College Aid 101

How to save the most money and still remain eligible for the best financial aid package

Over the years, you have contributed to the account, watching it grow to $25,000. When your daughter applies for college aid, that $25,000 in her name will add $5,000 (20% of $25,000) to your family’s EFC. On the other hand, if you had kept that $25,000 in your own name, it would add only $1,410 (or 5.64% of $25,000) to the family’s “expected contribution”. In this example, your EFC is $3,590 lower, by investing in your own name, and your daughter might begin her freshman year with $3,590 more in financial aid.

Saving and investing in your own name makes sense if you have young children who are many years from college. But what can you do if you have teens or pre-teens who already have substantial assets in their own name? One tactic is to take cash from savings and investment accounts and put it into a 529 college savings plan, Hurley advises. These plans, offered by every state, allow you to earn investment income, tax-free. Withdrawals are also tax-free, as long as the money is spent on college bills. “Assets in a 529 plan are assessed for financial aid at the parent’s rate, up to 5.64%” says Hurley, “not the student’s 20% rate.” You’ll wind up with fewer student assets, more parent assets, and a greater chance for increased financial aid.

The Costs of College (Tuition, Fees, Room & Board)
2009-2010 Academic Year

Private College
Increase from ’08 to ’09: 4.3%

Public College (In-State Student)
Total: $15,213
Increase from ’08 to ’09: 5.9%

Public College (Out-of-state student)
Total: $26,741
Increase from ’08 to ’09: 6.0%

Source: College Board

This article will appear in the June 2010 issue of Black Enterprise.


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  • Jocelyn Ross

    It is also a good idea to pay a small fee of approximately 2,000 or about $5.50 a day for a year and have a private company do all the work for the total college admissions process. The fee is well worth it and the possible merit aid can take away the shock of saving for many years and student loans.  Students can start in 9th grade and be coached for for years for one low fee. Improved grade, 24/7 test prep, application and award letter review, career and learning assessments. Wonderful program.  We need this. Not all high schools can give each student this assistance.

  • As an experienced college advisor, I warn my clients about falling victim to predatory college access companies which promise to do all the work for a fee. In the long-run, students and parents don’t benefit from letting someone else do all the work for them. They’re put at a disadvantage because families must resubmit the FAFSA each year. The earlier families familiarize themselves with the form, the better. Incorrectly filing the FAFSA can cost thousands. Besides there are many non-profits out here whose mission is to help our youth access higher education. In addition, has excellent articles around college financing. There is lots of information out there on successfully navigating the college admissions and financial aid process. We just have to tap into the resources and not rely on someone else to do the work for us.

  • John Simons – Black Enterprise

    Good to know, Alisha. Thanks for the information.