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ent financial aid. There are other factors you also want to consider which will indicate your student’s likely success at earning a degree. The four things to consider, including financial aid follow.

The Net Cost of Attending

We always include the net cost of attending college as one of our primary factors in making a decision to apply. The new net cost calculators that colleges are required to provide are difficult to wade through and often very misleading in the information provided, as we indicated in an earlier post. Other than having a professional financial aid planner do the math for you using the Department of Education algorithms my next favorite resource would be from CollegeData.com. The calculator does a pretty good job of first calculating your expected family contribution and then calculating your likely aid package. Unfortunately like most college net cost calculators the web site does suffer from misleading and often limited information.

College Retention Rates

One of the things you want to consider is how likely is it for your student to complete freshman year and move forward to the second year. The freshman year is considered critical in the ultimate graduation of a student. You also want to consider how many students transfer out of the college. This is a good indication of dissatisfaction with either the educational program or the financial aid offered. One of the best sites to use is CollegeResults.org. This site uses the raw data collected by the department of education to give you an unbiased look at the retention statistics. The range in retention rates among seemingly similar colleges is astonishing.

College Graduation Rates

Obviously it is your hope that your student will eventually graduate from college, and with any luck, within the four-year window. However, the national average would indicate that about 50% of all students entering a four-year program will graduate within six years. To see which schools provide the best graduation rates once again you can turn to CollegeResults.org. While the numbers are not necessarily an indication of how your student will perform, I would certainly want my student to attend a college where the four-year graduation rate is very high.

Employment and Recruiting

Once your student graduates from college you will want to know how easy it will be for them to get a job. Especially in a time where there is expectation of economic uncertainty you want to know where the recruiters are looking. The Wall Street Journal does a good job of polling recruiters about which schools receive the most job offers. The numbers are mainly in the areas of business, finance, accounting, engineering and computer systems. If you are looking to figure out where your history major will fare the best that is a tougher one to pin down. One of the most striking things about the most recent recruiting lists is that major public universities rank high on the lists. This is for two reasons; they can be recruited a lower wage than their Ivy League counterparts, and they are more likely to be trained in the more practical aspects of their major.

There are a lot of web sites that purport to give you accurate financial aid, graduation rates, and ranking information. Please be careful how you use this information. Many of them are ranking schools based on who pays them the most money for advertising on the site. I would stick with the sites I list if you want to be careful.

uld you pay somebody to do it for you? The second is a belief by consumers that financial aid planning companies lure unsuspecting families into paying high fees for services they really do not need or for which they are not able to take advantage. The combination of the “you can do it on your own for free” crowd and the “I paid a lot of money for services I cannot use” crowd combine to make a formidable obstacle for families who could really benefit from a financial aid planning program.

Ironically we can all file our tax returns for free without the assistance of outside advice. But most of us choose to go to a tax preparer who fills out the forms for us and also gives us advice on how we can reduce the taxes we actually have to pay. So too financial aid planning is really about figuring out the best financial aid options for a family based on the needs of the student and the parent, with expert advice on how to reduce the cost of an expensive college education. The core of what a financial aid planner does or a tax adviser does actually has very little to do with filling out forms. What a tax adviser and a financial aid planner do is advise their clients on how to save money.

I have made hundreds of presentations to thousands of families over the past seven years. Many of the people in the audience were high school guidance counselors. I always found it ironic that the vast majority of these counselors admitted they learned quite a bit about financial aid from my presentation. And once they learned that financial aid planning is quite a bit more than filling out forms and searching for scholarships, many of these high school guidance counselors enrolled their children in a financial aid planning program. These once skeptical counselors realized a small investment would likely yield them a great deal of savings.

As in any industry there are a few bad apples. Unfortunately the bad apples in the financial aid and college planning industry are large and predatory. They invest all their money in marketing and sales commissions and very little in helping families plan for college and for financial aid. The result has been a bit of a backlash against the entire industry. Guilt by association is a hard one to break. If you hear a financial aid planner use words such as “guarantee,” “private student loans,” “100% effective,” or “we have never had anyone complain,” you should run for the exits as fast as you can. You should also not be forced to pay for services you do not need as part of a “package.” Companies that offer a menu of services and allow you to pick the ones that meet your needs are generally going to be your best option.

Financial aid planning is not for everyone. This is why we prequalify students and families for our program. (Yes, we turn people away!) If your student is going to a community college, or you are likely to benefit from large federal and state subsidies due to your income, a financial aid planning program is probably not for you. If your student is a below average performer on grades and college entrance exams, then financial aid planning is not going to help your cause either. However, if you are a middle-income family with a smart student, or a high income family with multiple students attending college, a financial aid planning program could be a wise investment. I have seen families who never thought they would qualify for financial aid receive substantial subsidies.

I agree you should not needlessly pay someone to fill out forms for you that you can complete on your own. I also agree that there are quite a few college planning sharks out there. But if you realize this is primarily a planning process and not a forms filing process, and if you pick your financial aid planner wisely, you can receive great benefit from someone working with you one-on-one to achieve what you really want in the first place; the best and least expensive college education for your student.

people who look to attend colleges view attendance as either a privilege, at one end of the spectrum, and as an entitlement at the other end of the spectrum. In fact, just like anything else for which we pay a fee, we are all consumers of education whether we pay for it with financial aid dollars or money out of our own pocket. And as consumers of education it usually pays to shop around. Here are 4 important comparisons to make when shopping for a college.

Public vs Private

Invariably people think that a four-year public university is going to cost them a lot less than a four-year private university. With states reducing their subsidies to higher education and private universities increasing their financial aid budgets to compete for the best students, private universities are often becoming the better financial alternative. The only way to know is to estimate costs, financial need, and expected financial aid at each school to determine whether public or private is your best option.

Living at Home vs Living on Campus

Parents usually think they are going to save substantial dollars by having their student go to a local public university and live at home. While this may indeed be the case, if you live at home, colleges do not include the expenses you incur for your student to live at home in your financial aid package. Whereas most colleges will include room and board on campus in a financial aid package. Once again figuring out the costs of each alternative and the likely financial aid consequences will give you the answer.

In State vs Out of State

Generally speaking if you are looking to attend a public university you are going to save money by having your student attend an in-state school. Some states do have reciprocity with other states to provide in-state rates to out-of-state students, so check this option as well. Private universities do not care whether you live in or out of state. They charge the same amount for each student. And with private universities looking for geographic diversity, the further you live away from a private university the more likely it is that you will be accepted. And they may give some extra financial aid dollars to you to encourage you to attend. Once again figuring out costs and aid are the key.

Acceptance of Advanced Placement and Dual Enrollment Classes

Parents are always proud to tell me that their students are enrolled in Advanced Placement (AP) or dual enrollment classes at the community college. They are proud for two reasons; they like the fact their student is gifted enough to participate and they think they are going to save a lot of money on their student’s education. Both AP and dual enrollment classes are a great idea. However, if you are planning on saving any money with either you have to figure out which schools accept which classes for college credit. And even after you figure out which schools accept the credits, depending on the school’s financial aid policies, your student may be better off going to a school that does not accept all the credits. It is important to do the math before your student applies.

You are neither privileged nor entitled to attend college. Education is an industry just like any other and you are a consumer of their services. And just like any other purchase it pays to shop

1. Position Your Student

When looking at colleges and universities you want to position your student at certain schools where their academic achievement will stand out.  Focusing on your student’s class rank and scores on the SAT or ACT test you want your student to apply to schools where their statistics will rank them in the top 25% of students being accepted.  Schools often reserve special scholarships and grants for students who rank high in achievement based on their list of applicants.  The higher your student’s achievement in the applicant pool puts them higher on the list for merit aid.

2. Highlight Special Talents

Many schools reserve money for students with special talents.  The most common of course is an athletic scholarship. Many schools offer special scholarships for playing certain musical instruments, excelling on the debate team, or generally anyone who has been active in extracurricular activities in high school.  Colleges also are interested in students who have exhibited special leadership skills.  It is important that you use the college application process to highlight any areas where the school may have a particular interest.

3.  Apply out of State

While many parents are loathe to have their student attend college too far away from home, most colleges and universities are looking for geographic diversity in their student body.  Especially at schools where the application pool is highly competitive I always tell families that the further away you live from a school the more likely it is you will be accepted.  Schools often pay a premium for students who live further away in order to increase diversity on their campus.

4. Ask for a List of Special Scholarships

Although it is becoming less likely that a scholarship will not be awarded, many schools have scholarships that require unique qualifications. Something as simple as living in the right county, or coming from a certain ethnic background can actually win an award.  These usually require a special application process.  But if you are the only one applying you just may win the award.

While the majority of financial aid is based on need, most colleges and universities also set aside money for individuals with special qualifications.  These merit awards can reduce the cost of attending significantly.

sity at around $20,000 and the average cost of attending community college around $7,000, and increasing, there are some ways to help address this issue of increasing costs. Every dollar you set aside for college will reduce your need for students loans by a similar amount. And with special tax treatment of most saving options there are a few good ways to attack the problem. Here is a list of ways to help.

1. 529 College Savings Plans

These plans are administered by the states and allow a family to set aside money tax free to save for college, much like a 401(k) plan does the same thing for retirement. These plans give the ultimate in flexibility as they are not subject to income limits and the assets in the plan may be transferred easily to another beneficiary if the student decides not to attend college. As long as the money withdrawn is used to pay for a college education the funds are not taxable. This allows even grandparents to set up these types of funds. The only real drawback is that your investment options are limited by what the states choose to offer. But for tax deferred savings it is hard to beat this option.

2. 529 Tuition Savings Plans

Once again these are administered by the states and allow a family to invest a certain amount of money to fix the tuition rate that the student will pay once they arrive at college. While many families choose this option figuring they will pay once and save a lot of money later on, it limits the student to certain schools, and, let’s face it, only covers tuition. While you may be getting a great rate on tuition, room and board and books will still be growing with the rate of inflation. While some benefits are transportable to schools that do not participate in the plan your options are severely limited under this type of investment option.

3. Coverdell Education Savings Account

This type of plan works a lot like a Roth IRA. You are allowed to deposit up to $2,000 per year, subject to income limits, into a tax deferred account. When the money is withdrawn there is no tax liability as long as the money is used to pay for a college education. The investment options available are much broader than with a 529 plan. Funds in the account may be rolled over into a plan for another beneficiary.

4. US Savings Bonds

Series EE and Series I bonds are types of savings bonds issued by the federal government that offer a special tax benefit for college savers. If the bond is used to pay qualified education expenses and you meet income limits, the bond’s earnings are exempt from federal income tax. The bond’s earnings are always exempt from state and local tax. You have great flexibility here as unlike other plans these bonds do not have to be designated to a specific beneficiary when purchased.

The great thing about all the savings options is that for the calculation of the family contribution they are considered parental assets and subject to a large exclusion and a low asset allocation of about 5.6%. If they were considered a student’s assets they would be subject to a much smaller exclusion and an asset allocation of 20%. To find out more about these savings options I recommend you read this article.

versity increasing to approximately $41,000 per year. The expectation is for continued increases in tuition and fees due largely to cuts in education spending by the states and the federal government.

There are two ways for families to approach this problem. The first is of course to throw up your hands and either send your student to a lower cost community college or not send your student to college at all. The second is to become an informed consumer of education and develop a plan to make sure financial aid with free money becomes a viable alternative to paying out of pocket.

Here are five ways to cover that expensive education:

1. Have someone else pay for it.

There are resources available for most families which can cover the majority of a families financial need, mostly for free. This need based financial aid comes in the form of grants and subsidized loans. Making sure you get all that you qualify for is an important first step.

There are also additional resources available to very smart students or students with special talents. This merit aid will be based on your student’s grades and skills. Making sure your student knows this and works hard in high school can pay big dividends when financial aid is awarded.

2. Pick the right colleges

Not all financial aid is created equal. Similarly not all colleges offer the same types and amounts of aid. Knowing which colleges give away the most free money and the ones that meet the highest percentage of need is invaluable. Applying to schools with the highest payouts of free financial aid can save you thousands of dollars.

3. Have your student pitch in.

While most parents view the time in college as a period of personal exploration for a student, there is no reason a student cannot do a little exploring on the job. Recent studies have shown that students who work less than 20 hours per week and attend college tend to have higher grades and graduation rates. When you have to pitch in some of your own money, college becomes a little more important.

4. Appeal your award letter.

When most families receive the financial aid award letters they assume that is the final offer from the college. If a large portion of your need is not being met, or being met mostly with student loans, you may have the basis of an appeal. And if your financial situation deteriorates between the time you file for financial aid the time you hear about your award, it makes sense to update the financial aid office and see if they may have a little extra money for you.

5. Reduce expenses.

Living at home, sharing expensive books or buying them used, and shopping for a better meal plan can add up to a lot of money savings. There are a surprising number of ways to save money from the cost of college. Do some research and spend your money wisely.

With the right balance of financial aid and penny pinching there is a way for most families to pay for college. The important first step is to develop a plan that will get you there. Going into the process blindly is a recipe for disaster.

d to provide this information by October of 2011. While this program has a good intent the actual implementation of these calculators gives families a bewildering sort of numbers in ranges that are hard to understand and, even worse, very misleading.

Most calculators are designed to ask you a few questions about income and family to determine what you might have to pay for your student’s education. In essence these few questions are supposed to determine your Expected Family Contribution (EFC) and eligibility for federally subsidized aid. Unfortunately these questions replace the over 100 questions required on the FAFSA, the result being highly inaccurate information.

In order to test some of these calculators I used my own information based on my FAFSA for the 2011-2012 school year. My EFC determined by the real FAFSA was approximately $16,000 and I was not eligible for any subsidized federal aid. Surprisingly many of the calculators were telling me that I would pay anywhere from zero dollars (not possible given my real EFC) up to the full amount of the cost of attending. This was especially true at colleges that are not known for their financial aid largesse. Colleges that tend to offer better financial aid packages offered a truer picture of what a family would pay. Although still not an entirely accurate picture.

I also paid close attention to the calculator being used by most public colleges and universities across the State of Texas. While this calculator was no worse or better than most, there is a built-in bias against the community colleges. The “other cost” category at these schools is inflated pushing the cost of attending to ridiculous heights. If you spend more than $5,000 on your student’s education at a community college in Texas, you are doing something very wrong.

The net result is that except for determining the total sticker price of a college or university before receiving financial aid, these net cost calculators are very misleading. Except for the schools that tend to offer the best financial aid packages, these calculators will leave you with an array of net costs that really make you no more informed than when you first entered your information. Unfortunately you are still on your own for determining costs and estimated aid to get a real picture of the real net cost of attending. It takes a bit more time, but the results will be more accurate.

education, 94% of parents indicated that they wanted their children to go to college while less than half of the students will enroll in a four-year degree program. The single biggest obstacle cited by the students was a lack of money to pay for their education. Among minority students close to 70% of those students who chose not to go to college cited the lack of information about financial aid as the biggest obstacle to continuing their education. There is a big gap in wanting to go to college and ultimately being able to pay for it.

The other interesting part of the Pew study took a look at the problem from the viewpoint of college presidents. Three-quarters of all college presidents polled indicated that college was a good value for the money spent and 42 percent believe that college is affordable for most people. This compares with 60 percent of students and parents who were polled indicating that college is no longer a good value along with the 75 percent who believe that college is not affordable for the average family.

One group of respondents, the parents and students, see college costs rising and state funding dropping. The other group of respondents, the college presidents, have seen unprecedented increases in student aid over the past several years. Much of this new money is being funded directly by the colleges. So who is right?

It is a matter of where you live and what types of schools to which you apply. In many states with funding cuts the net cost of attending public schools has gone up dramatically over the past few years. However, the net cost of attending private schools has actually declined over the same period of time. Essentially financial aid has increased faster than the cost of attending at private schools. And while the federal government has poured money into financial aid in the form of grants and subsidized loans the number of students wanting to attend college has gone up dramatically as job options have been limited during the recession.

The biggest difference between the consumer and the supplier of education is simply information. Families do not hear about college funding from the college’s perspective, and colleges assume that families know everything about the financial aid process. For most families developing a financial aid plan could help them become better consumers of education. In most cases reducing the cost of an education thereby making it more affordable. And colleges could make the whole financial aid process more transparent and less difficult to navigate. They would be creating a greater perception of the real value of an education. Unfortunately for the families, as the consumer, the onus is on them to pick schools wisely, based on the real costs of attending. There is a way to plan financially for a college education. Let the buyer beware!

make this assumption after they apply to schools that as a matter of policy carry out their admissions process in a “need-blind” manner. The assumption is that need-blind admissions leads to meeting all your financial need. Making such an assumption can be a big mistake.

A need-blind admissions process simply means that a college or university will not take into account your ability to pay for college when it considers the student for admission. This is a good thing. It is not a guarantee that you will receive financial aid to meet your financial need. Many schools that carry out a need-blind admissions process have terrible financial aid. Just because you can get accepted at these schools does not mean you will receive all the money you need to pay for the school after acceptance.

Families also need to understand that financial need will be determined by the individual schools based on the families perceived ability to pay, as summed up by the Expected Family Contribution. This number may be determined differently at each school to which a student applies. The other variable, the Cost of Attending, is also determined by each individual school. Therefore financial need is a moving target.

A family must first determine whether they can meet the Expected Family Contribution as determined by each school. Just because the federal government or a school says you can meet this obligation does not mean you really can. Take a close look at this number based on your own knowledge of your finances.

It is also important that a family understand the likely percent of need met at each school to which their student applies. Many schools as a matter of policy are very generous and will meet 100% of your need. Other schools cannot be so generous. Looking at historical numbers for each school’s ability to meet need is a good indicator of whether a school is likely to meet your need. Knowing this ahead of time can usually reduce the cost of an education significantly.

Understanding the financial aid process at each school before a student applies is a necessary part of your financial aid plan. Having an accurate estimate of your Expected Family Contribution at each school, and the expectation of need met, will more likely lead to a better financial aid award.

r school. The report indicates that at least half and as many as four of five students who begin at the community college want to complete a four year degree. These numbers have increased as community college has increasingly been seen as a money-saving alternative for the first two years of college. Unfortunately there is a disconnect between student objectives and outcomes. Fewer than 20% of students entering the community college ever finish a four-year degree.

The single biggest problem sited is the lack of counseling coordination between the community college and the universities. Students who state a preference for continuing on at a four-year school after the first two year commitment at a community college need to receive the correct counseling on course requirements and transferability of those completed courses to certain institutions. Often times the students when transferring have an incomplete course load for the first two years, or opted to take classes that would not transfer to the four-year school. This can lead to a transfer student having to play catch-up with the course requirements at the new school, delaying graduation and costing money which the community college enrollment was supposed to avoid.

Community colleges that partner with four-year schools in transfer programs seem to have a much greater success rate at transferring students. Partner programs include transfer admission guarantee (TAG) programs or dual enrollment programs. Both serve similar purposes in guaranteeing admission to the four-year program when requirements are met. Dual enrollment programs offer the added benefit of being able to take classes at the four-year school while the student is enrolled at the community college. Both types of programs require a student to declare their transfer intentions as early as the first year of community college to be successful. Counseling is a big part of the difference in these programs.

While the graduation rates for community college students from four-year programs would indicate severe obstacles to success, a student who knows they want a four-year degree and plans on it from the start can be successful with the process. In this case the community college at about one-third the cost of a typical four-year public university can offer a cost savings when included in the financial aid planning process.