Creative College Financing 2/21/13
Note: All information, facts, and figures are “ballpark” and subject to change.
Financial Aid Terms and Keywords
FAFSA - Form which must be completed for most financial aid – deadline varies by school,
typically around March 1 for UC, CSU, and JC, but may be earlier
EFC (Expected Family Contribution) – Amount FAFSA reports that your family “ought to be
able” to pay. Colleges use this number to compare financial need of various students.
Demonstrated Need - the difference between a school's tuition, room, board costs and your EFC
Key phrase: "ABC University guarantees that it will meet the demonstrated need of all
accepted students." Question: How much of the aid is loan?
Note: Some colleges count room & board as a cost, but do not count car expenses as a cost
Net Price Calculator – An online calculator which every college/university is required to post on
its website. It takes student data (such as income, grades, and scores) and gives an estimate
of how much aid the student will receive, based on the previous year.
How are Colleges funded?
1. Public Colleges – funded by the state, student fees, and endowments
2. Private (not-for-profit) colleges – funded by student fees and endowments
3. Private (for-profit colleges) - funded by student fees and shareholder investments, which
must be repaid
 Accreditation & transferability of units are concerns. Search for "college accreditation"
or http://www2.ed.gov/admins/finaid/accred/index.html
Financial Aid Types
1. Grant - generally need-based, does not need to be repaid
 BOG (Board of Governor's) Fee Waivers (junior/community colleges) – cccapply.org or
search for "Board of Governor's Fee Waiver"
o Based on income only, requirements vary, typically under $40,000
 Cal Grants (state) - $1500-$11,000 (based on family income and GPA) http://calgrants.org/ GPA & income requirements change from year to year
o A (high GPA, income under ~ $42,000 for family of 4)
o B (mid GPA, income under ~ $42,000 for family of 4)
o C (technical/vocational schools only, max award ~ $3000)
 Pell Grants (federal) – $0 - $5500 per year based on cost of attendance, family income,
and status (what percentage of full-time)
o Income requirements vary, typically under $60,000
 Need-based grants from individual colleges –In 2010, at Stan State, the median family
income of a need-based recipient was $29,000, while at Harvard, the median family
income of a need-based recipient was $120,000.
2. Scholarships – do not need to be repaid
 Merit-based for academic, athletic, or other ability, including those offered by individual
colleges, and private organizations like the National Merit Scholarship foundation
 Feature/affiliation based, including scholarships for future farmers, children of teachers,
employees of Wal-Mart, tall women, and the descendents of a certain remote village in
Finland, etc….
3. Work-Study – wages paid for work done on campus
 Tends to be less competition than for off-campus work, and designed to work around the
students’ schedule
 Eligibility varies from school to school (are you “needier” than your classmates?)
4. Loans - Must be paid back
Affordable College Paradigms
1. In-State Public Colleges (UC, CSU, JC)
 Generally, lowest sticker price for residents because CA contributes 50 – 90% of tuition
 Commuting MAY save money, if the cost of maintaining a car is less than room and
board
2. Out-of-State Public Colleges with Low Tuition, Room and Board
 Some out-of-state universities have relatively low fees for out-of-state residents, and low
cost of living makes the total cheaper than UC
 Some states have lenient residency requirements
 Examples: Utah State, Missouri State, Iowa State. Most states have a “University of
ABC” and a “ABC State U”, and the State U is cheaper (e.g. CSU is cheaper than UC).
3. Private Colleges with High Sticker Price ($50K+), Generous Need-based Aid
 These colleges generally have large endowments and “needy” students may have
incomes up to $180,000
 They are often “elite” and highly competitive
 Most elite examples: Harvard, Yale, Princeton, Stanford, MIT, Caltech, Duke,
Dartmouth, Columbia
 Lesser known examples: Washington & Lee, William & Mary, Bowdoin, Swarthmore,
Pomona, Lehigh
4. Private Colleges with High Sticker Price, Generous Merit-based Aid (more than half the
total cost given to large percentage of students)
 Tend to be “almost elite” schools with big endowments
 Can be earned by children of millionaires
 Examples: Rice, Vanderbilt, Rhodes, Denison, Case Western Reserve
 Warning: Often come with GPA requirements (e.g. 3.0) to keep scholarship
5. Private Colleges with Relatively Low Sticker Price
 Sticker price for tuition, room, and board in the $20,000 – 30,000 range
 Typically less competitive than the “elite” colleges
 Often save on costs by focusing on a few quality programs, but have limited programs
and extracurriculars (e.g., no medical school or football team)
 Often subsidized by a church or denomination
 Sometimes have generous need or merit-based financial aid as well
 Examples: Grove City College, Cedarville, Brigham Young, Christendom, Spring Arbor
Maximizing Value at MJC/CSU/UC: Time is Money
College sessions at the local high schools are usually informative.
Q: Why can't they just add more classes and hire more teachers if the demand is so high?
Q: Costs at MJC/CSU/UC keep going up. When/where is it going to stop?
Q: Why do some students earn an AA degree/transfer in 2 years and others take 8+ years?
MJC Insider tips:
1. Placement test optimization – learn well in HS, do your best on the tests
2. Priority registration
3. Sequential order of classes needed for your program
4. The Math Mill
5. Class Wait Lists
6. Creative options – other schools, online courses for fill-in
Private Colleges – Out-of-pocket costs
Q: How does anyone pay $50 – 60K a year for college?
My family’s costs at CSU Stanislaus (2010)
Some College Statistics:
4-year graduation rate: 19.4% (in 2010)
6-year graduation rate: 51.8%
Median income of financial aid recipient:
$29,000
Annual Expenses
Tuition & Fees
Room & Board
Transportation
Total
Annual Financial Aid
None
Total
Annual Family Cost:
$5,000
1,000
6,000
$12,000
My family’s costs at CWRU (2010)
Some College Statistics:
4-year graduation rate: 63% (in 2010)
6-year graduation rate: 82%
Median income of financial aid recipient:
$85,000
Median aid amount: $27,000
Annual Expenses
Tuition & Fees
$35,000
Room & Board
11,000
Transportation
1,000
Total
$47,000
Annual Financial Aid
0 University Grants
Work-Study
Loans (by student)
0 Total
$12,000 Annual Family Cost:
X 6 years
$78,000
Debt
0 Debt
Total Cost of Degree
$72,000 Total Cost of Degree
(not including misc):
(not including misc):
Not mentioned: Potential wages earned in 2 years by a college graduate.
Q: Where are all these schools with money to give away?
$28,000
$3,000
$5,000
$36,000
$11,000
X 4 years
$44,000
20,000
$64,000
Strategies for high-sticker cost schools


Look for value (America's Best Value Colleges, U.S. News & World Report).
Look for schools with generous endowments (search for "top college endowments"), but
be aware that generous schools tend to be highly competitive.
 Look for significant merit-based scholarships, and significant numbers of students
receiving (aid based on a performance level, rather than a “horse race”). Check out the
net price calculators of your target schools.
 Scholarship matching (use only for your #1 choice school)
 In-state tuition match for out-of-state public colleges
 Outstanding students might target a "full ride" at a less competitive college
 Be "as needy or needier" than your fellow classmates
 Give a second look to mail/e-mail from colleges for “diamonds in the rough”
Bottom line: The better your academic record, the greater likelihood of acceptance to and/or
financial offers from a well-endowed school
Note: Less competitive schools sometimes give merit-based aid to “solid, not stellar” students.
My projected costs at Spring Arbor (2012)
Some College Statistics:
4-year graduation rate: 37% (in 2012)
5-year graduation rate: 53%
Median aid amount: $20,000
Annual Expenses
Tuition & Fees
$21,000
Room & Board
8,000
Transportation
1,000
Total
$30,000
Annual Financial Aid
Merit-based Scholarship
Need-based Grant
Loans (by student)
Total
Annual Family Cost:
Debt
Total Cost of Degree
$7,000
$6,000
$6,000
$19,000
$11,000
X 5 years
$55,000
24,000
$79,000
Cost-Reducing Principles
1. Do your best with the classes and opportunities you have now.
 If enrolled in college, "clear away" obstacles to get the best grades possible. If they can't
be cleared away, consider postponing classes until a better time.
 If enrolled in high school, succeed in classes now so you don't have to pay to retake them.
Study for college placement tests to reduce the number of remedial classes needed.
 Take a look at some colleges BEFORE 9th grade (before transcripts "count"). Ask,
"What kind of grades and classes will I need to be accepted/receive scholarships here?"
 If possible, take AP classes and AP tests.
2. Decide whether college is really the right option for you
How do you figure this out?
 School classes/favorite subjects - what do you like, and what are you good at?
 Enrichment classes and extracurricular activities
 Volunteer activities – generic and targeted.
 Be realistic about available opportunities vs. your ability. Consider not only what you
like to do, but also what an employer might be willing to pay you for.
3. Know what you want to study before you enter college, even if you end up changing
majors.
Some Draconian Strategies - proceed at your own risk


Declare financial independence – you must not receive financial assistance from a parent
or relative.
Become an in-state resident in another state - must live and work there for a year.
Savings Strategies
1. Be honest about what priority college has in your life
2. Consider ditching the car
3. Eliminate debt ASAP
 High interest debt
 Strategic timing of large debt retirement (e.g. car or house)
Savings Accounts - A Few Options
1. 529 account - an education savings plan operated by a state or educational institution
designed to help families set aside funds for future college costs.
Advantages
 Interest is tax-deferred, and withdrawals are tax-free if used for education.
 Donor (parent) maintains control of the fund
Disadvantages
 Assets must be used for education or be taxed and take a 10% penalty
 Prior to 2009, these were considered student (rather than parent) assets when
calculating the EFC (expected family contribution) for financial aid. If the rule
changes back, the student could receive less financial aid
2. UTMA/UGMA (United Trust/Gift for Minors Act)
Advantages
 Assets are taxed at the minor's income bracket, rather than the parents'
 Can be used for any purpose, not only education
Disadvantages
 Child legally can assume control of the assets at age 18, even if irresponsible
 Prior to 2009, student assets had a greater negative impact on financial aid than
family assets. It could potentially reduce financial aid if the rule changes back.
3. Generic Account in Parents' Name (Savings, Money Market, Brokerage, etc.)
Advantages
 Can be used for any purpose, not only education
 Parent maintains complete control of the assets
 As parent assets, will have the least likelihood of reducing financial aid if the rules
change
Disadvantages
 No tax benefit
 Requires self-control. It might be too easy to siphon off these funds for a house
payment or family vacation.
Additional Resources can be found at my website:
http://peterseny.faculty.mjc.edu
E-mail: peterseny@mjc.edu