Paying for College

Written by: Michael Carbone, CFA, CFP®

For those with children approaching freshman year…

It’s time to start thinking about potential colleges. If you’ve read any of my articles, you may know that I’m big on getting as much value as possible for a given education. College is typically a buyers’ market! For example, 89% of student’s attending private schools will receive a price break. So, it’s important to avoid overpaying! This may be a crucial step to getting through college without compromising your retirement.

Step 1: Calculate Your Expected Family Contribution (EFC)

The first step in this process should always be to calculate your Expected Family Contribution (EFC). Why? because each school will use your EFC to determine how much they’ll potentially offer you via grants, etc. Grant and scholarship money is as good as cash – reducing your college costs dollar for dollar. Once you know your EFC, you’ll have a much better idea of what you’ll realistically pay for school. For context, colleges will subtract your EFC from the cost of attendance when determining your eligibility. So, the lower your EFC, the more money you’ll potentially receive.

Here’s where it gets tricky… your EFC will only determine how much assistance you’re eligible for – there are no guarantees. So, it’s important to understand how generous different schools are before motivating your kid to apply. Also, to make things more complicated, there are two main EFC formulas. Although most schools will use the “federal formula”, some will use the “institutional formula” (i.e., the CSS profile). The key difference being how your home equity is considered, which may be an issue for those who’ve benefitted from a strong housing market. Anyway, you can find the list of schools using the institutional formula using this link.

Step 2: Research School Generosity

As I mentioned before, the EFC only determines your eligibility. So, it’s important to try and understand just how generous certain schools are when it comes to spending their money. One way to do this is by looking up how much they’ve spent in the past. You can find this information using the data published by Search the school à go to “financials” à look to see how much different schools have historically awarded to students. I personally think the “All Undergraduates” section is the most useful.

Also, once you’ve narrowed it down to a handful of schools – make sure that you use each school’s mandated “net price calculator”. You can find this by googling “{school name} net price calculator”. Although these aren’t always perfect, they may offer you valuable insight to guide the application process.

Step 3: Don’t Settle for Less

In many cases, it can be worthwhile to appeal your offer. Remember, college is generally a buyers’ market – schools want your kid to attend. On the other hand, they’ll always seek to get as much money as possible. There are ways to be smart about appealing. There’s a great company you might consider looking into – College Aid Pro. I’m not associated with them in any way, but I’ve found their product to be extremely helpful for parents looking to do college right. Here’s a link to their different packages.

As always, please don’t hesitate to reach out to me with any questions. Although I always seek to provide investors with valuable insight for making smart decisions, I’m also a practicing Financial Advisor. So, if you’re interested in a complimentary review of your strategy, please let me know.

Thanks for reading!


Michael Carbone, CFA, CFP® | Financial Advisor, RJFS

O: 978-455-7799 //

Eppolito Financial Strategies, LLC. | Raymond James One Meeting

House Rd. Ste. 14, Chelmsford, MA 01824

Main Office: 978-455-7799 //

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