UlTImATE SUccESS GUIdEThe next part of the formula is the Expected Family Contribution (EFC),
which is the amount you as a family are expected to contribute toward
your student’s education expenses, and is recalculated each academic
year during the FAFSA process.
After subtracting your EFC from the college’s COA the remainder is
need. Your EFC is the same at every college but your need at each col-
lege will vary according to the college’s COA. If your EFC is $10,000
and the COA at college A is $13,000 and college B, which happens to be
an elite school is $43,000 it may make perfect sense to choose college
B. FAFSA is just the first step of the funding process however.
Once your student has filed the FAFSA you are able to explore various
financial aid opportunities that can make the difference between afford-
ing your student’s first choice school and having to settle for less. It has
been estimated that an excess of $60 billion is available every year that
goes untouched by students.
In many cases parents assume that Scholarships, monies distributed by
entities such as civic organizations or corporations, are the key to mak-
ing up the difference for them financially. These funds are paid directly
to the student to offset the cost of college but they represent less than
three percent of the total money available for education. A college plan
that counts on scholarships to pay the majority of costs is an ill-fated
strategy that will have disastrous results for most families.
Merit-based aid is an incentive to attract students considered valuable
to the institution in the “subjective” areas of academics, arts, athletics,
or outside activities. Merit awards are distributed by the Admissions
Office of each school in the form of distributional discounts and loans
subsidized by endowment funds. Colleges control over $150 billion in
endowment funds, the 2nd largest pool of money behind Federal Aid,
meaning they are choosing who gets this money. Properly positioning
and demonstrating the value of your student is not just a good idea but
imperative if you want to make college affordable today.
Generally private schools exhibit the highest COA and many families
eliminate them believing that they cannot afford the high expense. While
this thinking seems reasonable it is faulty thinking. Private institutions
have the largest endowment funds available and therefore offer the larg-
est awards to students that meet or exceed the school’s criteria.