Selecting
the best college to meet your needs and fulfill your
ambitions has always been a challenging and arduous
process. There is a lot at stake and thousands of
colleges to choose from in the United States alone.
Families use a number of criteria to
help narrow their choices to a manageable level. These
include school location, availability of a desired
academic major, and school reputation. Cost is another
important factor. While residents of some states
(Georgia residents, for example, can
attend any Georgia state school tuition free, if their
GPA is 3.0 or above) have a relatively straightforward
calculation, we find many families eliminate private
schools from consideration due to misinformation about
how the financial aid process works.
Cost of Attendance
The first
number you need to consider in your calculation is Cost
of Attendance, or COA. For instance, Harvard University
is a private Ivy League school, and the University of
Virginia (UVA) is one of the top five public colleges (also
known as a "public Ivy"). For 2010-2011, Harvard
University's COA was about $56,000 and the University of
Virginia's COA was about $24,000 (in-state residency).
Expected Family Contribution
The second
number to include is Expected Family Contribution, or
EFC. By employing the services of a competent financial
planner, you can determine how much of your income and
assets are necessary for your college contribution. If,
for example, a family in Virginia has an EFC of $10,000,
their need at UVA will be $14,000. Their need at Harvard
will be $46,000.
"Need" is
the amount that remains to cover attendance after the
family's contribution is considered.
If
Harvard uses its large endowment to cover 90 percent of
the family's need, the true cost for attendance is
$14,600 per year at Harvard. If UVA only covers 20
percent of the need (because of its more limited
financial resources), the true cost of attending UVA
will be $21,200. The family actually saves $6,600 a year
by sending a child to Harvard instead of UVA.
Harvard
Virginia
Cost of Attendance
$56,000
$24,000
Less: Expected Family Contribution
<10,000>
<10,000>
Remaining Need
$46,000
$14,000
Less: Aid (% of
Remaining Need)
<41,400>
<2,800>
True Cost of Attendance
$14,600
$21,200
This example is not as far fetched as it
may at first appear to be. Many private schools have
large endowments that allow them to fund a large portion
of the unmet need through "free money" scholarships and
grants.
Years in College
In addition to saving money each year on college, families
need to consider how many years each child may be in
school. Ivy League schools such as Harvard are renowned
for helping their students stay on track to graduate in
four years. If, for example, you discover you need a
class to graduate this course will often be added to
your schedule to maintain your timeline for four-year
graduation. Public schools, however, are much more
likely to expect you to fit your requirements into your
schedule. If you need to take particular classes, you
may have to wait another year, turning your four-year
graduation track into a five- or even six-year timeline.
Make Your Decision
Great reasons exist for attending a public college instead of
a private college or university. Saving costs, however,
is not necessarily one of them. Make sure you consider
all your options before you fill out your applications.
– The general public has been using
tax accountants for years to legally minimize their tax liabilities. Call us at
1.800.809.0800 if you
are interested in talking with a licensed financial
advisor who can best guide you through the college
financial planning process and ensure your EFC is as low
as legally possible!
