College Financial Aid

Ready or not, paying for college is creeping up on me. Last night I went to my first financial aid information meeting and am happy to say, I learned quite a bit.

For example, I learned that:
  • Merit-based scholarships seem to be disappearing;
  • A family of three with an income of less than $73,300 is eligible for Cal grants (CA only);
  • The average undergraduate degree comes with about $20,000 loan debt to the student (Stanford is about $14.5k);
  • Students should not have lots of money of their own when they start college - they will be expected to contribute 50% of their income and 25% of their assets each year;
  • Colleges and universities expect parents to have saved about 1/3 the cost of a college education, borrow 1/3 and take 1/3 of the costs out of their current income;
  • Private universities try to cover 100% of expenses (after the parents contribute their portion);
  • The parent contribution will be the same whether the annual cost for the student to attend the college is $10,000 or $51,000, and the parent contribution is divided by the number of college students you support;
  • Parents retirement accounts are not considered assets; and for those divorced families,
  • If your child goes to a UC or state school, only the custodial parent has to complete the Free Application for Federal Student Aid (FAFSA) each year, but private colleges also require a profile form from each biological or adoptive parent, and whether or not that parent will pay what they should (and I hope you know that Family Court cannot force them), their contribution is counted against the total financial aid award needed (usually requiring the student to take loans to cover the deadbeat parent's portion).
Isn't that fun? If you want to get a head start, College Board has a family contribution calculator that is pretty accurate, so you can start preparing for the process. If you are like most of us, covering the cost of college is going to take some preparation!
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