With each college application your high school senior fills out, you are filled with simultaneous joy and anxiety. Your child is ready to spread her wings and fly. But the question that’s weighing you down is how you’ll pay for it.
In our last post, we talked about determining your expected family contribution—EFC. Financial aid might be able to help your budding student get through college, but it’s coming up with your contribution that’s keeping you up at night.
That brings us to today’s topic, cost of attendance—COA. Understanding the EFC and COA thoroughly will help you to keep your commitment to stay out of your retirement fund to pay for college. Here’s how.
COA – EFC = Need
You’ve probably seen that formula before. COA is how much it costs to go to school, including tuition, housing, and other living expenses. EFC is your out-of-pocket costs. And need is filled in by financial aid.
When you take a closer look at each of these elements, it doesn’t turn out to be as simple as it seems. Some schools will not provide the entire amount of “need” in the formula and that increases your out-of-pocket beyond your determined EFC.
However, this can be used to your benefit and benefit your student as well.
Don’t Let COA Determine Which School Your Student Attends
After the acceptance letters start arriving, selecting a school should be about more than a degree program or academic opportunity. It should include financial consideration.
For example . . .
In California, a state school’s yearly COA is about $24,000. Let’s say your EFC is $10,000. That leaves $14,000 in financial aid need. The bad news here is that on average, about 50% of need is supplied by financial aid for students at state schools. The other 50% is called unmet need and it adds another $7000 to your out-of-pocket college expenses.
Total cost to you each year at a state school: $17,000
Compare that to UC’s yearly COA at $33,000. With the same EFC of $10,000, need equals $23,000. On average, UC’s financial aid provides about 70% of the need leaving unmet need at $6900.
Total cost to you for a UC school: $16,900
Lastly, compare to a California private university with a yearly COA of $54,000. Once again, with an EFC of $10,000, need equals a whopping $44,000. But don’t dismiss this option yet. Private schools supply an average of 100% of the student’s need in financial aid.
Total cost to you for a private school: $10,000
Surprised? Don’t dismiss schools with higher tuition simply because they have higher tuition. Loans will have to be paid back later, but the immediate out-of-pocket cost can be significantly less depending on the school your child decides to attend.
COA Can Decrease Your Costs
A little financial consideration can allow your student to attend his dream school and at a lower cost to you.
Schedule a consultation at College Planning Source to find out how to pay for college without going anywhere near bankruptcy.