This is a milestone year for my family—2018 is the last full year the four of us will all be living together since my oldest son will be heading off to college next year. And as I savor these remaining months with him, the realization that he soon will be leaving home and launching out into the world is hitting me hard.

However, there is another reality that’s hitting me even harder lately: the full price tag for how much his college education is going to cost. As we have been exploring college websites and building his list of schools to apply to, it’s not just the tuition numbers that are taking my breath away, it’s the full “cost of attendance”—including other expenses like room and board, books, and travel—that’s truly terrifying.

We knew college was going to be expensive, of course, and my husband and I began contributing to a college savings account years ago in preparation. But until recently, higher education and its associated costs have always been kind of abstract—a fuzzy idea to deal with in the future. Like most families, we’ve been busy raising our boys and just taking care of the day-to-day demands of life, so sitting down and thinking more thoroughly about money for college has been an activity that has remained quietly at the bottom of the “to do” list.

Now that the time has come, however, and I can see the college picture more clearly, I’m wishing we had done a little more planning, a little more saving. There’s no turning back the clock, I know, but fortunately there is still time to figure out a few things.

As luck would have it, I recently met a financial planner who specializes in college financing, and I learned a lot participating in an online webinar she conducted a few weeks ago. Nicole, also known as “The College Money Lady,” provided a great overview of the college funding “pie,” describing each of the potential sources of money we need to think about, steps we can take to predict and minimize what our family will need to pay, and some helpful resources we can consult to help us as we go through our planning process.

The College Funding Pie

There are five primary sources of funding to think about when planning for college:

  • Merit aid
  • Need-based aid
  • Income
  • Savings and other assets
  • Loans

Schools provided the first two types of aid, and each school has a different amount of money to pull from and different eligibility criteria for applicants. This means that each family will likely have very different financial aid offers from each school our child applies to, and these offers frequently include federal student loans (another piece of the pie) as well.

When determining what to offer, schools heavily weigh the remaining two pieces of the pie—family income and savings/assets—which help in the calculation of the “expected family contribution,” or EFC. In other words, each school calculates what they think the family should be able to afford to pay that, combined with their financial aid package, will cover the full cost of attending their school.

Figuring out your family’s EFC is where the rubber really meets the road in college financial planning, and I was surprised to learn that it does not just include parental income and assets, but student income and assets, too. Depending on how all of these add up, your family will fall into one of three categories, with those in the highest category unlikely to qualify for aid.

So, knowing what level of financial support you can expect from each school on your child’s application list before applying can help your family target more affordable schools. How can you find out your estimated EFC? Each school is required to include a net price calculator on their site. So, as you and your student peruse the lists of majors, courses, and student life photos full of attractive, smiling students, make sure to check out this calculator also.

Minimizing Costs and Maximizing Aid

Once you have an estimate of what each of the schools are likely to cost, along with a rough idea of your EFC, you can start thinking about ways to minimize what your family will be expected to pay and how to maximize the amount of aid you will qualify for.

Minimizing the EFC can be a complex process because available options will be very different for each family. As a result, if this is something you want to focus on, working with a college planning expert can save you a significant amount of money and frustration (and preserve your retirement account, too!) Some possibilities Nicole discussed in her presentation included repositioning assets and identifying tax saving strategies, so seeking expert advice to ensure you understand these and other options available to you is important.

As for maximizing potential aid, the students who receive the largest amount of aid are those who are above-average candidates for the college. Therefore, your student should plan to apply to at least several “safety” schools where his or her GPA and SAT/ACT scores is in the top 75 percent. Not only will your student have a better chance of being admitted, but also of receiving scholarships.

In addition to school-based merit aid, private scholarships are also a potential source of funding, but keep in mind that there is a lot of competition for the larger and better-known scholarships, so you may have better luck with less well-known ones offered by local organizations.

Helpful Resources

The amount of college financing information available online can be overwhelming and confusing. There are several sites that explain things particularly well, though, and provide most of the information you need, whether you’re still in the process of researching schools, or if your child already has offers in hand and you are evaluating options:

My Intuition Quick Cost Estimator

Big Future

Federal Student Aid

Wrapping Up

As I reflect on what I’ve been learning through this process, there are a few other insights and suggestions Nicole provided that I will be keeping in mind as my family moves forward:

  • The first is to include my son in the financial discussions and planning—the more he understands the full costs of higher education, the more equipped he will be to compare schools and to select a major that best positions him to pay back any college loans that may be necessary.
  • Since most college students take five years to graduate these days, projecting expenses for an additional year—should that be necessary—can help our family avoid undue stress and financial hardship in the future.
  • Finally, while hiring a financial planning professional may seem like an unnecessary additional expense at a time when we are saving every penny we can, it’s actually more accurate to think about it in the same way I think about hiring a professional to prepare my taxes—it’s an investment that will save us money in the long run, with the added benefit of letting me relax and enjoy this precious, waning time with my son.