savings for college 529 plan

Parents Forum
1

I was/is not familiar with the college fee savings plan.
My kid is in sophomore. A very good student and definitely deserves college education.

I have no clue about scholarships and the application process.

I have to pay for the college fee — partly from my savings and partly by taking loans.

What advice can you give to a parent who is so unprepared financially for college?

2

Explore merit based scholarships from colleges awarded to freshman. These are the biggest scholarship opportunities. Also go to the scholarships and financial aid section and learn what you can about paying for college. You are jumping in at a good time in your kid’s sequence.

3

^^^ to add on to that, be sure to run the ‘net price calculator’ (NPC) for several schools. If you are low-income you may be surprised how much financial aid there is available. the most selective schools give the most FA, but be sure to look into this in addition to merit aid. if you are medium income, less selective privates may work well, because most of them offer decent merit awards. soph yr is when I started learning about all this and i was quite surprised when i found out how FA worked.

4

One of the first things to do is figure out your EFC.

Your Federal EFC is estimated here: https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

Your Profile (Institutional) EFC is estimated here: https://bigfuture.collegeboard.org/pay-for-college/paying-your-share/expected-family-contribution-calculator

You should also save as much as you can in the time you have left before college starts, and create a budget for the maximum amount you can pay.

Your budget should include:

  1. The amount you can pay out of your income each month. Think about areas where you can cut back expenses or expenses your won't have once student graduates high school (for example, if your student takes a music instrument lesson each week, you will not be paying for that during college)
  2. The amount you can pay out of savings each month
  3. The amount of any tax benefits for education that you can qualify for

Here is a quick guide: https://www.edvisors.com/education-tax-benefits/introduction/overview-of-education-tax-benefits/
Here is the real guide: https://www.irs.gov/pub/irs-pdf/p970.pdf

  1. The amount of Federal Direct Student Loan your student is willing to take
  2. Any amount of parent loans that you are willing to take

Add them up and you have a budget.

Once you know your EFC and your budget:

If the EFC and budget are similar, you are looking for schools that meet full need.

If the EFC is and the budget are farther apart, you are looking for schools with lower price tags.

  1. In-state public schools give tuition discounts for residents
  2. Schools where your student can live at home and commute
  3. Schools that might give a full or partial merit scholarship
5

All parents who responded to my post, a big thank you.
A lot of things that you mentioned in your posts is not easily comprehensible for me.
I will take out some time to read and research the different things you all posted.

6

Sorry if I used some abbreviations that are not yet familiar to you.

EFC = Expected Family Contribution. This is what financial aid formulas think you can pay. There are two main financial aid formulas, but colleges also adapt the formulas to what they think they can afford with their financial aid budgets. If you don’t have a college list yet, the EFC is a rough ballpark estimate of what colleges might expect you to pay.

NPC = Net Price Calculator. Colleges are supposed to provide these on their websites. This calculator returns what a particular college thinks your price will be once you file their financial aid forms. There are good calculators and bad calculators out there (they are notoriously off for families where parents are divorced, for example). The more questions a college Net Price Calculator asks, the better the final price estimate is likely to be. Google search for the NPC as follows (put the actual college website name in the first part)

site:putcollegewebsitenamehere.edu Net Price Calculator

FAFSA = This is the main Federal student aid form.
CSS/Profile = This is College Board student aid form.

The FAFSA is always required. If a college requires a Profile, it will be listed on the college financial aid website.

Feel free to ask about any other unfamiliar terms.

Good luck!