Each section provides insightful information to help with your college funding & financial planning. This section covers the general fees and any related costs to applying and attending college.
We understand the college funding process can be difficult and hard to understand. That’s why we’re here to help. At anytime if you have questions, please contact us at 858-676-0700, and one of our College Planning Consultants will assist you.
*The information are for reference only and does not reflect actual pricing.
What is the Cost of Attendance?
- The Cost of Attendance is different at each school. It is one of the figures that they use in the financial aid formulas to determine a family’s financial aid eligibility.
- Cost of Attendance includes: Tuition, Fees, Room and Board, Books, Transportation and Personal expense money.
- The average Cost of Attendance is currently at:
- California State University: $27,000/year*
- University of California: $36,000/year*
- Private University: $57,000/year*
- *Varies per university, see each university’s website for exact costs
- University A
Room & Board: $13,000
Personal Expenses: $2800
Total COA: $32,400/year
- University A
What is the Financial Aid Formula?
- The formula that all colleges use to determine your student’s financial aid eligibility is:
- Cost of Attendance – Expected Family Contribution = Need
- Something to consider here is NOT all schools provide 100% of the “need.” Your family’s out of pocket costs will be the EFC + Unmet Need.
- Please watch our Online ‘Quick Start’ College Funding & Aid Video to learn more about this! (link to video sign up)
- What is expected family contribution?
- There are two different methodologies as to how they calculate a family’s expected contribution: the Federal methodology and the Institutional methodology. In both formulas, it takes different percentages of the parents’ and students’ income and assets. Then it calculates the figure that a family can “technically,” according to this somewhat unfair formula, afford to pay towards college.
- The financial aid formulas are not typically favorable towards middle and higher income earning families. The key is to learn in advance what your potential base cost will be for your children and begin to plan as soon as possible.
- Can you tell me a little about the different methodologies?
- Federal Methodology: If the colleges use the Federal methodology, more than likely they typically request only the FAFSA form to be submitted to the university. Most public universities use only the FAFSA and some (but not all) private universities use this form solely as well.
- Institutional Methodology: If the colleges use the Institutional methodology, then more than likely they request both the CSS profile and the FAFSA forms to be submitted to them as well.
- What is the main difference between the federal methodology and the institutional methodology?
- While there are many variables that go into the calculation behind both of these financial aid formulas, there is a main difference between the two formulas. In the Federal methodology, your primary residence home equity is not counted as an asset in the financial aid formula, but the equity in an investment property you personally own does. In the Institutional methodology, your primary residence home equity does count to some degree (varies per school) as an asset of the parents’ AND also the equity in an investment property you own.
- What are the most common student loans that are offered?
- Direct Loans – Subsidized & Unsubsidized
- These loans are offered to every student who is attending an undergraduate program. However the subsidized loans are “need-based” meaning you must qualify for it. If you do not qualify for the subsidized loan then you can receive the amount of the subsidized loan in an unsubsidized version. As an example, you would get a maximum of $5500 in an unsubsidized loan as a freshman.
- Here are the loan limits:
Freshman Sophomore Junior Senior
Subsidized $3500 $4500 $5500 $6500
Unsubsidized $2000 $2000 $2000 $2000
- Direct Subsidized Loan Terms:
- Loan is under the student’s name only
- Interest free while they’re in school
- Then the payments and interest begin 6 months after graduation
- The fixed interest rate will be whatever the current interest rate is set. (5.045% Fixed – 2018-19 school year) However, every year the government can change the interest rate if they choose.
- Direct Unsubsidized Loan Terms:
- Loan is under the student’s name only
- An interest rate of 5.045% fixed will be charged to the student while they’re in school. However, no payments begin until 6 months after they graduate.
- Our suggestion is if you take out this loan try to pay the interest on a monthly basis so that your loan balance doesn’t compound on you.
- Perkins Loans Subsidized:
- The Perkins loan is another government student loan. The Perkins loan is “need based” and the financial aid department will determine how much a student can qualify for. The maximum amount that a student can qualify for right now is $5500 per year.
- Perkins Loan Terms:
- Loan is under the student’s name only
- Interest free while they’re in school
- Then the payments along with the 5.0% fixed interest rate will begin 9 months after graduation.
- Institutional Loans:
- These are student loans that are offered by the university that the student will attend. The loan terms and limits can vary, but typically are more favorable than private loans. Please be certain that you check with the university regarding the loan terms before accepting these loans.
- Private Loans:
- These are any student loans that are not offered by the government or a university. A bank will offer these loans to a student and they’ll typically be relatively easy to obtain to pay the difference between the Cost of Attendance and what the university is offering in terms of financial aid to the student.
- However, the terms and conditions along with the impact that it could have on a student and their co-signers is important to learn in advance. Many people hear stories about the vast amounts of student loans that students have taken out and it’s true. In the PAST, lenders used to offer undergraduate student loans to just about any student that applied for one, which is why you hear about students who are so far in debt today.
- These loans today typically require a parent to co-sign for a student, meaning it will stay on your credit until the loan is paid off and could hinder your future ability to borrow due to a higher debt to income ratio. Then from there, most of these loans have variable interest rates and for the ones that are fixed. The loan rates are typically higher than the loan rate that the student can get through the government. Be careful with these loans.
- What parent loans are offered for their children’s education?
- P.L.U.S. Loans
- This stands for Parents Loan for Undergraduate Students. The government will provide the opportunity for a parent(s) to borrow from this loan the difference between the Cost of Attendance and the financial aid that was offered to the student. Be careful with this loan as well. Most people forget that if you take it out the first year, more than likely you’ll have to take it out for all years!
- Parent PLUS Loan Terms:
- 3-4 points to originate the loan, 7.595% fixed, 10 year term, and the government asks that you begin making payments on this loan 6 months after the loan is distributed to the university for your student. However now they will allow parents to defer the loan payments until after the student graduates.
- P.L.U.S. Loans
There are two main financial aid forms that you might have to complete for your child. Please be sure to check online at every university that your student is thinking or will apply to in order to see which forms you need to complete. You also want to be sure to note the deadlines and any other documentation that they would like you to complete.
- What are the two most common financial aid forms?
- FAFSA – Every school will require you to complete this form in order to be considered for financial aid. Go to www.fafsa.ed.gov for more information. This is a self-reporting form, be sure to read through ALL the instructions. Most people begin the FAFSA, get tired of reading the instructions, starting estimating it, and then make mistakes. Don’t be one of them.
- CSS Profile – This form is required for most schools that use the institutional methodology. This form directs all the questions to your student. Please do not let your student complete this form. This form is lengthy and asks a lot of detailed questions. Be certain you answer them correctly. This form really gets at looking at your full financial picture. If you are divorced/separated some of the schools could ask for the non-custodial parent to complete the non-custodial parent profile, meaning they’re going to count the income and assets of your ex or soon-to be ex-spouse to some degree. Some of the schools that require the CSS Profile could also ask for you to submit your financial documents (tax returns, W-2s, etc.) through the IDOC system. Just be prepared to provide schools that use this form with a lot of your financial information.
- What other financial aid documents could a school want?
- Some schools have their own financial aid forms they want you to complete, some schools might ask for a Dependent Verification Worksheet, Income and Expense sheets, Divorce agreements, and much more. However, typically they’ll ask you to complete the FAFSA, sometimes the CSS profile and/or an institutional financial aid form and then they’ll ask you for supporting documentation/forms to be submitted.
Check the financial aid website for each of the colleges your student’s interested in applying to during the summer before they start applying. Find out what financial aid forms/documents they would like you to complete/submit and the deadlines for them. It is important that you understand what is required in advance before your student applies for admission!
- Typically the schools will work in this order:
- Apply for College Admissions
- Apply for Financial Aid (estimated income is okay)
- Student’s receive notice of admissions: waitlist or denial
- Parents need to complete their tax returns and submit tax return information via IRS data retrieval, IDOC, and/or hard copies of federal tax returns
- Student receives a financial aid award
- Student and family compare financial aid awards
- Student and family make decision on which school to attend
- Student proceeds with process of committing to a university
- Merit Scholarships
- Merit scholarships are scholarships that are awarded to a student in an effort to attract the student to the university. The universities will look at the average student that gets accepted into the university/major and compare the applicant’s GPA and Standardized test scores. If the applicant’s is well above the average student and typically it has to be both GPA and standardized test scores then the universities will offer some amount, depending on how much higher the applicant’s information is, of merit based scholarship to the attract the student to attend the university. Typically these scholarships are renewable every year as long as the students meet a certain GPA requirement. Please contact each university for more information.
- Private Scholarships
- Private scholarships are scholarships that are not offered by the university, government or state. Students will typically need to apply for these scholarships separately from their college admissions applications or financial aid forms that provide ‘need-based’ financial aid.
- These in our opinion are an ‘apply but don’t rely’ type deal. There are no guarantees that your student will win these scholarships, unless your student is the only that that is applying. Your student will typically need to meet certain criteria to apply, then complete an application and write an essay to be considered for the scholarship.
- Cal Grant
- The Cal (California) Grant is a grant that is available to families who live in California and have or will have a student that is attending a Cal State, UC, or accredited private college. The Cal Grant would cover about the cost of tuition currently at a Cal State or UC school and approximately $9000 for a private university. The Cal grant amount can adjust annually.
- How do you qualify?
- The Cal Grant is income, asset, and GPA based. First you would need to submit your student’s FAFSA before March 2nd typically and then depending on the number of family members in the household your income and assets need to be below the following income and asset ceilings.
- The income figure that they’re calculating to determine income is your AGI + untaxed income like contributions towards your pre-tax retirement accounts and child support.
- The last things that action that needs to be completed is that the high school counselor or community college counselor needs to submit a GPA verification form to the California Aid Commission before March 2nd as well. Please follow up with your student’s counselors to ensure they submit the necessary documents.
|Family Size||Cal Grant A & C||Cal Grant B|
|Six or More||$114,300||$62,800|
|Asset Ceiling for Dependent Students||$76,500|
- Many families in California do not qualify for this grant and will have an out-of-pocket cost that is larger than what they would expect. The key is to be prepared. Click here to contact our office and schedule your complimentary consultation to determine your out-of-pocket costs and what plan you need to create to provide more clarity into your financial future.
- Pell Grant
- The Pell Grant is typically for lower income households. Many families will complete the FAFSA and right at the time of confirmation they’ll see that they do not qualify for the Pell Grant. This does not mean that you will not qualify for any financial aid necessarily. This just indicates that you’re not at the Expected Family Contribution level that you need to be at in order to qualify. The maximum amount of Pell Grant a student can receive is $5500.
Creating a solid and confident plan is essential to minimizing your out-of-pocket costs. There are many ways that you can fund your children’s college education. There are many key steps to developing the most efficient plan that leaves you with the future financial clarity. Many financial advisors spend their time helping families try to amass a certain amount of wealth so that they can “retire.” However, often times they do not take into account some of life’s larger expenses, like college educations, that could hinder their ability to retire in the lifestyle that they had anticipated. Start by scheduling your consultation today.