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Tuition Without Tears: Money-Saving Strategies

When you're a parent, the whole topic of saving for college is scary. My children are little, so the conversation is typically about how I need to put away $1 million per month because by the time my daughter is a co-ed, the price of tuition is likely to be $7.3 trillion per semester at a state school.

Okay, so maybe I am exaggerating, but the numbers are staggering. While I can still pretend that I am going to save a ton between now and when my tots head off to school, parents with teenagers have to get real. If they haven’t saved, or even if they have, parents and students need to figure out the financial aid system, as well as look at scholarships and other money-saving alternatives. I called Michael Franzblau, a former teacher and financial consultant who has created the program Tuition Without Tears. He gave me a quick tutorial on financial aid and other related topics. Here are seven things I learned from him:

1. The most important number in the financial aid system is the expected family contribution, or EFC. In the fall of your child’s senior year, you fill out a whole bunch of paperwork, which is inputted into a formula. A month later, you get a number, which is your EFC, or the amount you are expected to contribute toward tuition per year. If your EFC is $15,000 and your child goes to a school that costs $15,000, you get no help. However, let’s say that you have twins who both go to schools that cost $30,000. Theoretically, you would still pay $15,000 per year and you would receive $45,000 in aid.

2. You can calculate your own EFC in advance, so you will know how much you need to be saving. There are a number of calculators online, including one at Tuition Without Tears.
3. There are strategies to lower your EFC. “You can be smart about it the same way you are smart about your taxes,” Franzblau told me. As an example of such a strategy, you don’t want to save money in your kid’s name. The financial aid office counts the money in your kid’s name a lot more than the money in your name. If you have $1 saved, the financial office will expect you to spend three cents to five cents of that dollar on college. It expects you to spend twenty cents of your child’s dollar.

4. The EFC thing doesn’t always work out perfectly. “Just because you qualify for a certain amount of financial aid doesn’t mean every college can afford to give it you or will want to give it you,” he said. “It depends on how much they want your kid. Colleges are businesses. They have a certain amount of aid dollars to give out and they want to reap a certain amount of tuition.”  Let’s say a college has $20,000 to give out. It can give the money to one needy student or it can spread the money out to four suitable applicants who can afford to pay the rest of the tuition themselves. What would you do if you were the school’s CFO?
5. Even people with six-figure incomes can get financial aid, especially if they have more than one child in college at the same time. However, Franzblau said he has never seen anyone making $300,000 or more qualify.
6. There are a lot of local scholarships. Guidance counselors can help parents and students sort through the niche opportunities. For instance, where Franzblau lives, there is a scholarship for a local student who supports golf. Any Tiger fans out there?
7. In addition to tuition and scholarships, there are strategies to reduce the cost of college. Franzblau recommends students consider spending two years at a community college, then transferring that credit to larger state university. The degree will look the same as for a student who spent all four years at the big school. Another strategy is to take classes at a local community college in the summers to rack up credit. You may be able to finish in three years.
Share your opinion at related chitchat: Do You Owe Your Child a College Education?