Discover Pathwaze Blog

Does your college pick meet your financial fitness?

Now it is important to utilize two important resources to vet your student’s “Best Fit” college list for “Financial Fit”. As a reminder, universities are deemed “Best Fit” due to offering a location, major, activities and many preferences that match what the student is looking for in a college experience. Every school on this list should be vetted for “Financial Fit”!

“Financial Fit” can be easily assessed by utilizing the federally mandated Cost of Attendance (COA) and the Net Price Calculator (NPC) posted on the website of each of the colleges of interest.

The COA clearly lists the cost of tuition, books, supplies, and board.

After reviewing the COA, go the colleges NPC site and fill out this document completely. The NPC varies from school to school, but most ask families about their adjusted gross income, number of students in college, amount of family members and sometimes GPA/Test Scores to establish potential merit aid. The information requested is used to give an idea of what your particular student will pay to attend that institution.  (Just a quick disclaimer, some school’s NPC are more detailed and accurate than others. NPC is designed to provide a general idea of what the cost of that school would be to your family; however, is not an offer of financial aid.)

Now that you are able to assess whether or not you will receive financial aid and how much a school will cost your family, let’s discuss merit scholarships.

Merit scholarships are based on a student’s academic performance. When a student applies to a university they are generally put directly into the merit scholarship pool. If a student is accepted, merit scholarships and the admissions offer are usually presented at the same time. In addition to the NPC, a family can go onto the financial aid page to review if the university offers any merit scholarships and what GPA and test scores it takes to qualify. If their website does not show anything, we recommend a phone call to the financial aid department to clarify.

Since colleges change their merit aid offers year to year, there is no magic way to search this information with any confidence. If your family uses the FAFSA4Caster and vets the colleges on your student’s “Best Fit List” using the Cost of Attendance (COA), Net Price Calculator (NPC) and the school’s Financial Aid website tools you will be well on your way to understanding what colleges are deemed a “Financial Fit”.

Determining your “Financial Fit” during the college choice decision

Finances are a strong component in any college choice decision, this is  referred to as “Financial Fit”. While researching colleges, many students and families forget to take the financial aspect fully into consideration.  Unfortunately, the student may end up being accepted to a school which the family cannot afford without financial hardship. This is a situation which can be totally avoided given the right set of tools.  Discover Pathwaze would like to supply families with these resources in order to allow you to make informed decision.

The starting point to navigate “Financial Fit” is to go to the FAFSA4caster (http:////studentaid.ed.gov/sa/fafsa/estimate).   The FAFSA4caster gives you a free early estimate of your eligibility for federal student aid and establishes an initial Estimated Family Contribution (EFC).  The EFC is used in the student financial aid process in the United States to determine an applicant’s eligibility for need-based federal student aid, and in many cases, state and institutional (college) aid.  The FAFSA4caster is considered the less detailed version of the FAFSA (Free Application for Federal Student Aid) but will provide a decently accurate view of the amount of Federal Aid your family qualification.  FAFSA is now open for 2018-1019.    

Once you have completed this document, if your EFC is under $11,000 your family would most likely qualify for federal aid in a large capacity.  This financial aid support would be offered in the form of grants, work study and subsidized loans (interest free until your student graduates).  However, if your EFC is between $11,000-$40,000/year your family will be in the category of qualifying for some federal aid in the form of grants, work study and subsidized loans, but would have to supplement the cost of college with merit and outside scholarships.  Finally, if your EFC is over $40,000/year then your family would most likely not qualify for any federal aid and must rely solely on unsubsidized loans (interest starts accruing immediately), family contributions, and merit/outside scholarships.

Now that you have established your family’s EFC, you can start being more school specific.  Most students have a list of schools which are considered “Best Fit”. These colleges are deemed “Best Fit” due to offering a location, major, activities and many preferences which match what the student is looking for in a college experience.   Every school on this list should be vetted for “Financial Fit”.  

In our next blog, Discover Pathwaze will explain how to vet specific schools for “Financial Fit”; as well as, how to locate merit aid and outside scholarships.

Stay Tuned…

 

Know Thyself

What I wish my younger self knew (Part 1)

Dear Younger me,

KNOW THYSELF

Know what you’re good at. I mean really good at. And please don’t say “I don’t know” or worse “everything”. If you need help in this area, there are so many great assessments and discovery tools out there. Some are free, some are costly, and then find a mentor, coach, trusting partner, who is unbiased to help you muddle through it. Once you have some direction, use that critical information and figure out what jobs, careers, and hobbies your strengths connect best with.

As important, know your weaknesses. Remembering always, those weaknesses are actually strengths in other areas. These will be the things that could get you fired if you’re not careful. They’ll definitely hamper your promotions and advancements in certain jobs. I like to say, know them and then “buffer” them with a more balanced approach. Mary, for you specifically, younger self, know you are super social. Which is great in many jobs / careers, and it’s going to bite you in the rear when it comes to getting the less desirable tasks done. While you are socializing, making great connections, closing deals, solving problems with people, you need to remember to stop and finish up your to-do list!

So, dear reader, what are YOU good at? Are you aligned with a job, career or hobbies that supports your gifts and talents? If not, why? We are here to help.

Author’s note. The picture is of our Creative – Josh K when he was younger… he truly knows himself and will do just about anything to have a career in his gifted space of Art and Graphics. I’m inspired by that every day!

Top Five things you need to know about 529 Plans

  1. What is a 529 Plan? – A 529 plan is a tax-advantaged investment plan designed to help families to save for a beneficiary’s (typically one’s child or grandchild) future higher education expenses. While commonly referred to as 529 plans, they are formally known as “Qualified Tuition Programs,” as defined in Section 529 of the Internal Revenue Code and are administered by state agencies and organizations. Source: collegesavings.org
    • Some states offer matching grants and other benefits to participants in their 529 plans.
    • Check your state for the plan offerings provided. In Colorado, a CollegeInvest 529 Scholarship is designed to award scholarships to Colorado residents of middle income families who have planned for a higher education by saving with a CollegeInvest 529 College Savings Plan.  Source: College Invest
  2.  Who can own the plan? Anyone 18 years or older can be an account owner.  An account owner can be a parent, grandparent, anyone who designates a beneficiary to receive the benefit or yourself.  Gifting strategies should be considered which can help remove assets from your taxable estate. There are no income or age limits on contributions.  The account owner retains control of the assets, so they can be used to benefit other family members (or any beneficiary) if the current child (beneficiary) does not use them.  The account owner can transfer the balance (or any amount) to any other qualified family (beneficiary) member.
    • You can participate in almost any 529 plan across the country, no matter what state you live in.
    • Minimum contributions can be as little as $10.
  3. What’s the tax implication? Investments grow tax deferred. Tax-free withdrawals when used for qualified education expenses. The earnings are state and federal tax-free when used for qualifying expenses.  The 529 plan contribution qualifies for the $15,000 per beneficiary annual gift tax exclusion ($30,000 for a married couple
    • In some States, the contribution is a state tax deduction (Colorado is one).
  4. Is it only for College tuition? Funds can be used for tuition and fees, room and board, books, required supplies and equipment, computers or peripheral equipment, computer software or Internet access and related services. Other acceptable expenses include payments for special needs beneficiaries at any accredited school, including public or private universities, graduate schools, community colleges, accredited vocational technical schools, some foreign schools and some K-12 private schools (some states are still voting on whether this selection is tax-deductible).
  5. Does investing in a 529 plan impact financial aid eligibility? While each educational institution may treat assets held in a 529 account differently, investing in a 529 plan will generally impact a student’s eligibility to receive need-based financial aid. For many families, the larger part of a financial aid package may be in loans. So, the more you can save before college, the less debt you or your student may have to incur during college.

Start investing for college as early as possible. It’s never too early, or too late, to begin.  Look at this chart which shows the rising cost of college.

Source: collegeboard.com, College Cost Calculator. The calculation assumes cost one year from February 2016

If you would like to discuss using a 529 Plan for your family, contact Hope Tuck (303.938.3914) at Merrill Lynch today!

Discover Pathwaze is a career consulting company.

We focus on three areas: Young adults and Career transitioners. We support the college process from selecting the best fit colleges to the application process.

We provide career services from resume creation to preparing for salary discussions.

Listen to a podcast by Discover Pathwaze on “How to Raise a Maverick” https://howtoraiseamaverick.com/?podcast=023-career-coach-teen

[USM_form]