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11/5/15/
Financial Aid and
Paying for College:
What Middle Class Families
Need to Know
Barb Kostanick
Lisa Brussell
Peak Admissions LLC
peakadmissions.com
College Costs a Lot
!  One Year of College, Living in the Dorm:
CU Boulder
$29K w/Opportunity Fund
Stanford
$65K
U. Michigan
$58K
CSU Ft. Collins
$23K w/Opportunity Fund
Georgia Tech
$46K
UCLA/Berkeley
$60K
This is called the Cost of Attendance (COA)
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College Costs are a challenge for
most families
Five strategies:
1.  Understanding Your Resources, 529 College Savings
Plans & the Colorado Opportunity Fund
2.  Financial Aid (also called need-based aid)
3.  Scholarships (also called merit aid) that are not needbased
4.  Finding Less Expensive Colleges
5.  Helping Your Student Build an Appropriate College List
Resources You Control
!  Savings (529 Plans + Other Savings/Investments)
!  Colorado College Opportunity Fund
!  Tax Credits
!  Dorm Savings
!  Student Work Earnings
!  Cash Flow from Your Income that can help with College
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Colorado-endorsed 529 plans
!  College savings plans sponsored by the State of Colorado come
with a special tax benefit: Every dollar you contribute gets you
a dollar for dollar reduction in your Colorado Taxable Income.
Contribute $10,000, save $463 in income tax.
!  Usable at almost every college in the US & many overseas
!  Can be used to pay for tuition, mandatory fees, room & board,
books & supplies.
!  529 plans assets are treated more favorably in the federal
formula than are student savings accounts
!  CollegeInvest.org !Colorado’s state program
Colorado Opportunity Fund
!  Grant (Money that does not need to be repaid!)
!  Approximately $2,250/year for students attending a
four-year public college or university in Colorado -most public colleges build this into their costs
!  Approximately $1,125/year for students attending
certain private colleges (DU, Regis, Colorado Christian)
!  No income limit, but must sign up to get it
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American Opportunity Tax Credit
!  $2,500/year for the first four years of college
!  Married? Income (MAGI) must be under $160K for full
credit, no credit if income >180K
!  Single? Income (MAGI) must be under $80K for full
credit, no credit if income >$90K
!  Very low income? May only be eligible for $1,000
Mariah lives at home with mom &
dad– Family spends
!  Food & HH consumables
$400/week
!  Restaurants
$300/month
!  Starbucks/Fast Food
$80/month
" For 30 weeks a year (the time away at college) Mariah’s
share of this is $5K. (Many families spend more)
But really, it is more: Less utilities, not as much driving
around as parents, and not as much need to grab fast food
because of tight schedules trying to get from here to there
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She plays soccer, sings in choir &
takes AP classes at HS:
!  Club Soccer Fees
$1,500 – 3,500/year w/travel
!  School sport & clothing
$400
!  Choir fees & tickets
$150
!  AP & School fees
$300
!  Snacks & lunches
$500
!  Parking/Bus/Gas
$400
!  Award Banq./Gifts
$100
" $3,350 – 5,350 in direct student expenses…at least
But there is even more…
!  Religious groups & retreats
!  Summer camps & programs
!  Tutoring
!  Lift tickets (and gas to get there)
!  Music instruction
!  Team snacks
!  Participation fees for clubs, scouts
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If you don’t let your lifestyle
expand, this can be used for
college
!  Typical middle class families with incomes under $100K
spend approximately $6-8K/per child
!  Typical middle class families with incomes over $100K
spend approximately $9-13K/year
!  Typical students on traveling sports teams spend
significantly more, especially if the family also travels
to some competitions
The College COA includes:
!  Food (dorm food, but still…)
!  Modest eating out budget
!  Tutoring centers on campus
!  No extra charge for tests
!  Rec center, activities and clubs with expense almost all
bundled into the fees you’re paying the college
!  Budget for books and supplies
" And many significant discounts for activities like skiing
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Work is Good…Skin in the Game is
Even Better
!  College students who work up to 15 hours/week have
better grades than do students who do not work
!  College jobs are plentiful
!  Summer jobs are usually easy to get for college
students, and if they’re living at home, they should be
able to save that for college expenses
" When students spend their own money for books,
supplies, personal expenses and transportation, they
become much more careful consumers
So What Do We Have as Family
Resources?
!  College savings/4 (Assume $32,000 balance)
$8000
!  Savings from the student living in the dorm
$9000
!  Student summer job & school job
$4500
!  American Opportunity Tax Credit
$2500
Total
$24,000
==> Even with NO savings, this comes to $16,000/year
Use the Worksheet to figure YOUR hidden resources
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What You Need to Know About
Financial Aid
Financial Aid
!  Determined by each college individually using data you
submit on your financial aid forms
!  Colleges often expect that a family can spend 20% or
more of the family’s gross income on college
!  Most colleges do not have enough financial aid to meet
all the needs that families have
!  Formulas are based on your income, assets, and family
size
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But it can look a lot different
with financial aid:
Harvard
CU Boulder
Cost of Attend.
$65K
$28K
Average price paid
by a family earning
$90K/yr
Up to $9,000
$28K
Average price paid
by a family earning
$120K/yr
Up to $12K
$28K
Merit Awards
None
For students in
the top 20% of
CU students,
$2.5-5K/yr.
NET PRICE FOR
FAMILY EARNING
$120K
$12K
$23K
How Much Might My Family’s EFC
be for One Year?
Rough (Very Rough) estimates:
Adjusted Gross Income $50,000 – $4,000 EFC
Adjusted Gross Income $90,000 -- $16,000 EFC
Adjusted Gross Income $120,000 -- $25,000 EFC
Adjusted Gross Income $160,000 -- $39,000 EFC
Adjusted Gross Income $175,000 -- $44,000 EFC
DOES NOT APPLY IF You Are Divorced, or Own Rental
Property or Own a Business or Have Other Large Assets
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Two financial aid systems:
!  FAFSA – the Federal method, used by almost all public
colleges and universities – standard formula established
by the federal government
!  Profile – the supplement used by many private
universities – each college can set their own formula
" Key – Even though the formula may suggest that you are
eligible for financial aid, it is the college’s own policies
and resources that determine what aid you get
" You apply for financial aid every single year
for each student
Home Equity & Financial Aid
!  Not used by colleges that ONLY use the FAFSA (most
public colleges and some private colleges)
!  Used to some degree by most selective colleges that use
the Profile (private colleges and a few public colleges)
!  Some cap home equity at 1.0, 1.2, 2.0, or 2.4 times the
family’s gross income
!  Some consider all home equity to be available
!  A few do not use it at all
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Of Course We Have Need, Don’t
We?
70
60
50
Cost/Year 40
30
20
10
0
CU Boulder
CSU Ft.
Collins
Georgetown
U.
Wisconsin
Who Has Need? -- Depends on Cost & EFC
Key Concepts
!  Grant: Money you do not need to pay back. Usually
given based on financial need. Re-evaluated each year
based on your new financial data.
!  Merit Scholarship: Scholarships based on academic or
other merit. Often awarded to freshmen for 4 years
!  Need-Based Merit Scholarships: Scholarships offered to
students based on merit AND financial need
!  Loans: Money you or your student will need to pay
back!
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Each College Has a “Net Price
Calculator”
!  Estimates your family’s actual out-of-pocket costs at
that college
!  May be inaccurate – the more questions it asks, the
more likely it is to be accurate
!  Uses last year’s tuition & fees
!  Inaccurate if you own rental property or own a business
!  On each college’s website
Divorce
!  FAFSA
!  Custodial parent & custodial parent’s new spouse (!)
!  Private colleges Often Require Data from All
!  Colleges will not offer financial aid if both parents do not
submit information
!  Rare exceptions (abuse, prison, long-absent)
!  Neither FAFSA nor Profile consider divorce agreements or
prenup agreements
Gain the cooperation of the non-custodial parent, or focus
college list on colleges that do not need your ex’s data
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Scholarships & Merit Aid
Who Gets Merit Aid?
Outstanding Students in the context of THAT college’s
freshman class
!  Ivy League/Stanford – nobody (everyone’s fabulous!)
!  Elite privates – from top 1% to top 15% of the college’s
entering class -- or none at all
!  Less selective private colleges – perhaps up to top 40%
of the college’s entering class get some merit aid
!  Public universities – often top 20% of students, but the
amount varies a lot – some guaranteed
" Key to understanding affordability for your student
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Merit Aid (Scholarships)
! Biggest pool is the merit aid offered by
the colleges to the students they most
strongly want to attract
!  Some Public Out-of-State colleges have generous merit aid
!  Some colleges require a separate (or earlier) application
for certain merit awards
!  Some merit-aid is actually influenced by need
!  Both financial aid and merit aid are usually wrapped into a
“package” by the college
Are You Fishing in the Right Pool?
!  Some colleges give Merit scholarships, some don’t (or
give only a very few)
!  Colleges that do give significant merit scholarships:
Cooper Union, U. of Richmond, Trinity (CT), Babson,
Boston U., Vanderbilt, USC, U. Miami, Tulane, Boston
College, Chapman, St. Lawrence, Emory, Wake Forrest,
George Washington, Rhodes, Bentley, Smith, Willamette
Puget Sound, Grinnell, Clark, DU, Redlands, Creighton,
Scripps, U. Chicago
!  Colleges that do NOT give merit aid: Ivy League,
Stanford, Amherst, Barnard, Bates, Cal Tech, Colgate,
Georgetown, Haverford, MIT, Pomona, Reed, Williams
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Test Scores and Grades Matter
!  Colleges generally award more merit aid to students
with better test scores compared to other students
admitted to THAT college
!  Colleges may also consider GPA (weighted or unweighted
or recalculated by the college)
!  Earning better test scores can have a MAJOR impact on
both merit aid and college admissions
With strong test scores & grades,
COA could be very low:
U New Mexico
Texas State
U Ohio
Purdue Ft. Wayne
U. Ala. Huntsville
Louisiana Tech
U. Alabama
Western Kentucky
Florida A&M
Western Illinois U
LSU
Automatic, but subject to change each year!
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Some Public Colleges Give InState Rates to students with high
test scores/GPA combinations
!  U of Alabama, U of Mississippi, U. Arkansas
!  Texas A&M and many public Texas universities for
students awarded academic scholarships (so you get a
scholarship + in-state tuition)
!  Oklahoma State , U. Michigan Dearborn, Louisiana Tech,
Boise State
!  Some have early deadlines!
National Merit SF/Finalist Big
Automatic Scholarships
Full/Nearly Full Tuition + more
Big Scholarships
!  Baylor
!  Boston U: $20K
!  U Alabama
!  U. Rochester: $17K
!  Fordham
!  Arizona State: Up to full tuition
!  Texas A&M
!  Auburn $15K + room + computer
!  U Nebraska
!  Rochester Institute of Tech: $17K
!  Loyola Chicago
!  U. Florida: $4k + pay in-state
tuition
List is subject to change every year!
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Finding Colleges with Great Merit
Opportunities:
College
Average Merit
Award
% of Freshmen
Getting Any Merit
Award
Johns Hopkins
$29,310
1%
Vanderbilt
$24,505
9%
University of
Southern Cal.
$18,874
24%
Some colleges give a few very large awards, others give
merit awards to a larger percentage of students – useful
when you are considering where to apply
Finding Less Expensive Colleges
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Finding Less Expensive Colleges
!  Regional Consortiums that offer tuition discounts (WUE,
for those of us in the western US)
!  Tuition discounts offered by some neighboring states to
Colorado residents
!  Tuition discounts/guaranteed scholarships offered to
children or grandchildren of alumni (ask your college)
!  Lower cost colleges and universities (Midwest and South
are generally less expensive than the West Coast and
the Northeast)
Western Undergraduate Exchange
WUE – say “Woo-ee”
!  70 4-year public colleges in the western U.S. that offer
Colorado students a special deal: Tuition that is no more
than 50% higher than in-state students pay
College
OOS Cost (COA) WUE Rate (COA) Savings
U. of Montana
$35K
$21.5K
$13.5K/year
U. of Hawaii
$43K
$30K
$13K/year
Western
Washington U.
$36K
$27.5K
$8.5K/year
U. of Alaska
$34K
$24K
$10K/year
Cal State
Monterey Bay
$30K
$23K
$7K/year
$27K
$11.5K/year
Portland State U. $38.5K
Based on 2014-15 COA
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And others offer special deals
!  Some neighboring states give special deals to Colorado
students – Wyoming and New Mexico are particularly
good
!  Some colleges (public & private) give special
scholarships or discounts to children (and sometimes
grandchildren) of alumni – always worth checking
So Why Does It Matter?
!  It is a starting point for seeing how you “look” for
financial aid purposes
!  It SHOULD change your strategy for choosing schools for
your list to make sure that there are several financial
safety schools on the list:
!  Schools that you can get into (very likely)
!  That your family can afford with the college’s typical
financial aid OR that have scholarships/merit awards that
are very likely for students with your grades/scores
!  That you like AND WANT TO ATTEND
Remember…Harvard is a lottery ticket. Don’t rely on it!
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Strategies for maximizing aid
Apply on Time!
!  For each college on your student’s list:
!  When is the Profile or school-specific form due? (if
applicable)
!  When is the FAFSA due? (Dates are changing…for current
seniors, can’t submit until after January 1 – but starting
next year you will be able to submit starting in October)
!  When are copies of tax forms due? (if required)
!  Don’t Wait - Estimate!
!  You may need to complete the forms before you’ve filed
taxes
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Conservatively Value Investments
!  Checking, savings and stocks are easy to value
!  Other assets require an estimate: be fair, but be
conservative – what could it be sold for as-is, quick sale,
cash buyer LESS whatever you owe on it
!  Do NOT include retirement accounts as assets EXCEPT
when you are specifically asked about retirement
assets*
*Most common mistake!
Most of All…
Do not finalize a college list unless you have at least two
“likely” schools on it –
!  academically a fit
!  Socially/environmentally a fit
!  Financially a fit for your family with the resources you
expect to have and likely financial aid
www.bigfuture.collegeboard.org
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Bigfuture.org
!  Website with information on almost all colleges
!  Under the tab “Paying” you can see the college’s costs
!  Under the tab “Financial Aid by the Numbers” you can
see:
!  Average non-need based aid (aka merit scholarships)
!  Average need-based aid
!  Average loans offered to students
!  Percentage of financial aid offered as grants/scholarships
and loans
!  Average % of need met
Summary
!  Do your homework: explore net costs
!  Decide on steps you might take to improve the picture
!  Consider carefully what your family could afford, and
how that will work if you have multiple kids
!  Make sure the college lists include some financial
safeties that also meet your academic needs
!  Get help if you need it
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Peak Admissions
!  www.peakadmissions.com
!  Barb Kostanick barb@peakadmissions.com 720-300-5098
!  Lisa Brussell lisa@peakadmissions.com 303-947-5958
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