Shocked at EFC - Where to Start?

Paying for College
21

St. Mary’s is also a MD public.

But in any case, UMD could offer a lot.
Unis in the UK or Canada may be an option.
Big merit scholarships elsewhere are an option.
Big merit scholarships at Duke, Emory, and elsewhere are possible (but very tough to get).

Is your D National Merit Scholar? What possible interests and goals might she have?

The richest country in the world doesn’t offer tuition-free education (Germany does, even for foreigners like us, so unis there are also an option). Of course, making college free would mean paying even higher taxes.
Anyway, the colleges with the highest prestige in the US tend to be private (so they can charge whatever) and there are a lot of people in this country and elsewhere willing to pay their sticker price.

22

@collegemom9, college costs have gone up quite a bit. Back in 1960, total list cost for Yale was $20K+ in today’s dollars. 4-year total was still above the median household income, but I believe the 4-year cost was below the 80th percentile household income. At some point, total 4-year list cost for the top privates passed the 90th percentile household income. Now it is past the 95th percentile household income.

23

Our FAFSA EFC is 42K. So our gross is less than yours but we live in the midwest.

D applied to a variety of schools in a major that wants to attract female studemts. At least 2 were CSS Profile schools. The CSS schools (one on east coast, one on west coast) merit momey (& all non-loan money offered) were almost exactly enough to bring her total cost to 42K. So don’t count on any bump from the CSs - we have almost zero home equity & no outside savings beyond 529s (40k total for 2 kids) & 1 401k. Our house is worth 1/2 of yours. D has zero income/savings/etc.

Our state flagship is Top 10 for her major but not the type of school we want or she wants. We are likely going to be paying 42k. Her 2nd choice is 30k and our state flagship is 18k. This makes us look like we are nuts.

We can pay this from the 529 and monthly income. However our lifestyle is taking a massive hit. We will continue to contribute to our 401 k at 6% as we have all along. We also have a son who is a freshman in high school.

We started running all of the college money through our 529 so we can get used to our new money flow. We started with $500/month and will be at $2000/month next month. It’s going to take evey extra penny we have.

We focused on cutting out debt over the past few years & I (mom) am working more. D will have the federal student loans.

Also, D knew the rough budget & how much she was getting from the schools as decisions rolled in. She marked the west coast school off the list immediately & without tears when she saw the paltry merit. For many months this school was her top choice.

As we enter the end of her senior year, this is what we have learned.

It is CRUCIALLY important to meet EA deadlines. D applied to 7 schools - a nice mix of safety/match/reach and they were all submitted by 10/1 - a monrh early for most schools. She was accepted & received merit money at all 7, even our state flagship which is notoriously stingy.

Expect to pay your EFC if you want a mid-top tier school. It’s as simple as that. Meets full need means that FAFSA or CSS need, not what the family actualy needs.

Loads of kids look at private schools and oos public but the vast majority attend in state schools. For most families, it comes down to $.

Have your students start building relationships with teachers now for letters of recommendation.

Be realistic about your child’s chances. D got in everywhere she applied - our list was well thought out but I kinda wish we would’ve applied to some crazy hard to get into schools for fun, not as “the dream”. She was done at 7 apps, she never did apply to her dad’s alma mater (it would’ve been a oos public).

While this is overwhelming, you are WAY ahead of most - even those who are well educated! Good luck! And enjoy every moment, it’s a lot of fun.

24

UMD CP is a great school! You are fortunate to have a strong flagship.

Once your student has standardized scores, look at schools where the stats put them well above the 75th percentile and that aren’t super competitive for admission. The best merit scholarships come directly from schools themselves.

25

@PurpleTitan I said that I don’t understand people’s shock over how expensive college is. College hasn’t doubled in the last 10 years. There should be no shock here. We’ve all witnessed college prices rising over the years. If you went to sleep in 1960 and woke up today I’d expect there to be shock. But most of us are pretty aware of what college costs and we’ve known that it rises every year. If you make $200k a year I’m not sure how shocking a high EFC should be.

26

@collegemom9, many folks don’t keep track of college costs until their kids start looking since they don’t have a reason to, which means that the last time they looked at college costs was when they were in college many decades ago. College sticker prices have gone up many times in nominal terms (and substantially even in real terms) since then.

27

It’s not reasonable, and as has already been made clear here (I think), the EFC is not meant to be covered 100% from current earnings. Savings for college (you already have some), loans, and current income are the three legs that EFC is built on.

There are a lot of very good colleges out there, many which wouldn’t expect you to stop any retirement savings in order to be affordable.

28

Public school or a school that awards merit aid. There are schools out there who will give a LOT of money to the top applicants.

29

BTW, IMO, full list-price for the most expensive privates is crazy high these days. $300K total now. Put that in to the stock market in an account that you don’t touch, reinvest, and in 40 years, when your kid is about to retire, you can, even with a relatively conservative assumption of 5% real annual returns, expect that to grow to $2.1M in current dollars. 4% draw = $84K/year.

Stock market returns since WWII have averaged 7% real returns/year.

30

This. College prices have gone up as they have cut the most core of costs (teaching salaries), increased admin costs, and fancied up their physical infrastructure. You would be shocked to see what has happened to employment terms- in pay and in contracts- at even top level universities. Teaching at university level is now as fanciful a career goal as something in the arts: most will struggle to eke out a living, while a tiny number will end up with an actual career.

For public universities, as taxes have been cut, subsidies have been cut (state funding for community colleges and state universities are currently $8bn lower than they were 10 years ago, with cuts from 15-30% per student; increased tuition is a key part of making that money up: in the same 10 years, by an average of 35%+; in 13 states by more than 50%*).

For private universities:

**

*https://www.cbpp.org/research/state-budget-and-tax/unkept-promises-state-cuts-to-higher-education-threaten-access-and

**https://www.theatlantic.com/education/archive/2018/09/why-is-college-so-expensive-in-america/569884/

31

Your kids can go to college. Just not one that costs $50-$70K/year. Better that you figure it out now than spring of senior year! You need to figure out how much you can pay, abd let your kid know. They can take out their federal loans. You have solid in state options. A high stats kid could get merit scholarships at a few OOS publics. Some fine 2nd tier and lower LACs give merit, too.

32

@collegemom3717 nails it. Also, having some of the best colleges in the world means that wealthy people all over the world, not just the US, want to send their kids to them. And increasing wealthy inequality in the US means the rich in the US have gotten a lot richer. That means that they can charge a lot.

33

I understand both sides. I can’t believe my kids are 20 and 22, that time does go by so fast but I can’t understand how parents don’t really think about this till their kids are in high school. No offense to anyone but accounts could of most likely been started when the kids were born. Even very small accounts. We met with a financial advisor when we had no money so when we started to get some we had a small clue what to do. We took the @thumper1 approach and funded our retirement first since it’s our business self funded pension plan but then shortly after started Ira and 529 plans for the kids etc. Again not a lot of money at first but it was more to form a habit to funding it with whatever we had. We have about 50% of the college costs saved and both have merit, which helps then we pay the rest out of current income. We were also paying off $300,000 of student loans for myself and my wife. Luckily we bought a house very low and the market rose very quickly over 20 years to pay off the loans with the equity.

Also people make choices of lifestyle, location, family size etc. If we had 2 more kids I have no idea how they would be going to college ) :wink:

Our kids work in college. We set up Ira and retirement accounts for them (not much money), so they can start to form saving habits now. Something I wish we did earlier.

34

@15J1217 - the first time you see your EFC can be a shock. 6 years ago when my oldest was beginning her search we went to visit my mother’s alma mater, Vassar. D liked the school so I ran the EFC and it came back that we could “afford” 90k a year. I almost swallowed my tongue. I actually wrote the Vassar admissions office to ask if it was correct, which they assured me it was. I was sore! After I got over my shock and fury I investigated the calculation of EFC and it boils down not to “what you can afford” but “what won’t bankrupt you”. They expect that parents will sell assets, refrain from saving and go into debt for college. They want to help families that don’t have the assets, savings and ability to handle debt.

You have lots of options. People here love to lecture about FA and school choice and lots of people will tell you how to not spend your money. As long as you can stand reading the diatribes you can learn a lot. But ultimately as a family you need to decide what you are willing and able to provide financially and have your kids work with you to find schools that fit within those financial guidelines. Once you have that number you can investigate if in-state or private-with-merit or cc+transfer will fit your kids’s needs best. Good luck - I know it’s a hard pill to swallow but it’s better to get over your sticker shock now and make a solid plan than it would be to have your kid apply to schools you and they can’t afford.

35

Its better than the folks whose annual income is under 60k before taxeswith no assets and they think they should pony up 15k and take 25k per year in parent loans. So while you are in shock it could be much worse. If you look at flagship state schools competition is growing as many people are priced out. We approached college like this: where is the money and those are your options. No chance for merit meant no application. We chased money not prestige.

36

Ok, so now you know that “take home pay” is not what you’ve described.

Is Maryland your home state?

BTW…with so much grade inflation going on these days, who knows if your child’s stats (test scores and GPA) will be competitive for top schools. Did your son take the PSAT as a soph? If not, then do you know if he tests within the high 90s percentiles on standardized tests. Hope so! We’ve seen way too many 3.85+ GPA students with modest ACT and SAT scores.

If your student scores well, then look at big merit schools.

How much per year can you pay?

37

Knowing the value of test scores (ACT/SAT) my DDs both had ‘baseline’ ACT and SAT at end of sophomore year of HS. Both DDs could move their ACT score. Both also had PSAT testing/scores. Some students test more ‘naturally’ than others. In our state (AL) GPA of 3.5 plus strong test scores means merit $$ for our public colleges. We used test prep, private tutoring; DD2 needed to move the score more and thus tested more and had more preparation. We kept first semester senior year a bit lighter to allow the best outcome on testing (DD1 took ACT Sept and Oct - got the score needed at Oct sitting; DD2 took ACT Sept, Oct and Dec and got the score needed - she also took the SAT in Sept because the reward was $$$ and it was worth another stab at SAT; at that point to be going from half scholarship to full tuition scholarship plus departmental scholarship money increase. Dec was the last test score her college (UA) would take and she got the score needed. A huge relief.

Another factor is using the MS/HS years to figure out student strengths and potential career options. ‘Finish in four’ is key. We made it clear that with their college degree, they need to figure out making enough money for their lifestyle. Certainly if they wanted to continue to graduate degree or professional degree, we could look at that along the way. However both DDs decided to begin their careers with their UG college degree.

H and I were married 15 years before having DD1, so we were DINKS (dual income no kids) for a period - moved quite a bit for H’s career in early years, and second income was sometimes less with graduate degrees acquired. We are not ‘high’ earners but also not living in high COL areas either. Then H’s travel schedule and no family around meant living on one income for many years. However the time value of money for retirement has paid off for us - when money got tighter, we were able to decrease 401k contributions after cutting out IRA/Roth IRA contributions. Now I am in ‘sunset career’ with us having just 2.5 years until we both are 65 and able to retire (H is 4 months older than me).

Some families do put higher value on specific colleges where they have to pay a lot more. My sister had much of her take home pay to supplement the merit at private college for her two sons, who thus had no UG student debt. Both sons are doing great in their careers - it was a good move for them.

Many students do want the ‘sleep away’ experience. However that may not be what works out.

Sometimes there is a fantastic school within commuting distance of parents’ home or relative’s home. Saving on room/board is a big help. However the student may not see the value in that. To me, I would then give the student the choice to take a gap year and work FT to save up enough money to make another choice more affordable - most students will want to start college at the same time as their peers.

The four year merit is during a specific window for HS seniors who have the GPA, test scores, other requirements for application etc (most specifically meeting the deadlines).

Visiting schools early enough - you never know what life will throw at you. When DDs were in 8th and 10th grades, I was diagnosed with aggressive stage III cancer - thankfully I survived and am cancer free going on 10 years (July), but very intense treatments and total medical interventions over 15 months and then another year of two major surgeries.

Some students may struggle finding their niche - it is a transition from HS to college that some students do not master - so IMHO it is very important to visit enough campuses early in student HS years (we visited many in our geographic area - and H and I had experiences in distant states too) so parents and students can see what is out there. Learn about the colleges, degree plans, internship and co-op opportunities, etc. Student learning is building - having strong reading/English and math all along - motivated student taking advantage of educational opportunities where they are planted. If they make the most of HS learning/opportunities, make the transition to college.

I can tell you it was like a boulder was lifted off my shoulder when DD1 got her college degree. At that point we knew DD2 would also be successfully completing college. HS grads of 2012 and 2014 became college grads May 2016 and May 2018.

Best wishes on the journey!

38

Thanks for the information, experience, and encouragement! The reassessment of options led me to investigate further the honors college program at our in-state public flagship as an affordable alternative to a highly selective school experience. That will be part of the stretch application process and would represent a really good value, IMO.

Meanwhile, we’re super proud of her and the success she’s having. As with everyone here, we all want “the best” for our kids and it stings when the image of what that might look like bumps up against hard reality. That said, we know we’re very fortunate in the the overall scheme of things, and the grit and commitment our oldest has demonstrated so far will lead her to good results whichever particular path she takes (and we take together).

39

@SOSConcern Great advice and encouragement. Congratulations on 10 years cancer free! That’s a major milestone indeed.

40

Yes, that EFC can be a shocker. Look at NPCs at specific schools too. The FAFSA EFC is often the least you are expected to pay on the financial aid front. That leaves merit money, which is very difficult to get in large amounts as the only other grant source from colleges and scholarship programs.

One is expected to pay for college from past, present and future income. The past is in savings for both student and parent. Present is what you scrounge up from current income. THe college years were ones of forced austerity for us even as my DH had a high paying job, because the school and extracurricular financial hits for our kids were hard. That’s where we spent our money. My kids worked part time at college and during the summer to contribute toward college costs. They also had worked summers in high school and saved most of their monetary gifts over the years. The future income was in the loans taken. Some “skin in the game” is not a bad thing and the student Direct loans are something a lot of students take. Controlled and informed borrowing, not necessarily a bad thing for parents and kids.

A lot of good advice here. We applied EA with our kids and generally got a smattering of merit possibilities that gave us a good picture of what was to come. We finally pulled it together with our youngest, who had options ranging from free ride to full sticker price by the time December of his senior year arrived. Also selectivity from difficult to pretty much automatic. We ended the process then, but had we continued with the app process during the RD season, we had a lot of info as to what was likely for him both in cost and admissions.