Whether you’ve just had your first child or major college expenditures are just a few years away, it’s never too late to make sure you’re on the right track. It’d definitely be a wise investment of your time to check your current plans against my list of Top Ten College Planning Mistakes.
Raising Your EFC
The Expected Family Contribution (EFC) is the portion of your family’s income and assets that you’ll be expected to spend in any given year before financial aid kicks in. Essentially, financial aid will only cover the costs leftover above and beyond your EFC.
While it makes no sense to try and make less money to receive more financial aid, it does make sense to make sure your child’s savings accounts are titled properly. For example, 20% of the assets in accounts owned by the child (such as UGMA or UTMA accounts) are expected to be used annually toward college costs. However, only 5.64% of the assets held in a parent’s name are expected to be used. Even better, none of the assets owned by a grandparent are expected to be used for the child (since there is no place to designate this on the FAFSA form).
