How to Pay
It’s never too early to make a plan to pay for postsecondary schools or training! The process to understand, research, and find the right options takes time and should optimally begin in middle school or 9th grade. No matter what grade your student is in, it is best to be informed so you can plan accordingly and maximize your student’s options.
1) Figure out your Expected Family Contribution (EFC) to know what your student/family will be expected to pay annually so you can plan and save accordingly.
- The EFC is an estimate of the minimum amount that colleges or programs will expect your family to pay annually. (This number may be higher than families think they can afford.)
- The EFC determines if a student qualifies for federal and state financial aid.
- Institutions (colleges and programs) use the EFC for their aid decisions, but don’t always meet the full financial need.
- Families need to know their EFC so they can plan to save, figure out how to maximize their aid, and be ready to take out loans or make other plans (such as student living at home).
2) Estimate Your Student’s Cost of Attendance (COA)
Once you calculate your EFC, look at a few two and four-year colleges or technical certification programs to see what their complete costs are (i.e. tuition, fees, room, board, etc). For example, look at UO, OSU or PSU, PCC, and few private schools such as Lewis & Clark or University of Portland.
3) Determine your Financial Need
Subtract your EFC from the total cost to attend school annually (COA) to determine your financial need. [COA-EFC=Financial Need]
- Schools usually do not meet 100% of your financial need, so there is often a financial gap that will need to be filled. A general guideline is that student debt should not exceed the student’s expected gross income in the first year after graduation.
- The sooner you assess your need, the sooner you can strategize to maximize the aid your student can get.
4) Understand Ways to Save for College
To cover the EFC and decrease financial need, understand the most effective ways to save for college.
- Consider which accounts to use to save money. When calculating financial aid in 2013, the government and colleges assume that about 20-25% of the student’s assets (i.e. money and property) will be used for college, and about 5% of the parents'/guardians' assets will be used.
- Understand that your expected family contribution (EFC) is based more on family income (47%) than assets (only 5%).
- Neither the federal government nor most colleges count parents'/guardians' retirement accounts toward paying for college.
- 529s are considered a parents'/guardians' asset by federal government and most colleges so they are sound ways to save for college.
- FAFSA (Free Application for Federal Student Aid) will determine need based on income of custodial parent/guardian.
- Private schools that use CSS PROFILE for their own methodology may also consider the assets of the non-custodial parent/guardian.
5) Maximize Your Financial Aid
- Research financial aid early, so you have time to find and apply to options that are right for you.
- Keep your grades up and develop good test-taking skills. Merit-based awards and scholarships have minimum GPAs and ACT/SAT scores.
- Advanced Placement (AP), International Baccalaureate (IB), and dual credit classes provide opportunities for you to earn college credits and save money.
- Research scholarships based on your talents and interests.
- Consider which organizations or entities provide the aid, so you can prioritize your applications.
- The federal government provides most of the financial aid nationwide, followed by institutions (college, universities, or programs), and then state and private sources.
- Understand the main sources of aid.
- Grants and scholarships that do not have to be repaid. Grants are often need-based, and scholarships have a wide range of criteria. Consider the primary sources for grants and scholarships.
- Federal government provides 44%
- Institutions (colleges, universities, and programs) provide 36%
- State governments provide 9%
- Private scholarships account for 6%
- Work-study programs provide students with campus jobs as part of their financial aid package or provide on-the-job training which offsets the cost of the program.
- Loans which need to be repaid with interest.