Messinger helps families select schools (from a financial perspective), maximize financial aid, use personal resources wisely and capitalize on tax benefits. One thing he shows parents is how they can manage cash flow when their kids go off to school—reallocate the hundreds of dollars they already spend each month on a child’s food, activities and other expenses. “They’re not free when they live under your roof,” he says, but parents often forget to factor this in.

Before a student even visits a campus, a family should figure out their EFC, estimate their four-year net cost and understand the vastly different aid policies of institutions, he says. For example, he notes that Tulane University and the University of Alabama, which is looking to boost its national profile, are awarding a lot of money in merit scholarships.

Messinger also encourages being open-minded. “People rule out schools on sticker price,” he says, “but our average private school is discounting 45% right now.”

CollegeData and the College Board have good online resources about aid packages, he says. Unfortunately, there are still no standards for aid award letters, he says, but the Consumer Financial Protection Bureau has a tool that can be used to help compare them.

Like Kantrowitz, he believes student loans shouldn’t exceed the student’s expected annual starting salary after graduation. Students undecided about their career path shouldn’t borrow more than the maximum allowable in federal direct loans (a total of $27,000 over the first four years), says Messinger.

To cut college costs, students may want to consider starting out at a community college or attending a satellite campus of a state school for a couple of years, he says.

Michael Beloff, a financial advisor with Barnum Financial Group in Shelton, Conn., says students can consider in-state colleges for the first year or two to save money. If they know which school they’d like to eventually transfer to, they should ask its staff what prerequisites might be needed and whether the courses they plan to take are transferable, he says.

“It’s hard for an 18-year-old to think about what they want to be when they grow up,” he says. But it’s important to ask, “Is that private school or that out-of-state school worth twice as much or two and a half times as much?” he says, when taking into account a potential career path and what the debt service may be upon graduation.

Families need to understand what the monthly debt payments will look like, regardless of where they hold that debt, he says.
So far, he hasn’t seen many results from the early filings of the 2017-18 FAFSA. But because the financial aid awards are based on 2015 data, he says, “This may be a boon for families that had financial struggles but righted the ship in 2016.”

Private institutions with strong endowments tend to be the most generous with need-based grants, says Beloff, and merit-based aid is really a function from school to school. A family he knows from the East Coast was granted non-need-based money from a West Coast public school looking for geographic diversity.

He encourages families to negotiate with schools once they receive their aid packages. “There’s no harm,” he says. “They’re not going to take it away just because you say, ‘Hey, can you give me a little more?’”

“Of course, one of the best ways to save money on the cost of schooling is to find a good fit for the student so they finish in four years,” he says.
According to a study he cites from Complete College America, only 36% of full-time students pursuing a bachelor’s degree at flagship or very high research public institutions completed their degree in four years. The figure was just 19% at non-flagship public institutions.

More Financing Strategies
Extended family members are also becoming a bigger part of the college financing picture. Gifting on the Ascensus College Savings platform, through its Ugift program, increased 299% between 2012 and 2015, says Steven Dombrower, the senior vice president of advisor strategy and investment management at Ascensus College Savings.

He attributes the growth to the tremendous amount of media coverage on tuition inflation, more parents asking family members to gift and enhancements Ascensus added to the platform, including electronic gifting capabilities. “Receiving from grandma and grandpa over the holidays the gift of college, versus some toy with 500 pieces that Dad is going to get frustrated putting together, because I’ve been there, that makes sense,” he says.

A 2016 study from the College Savings Foundation found that 80% of parents expect their children to help pay for college. When presented with a selection of options on how they expect their children to contribute, most parents chose getting a job (43%) or getting grants/scholarships/fellowships (29%).

Richard Polimeni, chair of the College Savings Foundation and director of education savings programs for Bank of America/Merrill Lynch, says that although early is better, it’s never too late to save. Families who open a 529 account when a child is in high school may be able to find other ways to fund the first couple of years of college, he says, and use this tax-deferred savings for the last couple of years or for graduate school.

“Every dollar you save now is still a dollar less that you have to find,” he says, “whether 10 years down the road or two or three years down the road.”

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