Your HS Junior know EFC, NPC or Merit? They should.

As if there isn’t enough going on, now is the time for your high school junior to start their financial aid process for college.

Each year, October 1 is a critical date as high school seniors can apply for FAFSA, the Free Application for Federal Student Aid form. So why the focus on junior year? 

While many look at deadlines, when it comes to college planning and maximizing opportunity for “first come, first serve” grants and merit scholarships, completing the FAFSA on October 1 should be a data entry formality. 

Especially if a student is leveraging binding Early Decision (ED) or non-binding Early Action (EA) admission processes, as those applications are due as early as November 1. Schools will ask if you need financial assistance, and if so, the amount not covered by financial aid. 

But let’s back up, as getting ahead of ourselves.  

To build your teenager’s school “wish list” during junior year, you need to understand a student’s true costs and analyze return on investment (ROI) per degree and school. Beyond expectation setting, this seeks to avoid your kid graduating with a mountain of debt and entering a profession challenged to pay back.

Expected Family Contribution (EFC), used in FAFSA, is a calculation to estimate how much the student’s family will be expected to contribute. EFC changes each year, given that incorporates family tax returns 2 years prior along with assets, titling, income, debts and other factors. 

Equipped with EFC, now your student can use a school’s Net Price Calculator (NPC). This incorporates many factors, including for merit scholarship purposes, GPA, test scores, class rank and activities. Comparing NPCs of various schools is an outstanding practice in selecting colleges for application.  

As a parent, by understanding how EFC is calculated, you can take action to potentially reduce EFC and increase financial aid eligibility or greater merit. There are trade-offs and implications to asset titling, control, gifting and taxes. However, as a parent of a high school junior now, you have until December 31 to impact your student’s sophomore year college FAFSA application. Wait until this January, any actions won’t make an impact until junior year college. For the real go-getters, parents of high school sophomores, you can act now to reduce EFC for FAFSA freshman year college. 

Consider the government’s collegecost.ed.gov, fee services like College Board’s bigfuture.collegeboard.org, or a coach, counselor and certain Certified Financial Planners who specialize in helping clients through the college admissions and financial aid processes.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

This article appeared in the November editions of Holliston Local Town Pages, Ashland Local Town Pages and Natick Local Town Pages.

Please call me at (508) 834-7733 or directly schedule a meeting to learn more about considerations for planning and investing so you can balance kids, aging parents and your financial independence.

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