Your Money Matters: College finance tips and information about Money Smart Week

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Joe Orsolini

College Aid Planners, Inc.
799 Roosevelt Road
Glen Ellyn
(630) 469-6776
www.collegeaidplanners.com

Speaking:
Money Smart Week
Don't Pay The College Sticker Price!
Thursday, April 28
7:00 p.m.
West Chicago Library
118 W. Washington Street
West Chicago

Check out the website for all Money Smart Week events:

www.moneysmartweek.org

Tips:

Re-think Housing Choice
A way to improve affordability is to consider living at home and commuting, be it to a community college or 4-year school. I’m not sure if this tougher on the student or the parents, but room and board averages nearly $10k year which can amount to a significant savings.

Target Legacy Scholarships
Parents can turn their college stories into cold hard cash if their kids attend their alma mater. Many colleges will extend that out the over family tree to included grandparents and siblings.  For example, my alma mater, Bradley University offers $1,500 as a legacy scholarship.

Be Big Fish-Small Pond
Look for colleges where academically you’re going to be in the top 25% of that schools student population. Those are the kids that get the money. If you go to a “stretch” school where you are just barely getting in, the thing that gets stretched is your wallet because you won’t get much aid.

Find Local Scholarships
Your best option for winning scholarship is to look locally.  Check you high school’s website for local organizations such as the Chamber of Commerce, Rotary, Kiwanis, or groups or professional organizations.  I ran the scholarship program for the Lombard Chamber and we would only get 12-15 applicants for our two scholarships.  Your odds of winning are pretty good compared to a national scholarship. And keep looking after freshman year, many of these local scholarships are not limited to only freshman.

Make Colleges Compete for You
Don’t lock in on one school right away, apply to multiple schools. You want colleges competing for your student.  You might like school A, but school B may have a better aid package. Nothing wrong with going back to school A and telling them that you have a better offer. Maybe they will match, maybe they won’t but there is no harm in asking. This primarily works at private colleges rather than state universities.

There are two forms of financial aid: need-based and merit-based.  Middle income families generally earn too much for the need-based aid, so they should target schools that offer merit based.  This often means looking at private college, rather than state universities. Because private college have endowments, they can offer more merit-aid. Unfortunately, many families look at the sticker price on private college and think they are out of reach.  In reality, private colleges will often cost the same or less than a state university.

There are three ways to reduce the overall cost of college:

Maximizing need-based aid
This is money for lower income families.  This typically comes from the state and federal government and is based on completing the government’s financial aid form known as the FAFSA – Free Application for Federal Student Aid.

Targeting colleges for merit aid
Middle income families generally earn too much for the need-based aid, so they should target schools that offer merit based.  Merit aid is not based on need, but rather a school wants to reduce their price to entice you to attend.
Targeting merit money often means looking at private colleges, rather than state universities. Because private colleges have endowments, they can offer more merit-aid. Unfortunately, many families look at the sticker price on a private college and think they are out of reach.  In reality, private colleges will often cost the same or less than a state university.

Taking advantage of educational tax break
The federal government offers tax breaks for paying college tuition. The American Opportunity Credit, for example, provides a $2,500 tax credit if you pay $4k in tuition and books.  Students get to take this four times during college, so that is $10k to help pay tuition.  This credit starts to phase out or (or disappear) for MFJ $160 and single/HH at $80k