Planning for All Four (or More) Years

A friend whose son is my twins’ age was surprised recently when I told her some of the colleges my daughter was applying to. She thought they seemed unlikely choices given my constant messaging of finding affordable schools. Her son was interested in some of the same ones and the net prices they found were quite high. The answer: we have the benefit of two children in college all four years. That means our EFC gets divided between then and in many cases, this yielded lower likely net costs. Good news for my friend, though: her sons are only a year apart, so she’ll see some of the same benefit. Bad news for another friend whose daughter is the youngest and whose college years will only overlap her siblings’ for the first two years; her daughter’s costs will likely rise.

When you get a financial aid offer or do a net price calculator, you need to ask, “What could change?” Because years two through four might not look the same as year one. How so? My friend’s daughter, the youngest, was interested in School A, with a list price of $75,000. School A projected a net price of around $30,000 including a $28,000 need-based award, and she’s being offered a subsidized loan. This sounds great, right? But in her first year of college, her two older siblings will also be college students, one a senior and the other a junior. That means that each of the next two years is likely to get considerably more expensive as her family’s EFC gets divided among a smaller number of college students. My other friend might see a drop in costs for her older son sophomore year when her younger son starts college.

Or what if your student, like my son, gets a merit aid award which, like most merit awards, has strings attached– a minimum GPA requirement, in his case. Can you still afford the school without the merit award, or do you need a plan b?

What if you just did your taxes for 2018 and realized your income went up considerably compared with 2017?

Any of these can dramatically change the cost of college, and they are possibilities you should explore and discuss with your student upfront. In the case of an actual aid offer from a school, contact the financial aid office directly to ask what next year’s (or another future year’s) net price is likely to be, based on data you know as of today such as one less sibling in college or a change in income. If you’re using a net price calculator, recalculate based on the number of siblings in college during each of your student’s college years or based on different incomes. If it’s a merit award with a GPA requirement, you need to get the details on that: is it based on each quarter, or the whole year? Do all classes count, or are some excluded? What do you do if the award changes to something unaffordable down the line?

Here’s another thing to consider: If your fallback position is transferring to another college that offered your student a scholarship, would they still get the scholarship if they’re not entering as a freshman? Many scholarships are exclusively for entering freshmen; often the schools will have a different set of scholarships for transfer students but your student needs to meet those requirements upon entry in order to be eligible, and the available funds may be lower.

And you need to map your family’s financial path for the duration of the college years. It’s one thing to look at your first-born’s first choice and realize you’ll need to borrow $10,000 for freshman year and think you can handle that. It’s quite another to multiply that $10,000 times four years times three siblings.

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