
The number two rule about negotiating with a college is never be afraid to ask for more.
5. Finally, you want to use smart money management practices. You are embarking on one of the largest expenses in the history of your family's budget. You need to take a full inventory of your finances and see what needs to change. Do you need to pay off some consumer debt? Should you delay a major purchase? Does it make sense to refinance the house, or should you look into a money merge strategy? There are all kinds of money management strategies that can save you thousands of dollars alone. Shoot, we have one client in the Chicago area that is saving hundreds of thousands on a money-merge strategy alone.
So there you have it... five strategies that have saved our clients thousands of dollars every year, year after year. Put them into practice, and you will save yourself a lot of headache as well.
Scott Anderson
http://www.realcollegesavings.com
Scott is owner of RealCollegeSavings.com and College Financial Strategies. He has been a college financial strategist and coach since 2001. Scott works with students and families in order to help them minimize college costs, help students determine college & life goals, and help families stay out of and get out of debt in the process. Scott lives with his wife Susan in Davenport, Iowa; but he works with clients all around the United States.
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