<p>My oldest child is a freshman in high school. We are in an income bracket where it is likely we will not get much/any financial aid, yet writing a check for $50,000+ each year is simply not possible. We have three children and live in a state where incomes and expenses are high. I find myself mulling over whether there are any steps we should be taking now to maximize financial aid possibilities - like maximizing 401k contributions to reduce AGI, paying down our house...any tips would be appreciated.</p>
<p>I would encourage every parent who plans on their child(ren) going to college to read and STUDY this book: Paying for College Without Going Broke, 2011 Edition , Princeton Review. It is available on Amazon for $11.57.</p>
<p>A new edition is published every year to reflect any changes in Financial Aid and tax laws, but reading it NOW will give you time to plan and be prepared! Unfortunately, I did not know of this book until this year, the year that my first child graduates from high school, and it’s too late now to take full advantage of all of the tips in the book. I have told many friends who have younger children to read it now!</p>
<p>Make sure you son does a lot of reading ! And make sure he takes the PSAT his sophomore year [ as a practive test]. If his score is within a few points of the NMS cutoff for your state, then the summer between his S & Jr year have him start taking practice SAT tests and/ or do some tutoring to raise his score. The results from the PSAT test he takes in his Jr year can mean the difference between receiving hundreds of thousands of dollars in merit $$ from many colleges or none- all for a doing well on a 1 hour test! So having him prepare for it is well worth it. GPA and standardized test scores will be the 2 most important factors on his college applications.
Of course he should take the most rigorous classes that he can do well in!</p>
<p>*We are in an income bracket where it is likely we will not get much/any financial aid, yet writing a check for $50,000+ each year is simply not possible. We have three children and live in a state where incomes and expenses are high. I find myself mulling over whether there are any steps we should be taking now to maximize financial aid possibilities - like maximizing 401k contributions to reduce AGI, paying down our house…any tips would be appreciated. *</p>
<p>EFC is largely income driven, so those tactics are unlikely going to change anything. The annual contribution to a 401k is “added back in” so there’s not reduction for that (altho it’s still a good thing to do for retirement).</p>
<p>If your income is highish, then the amount you’ll have to pay out will be high…</p>
<p>You need to determine how much you can pay out each year per child. That is your budget. You can tell your children that that is how much you’ll spend per child per year. Then it becomes you and your children’s job to find schools that will work with that budget…with merit scholarships or whatever.</p>
<p>Very large merit scholarships can reduce EFC by covering any need, and then cutting into EFC.</p>
<p>Because so much of the strategy depends on the college that your children end up choosing, it’s hard to generalize. The other thing is that changes are always happening. We quickly came to the conclusion that we simply were not going to qualify for more than a very little financial aid for scattered years MAYBE when we have two kids in college such as we shall have next year. Even then, we are talking maybe $10K total IF both kids are going to top cost schools and if the schools meet full need using FAFSA methodology. As it turns out, the one looking at colleges this year really does not have a great chance at acceptance in the select schools that guarantee meeting full need so the best we would get is probably some loan subsidization. For us, the only thing that makes sense is low sticker price and merit awards.</p>
<p>You want to make sure that any substantial assets are not in your child’s name, for one thing, because most all financial aid methodology hits the student’s assets harder than the parents. If it makes a difference in getting aid, and you have kids close enough in age, delaying one’s entry into college a year could give you two in college which could make you eligible for aid during those years they are both in school. </p>
<p>Most financial aid formulas are very heavy on income and there really isn’t much one wants to do to reduce that. It’s wise to run some numbers to see where you stand. Do you qualify at all? For what are you close to qualifying? What you don’t want to do is just miss some cliff cut off that could be avoided.</p>
<p>I found this helpful:</p>
<p>[FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility](<a href=“Your Guide for College Financial Aid - Finaid”>Maximizing Your Aid Eligibility - Finaid)</p>
<p>But as others have stated, there is only so much you can do about how much need based FA you will qualify for. I’d advise lots of research for Institutional merit aid as well as possible outside scholarships.</p>
<p>I just learned of a facebook post made by a young woman I know. She was lambasting Obama (who, by the way, does not make the financial aid rules) for not helping kids like her … and helping people who sit around and do nothing all day. She lives in a $750,000 house on a lake … in an area where the average home is probably about $125,000. Her parents are sending her to a very expensive private college (and I doubt they are borrowing). This young woman is not borrowing … but she does have to work during her breaks to earn spending money, so I guess that is a bone of contention for her. I bring this up because it illustrates what I find most astounding. People have no clue how well off they are.</p>
<p>The first thing to figure out is what you can afford. Then find a financial aid calculator & see how much you are expected to pay (probably a good 25-30% of your gross annual income). Realize that this is reality & figure out how to deal with it. That means having a conversation with your child about what you will pay … and how that may well differ from what colleges expect you should be able to pay. There is nothing wrong with not wanting to finance an expensive education! But IMO, it is only right to help your child understand what you are willing to pay & help him come up with strategies for finding a school that works for him AND you.</p>
<p>Our kids except for the oldest have participated in the payment of their education. Our son currently in college had money saved for college from gifts, allowance, odd jobs and summer jobs. He also works a part time job on campus and works summers and breaks here at home. He was also amenable to borrowing via Stafford loans, but he got some merit money from the school, some grants and outside scholarships that made it unnecessary. We pay the bulk of his costs with our savings, current earnings and some loans too. So it will be for the next one.</p>
<p>“paying down our house”
NOT a good idea! More equity in your home means you have more $ to tap for colleges[ at least that’s what colleges will say- not matter how hard it might actually be to get an equity loan in the future! Home equity is one of the factors taken into account by the Profile financial aid calculation form that you are required to submit by many colleges.
Another financial tactic- if you have any assets that may/ or will be sold in the next few years- sell them BEFORE your child’s Jr year so the income is not reflected on that years financial aid calculations. Income of any kind, even if it si from a 1 time event, will impact your EFC- expected family contribution- which is college speak for what the Financial aid calculators say you will have to come up with. Expect that number to be MUCH higher at colleges that use the Profile formula, or their own hybrid version, for financial aid calculations.</p>
<p>Look at schools that give merit aid, figure out at what levels (GPA, SAT, ACT) they give it, have child apply when he or she meets or exceeds those levels.</p>
<p>If your child has good stats you can look for merit aid possibilities. Some universities post information on their websites about scholarships for people with high SAT scores (as well as national merit students). Depending on the university it’s possible to get close to the in-state price for excellent publics. (Just realized mdwstmom said the first part of this already.)</p>
<p>I recommend the book “The College Solution: A Guide for Everyone Looking for the Right School at the Right Price” by Lynn O’Shaunghnessy. It has lots of helpful information in it on finding an affordable college. (She also writes a college blog.)</p>
<p>Get your children used to the idea that where they go to college will depend on where they get in…but also on how much you can afford. A good academic record could be what snags them a nice merit scholarship that allows them to go to an otherwise too-expensive school. You can do this gently and gradually, using anecdotes you’ll read about here on CC.</p>
<p>A few items to add: Paying for College without Going Broke is an excellent book, although it concentrates mostly on need-based aid rather than merit aid. It has a section on what you can do now, before your child is a junior. You are smart to be thinking about it now. I found The College Solution to be a bit simplistic, but perhaps that is because I had already read a lot about financial aid. </p>
<p>I agree with MenloParkMom about the PSAT. My D took the SAT in October of her junior year, days before she took the PSAT. She didn’t score up to expectations on the SAT, but it was good preparation for the PSAT, on which she scored the highest in her school by 10 points (i.e., equivalent to 100 points on the SAT). She is now a National Merit finalist. None of the schools she is currently considering offer huge scholarships based on NM status, but at least she had that choice–and $2500, or $1,000/year–is real money!</p>
<p>I agree with Slithey, and would add that once you have figured out what you can afford then you can begin to work with your student to craft a list of colleges that will meet both objectives: what are good academic choices that could be affordable.</p>
<p>Absolutely do not do anything to add to your income when your child is a junior, that means taking anything out of your 401k, increasing work hours, getting another job, selling assets. This will reflect in generating a higher EFC and usually once this happens, it will be difficult to to garner any more FA in subsequent years, because many schools do not adjust awards to reflect lower EFC. If your children have any savings accounts, assets and/or income, it is also included in your EFC. In fact, children assets carry more weight. You may want to shift things around. I found the fin aid website very helpful when I was planning my strategy.</p>
<p>[FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility](<a href=“Your Guide for College Financial Aid - Finaid”>Maximizing Your Aid Eligibility - Finaid)</p>
<p>These suggestions are so helpful. Thanks so very much for the replies and practical advice.</p>