It’s September and college students are back in the dorms and classrooms for the new school year. Many high school seniors are starting to think more seriously about their college options and upcoming applications. A college degree can be a very expensive investment and it’s important to consider the financial side of the decision as well as the other factors that are generally much more fun.
In this post, we’ll look at a new report we’ve designed for students contemplating their college choices, changes to the federal financial aid form, FAFSA, and offer information on selecting a college major.
College Financial Decision Report
In addition to assistance with financial aid, student loans and college savings, Vintage has developed a personalized college financial decision module to help students consider finances in deciding on which school to attend. The analysis will compare the cost of attendance at different colleges and detail the dollar amount of loans needed if costs exceed current college savings. We’ll break down the student loans associated with each college option into an expected monthly payment amortized over the typical 10 years.
Applying from a position of strength can sometimes help the student achieve a larger award package. A position of strength is achieved when an academically gifted student negotiates with a college whose typical applicant is less academically gifted. Dealing with a higher education institution can be similar to negotiating with a business!
It’s important to understand the cost versus value relationship associated with each college. Sometimes it’s worth paying a little extra to go to a school such as the University of Michigan because their average Bachelor’s degree recipient has a higher lifetime earnings figure. However, there is a significant increase in cost to attend out-of-state Big Ten schools that may provide similar outcomes. For most students, it’s better to pay the lower price to attend the in-state school.
Please contact our office if you’re interested in having the report created for your future college student.
FAFSA Changes
One of the tasks that many parents must undertake when sending their child to college for the first time is filling out the FAFSA financial aid form. Any families that want to pursue financial aid or low cost federal loans will need to complete the Free Application for Federal Student Aid or FAFSA. One of the big frustrations with the form is that, in Michigan, it is due by March 1st and it requires numbers from the parent’s prior year’s tax return. It can be difficult to gather all tax documents, including delayed forms, and have a professional complete the tax return by this date.
Starting with the 2017-2018 financial aid award year, the FAFSA form will change from prior year to “prior, prior” year. This means that the Department of Education will use financial asset and income levels from 2 years ago in their award calculations. Under the old rules the 2016-2017 award year will use prior year information and the 2017 – 2018 award year will use prior – prior year information. The result is that 2015 income and financial asset numbers will be used twice!
We’re here to help with the financial decision side of college. If Vintage prepares your tax return, we’re able to provide you with a worksheet detailing all of the numbers needed for the FAFSA form. After completing the form, the Department of Education comes up with the Expected Family Contribution or EFC. As the name suggests, this is the number that the family is expected to contribute toward the child’s education, irrespective of the cost of attendance.
Choosing a Major
Choosing majors can be a daunting decision for many students and understanding the expected salary for different college majors should be a part of that decision, especially if you’re taking out student loans. The Hamilton Project is a study undertaken by the Brookings Institute that compares the earnings of different college majors. It’s interesting to note that some Bachelor’s degree majors can expect to earn less than the average Associate’s degree recipient. More information can be found at the Hamilton Project.
