Before parents purchase a home, they know what it will cost and how they will pay for it. The same is true when purchasing a car. However, when it comes to college expenses, most parents do not know what it will cost, and most importantly, have no idea how or the best way to pay.
What is an EFC? Expected Family Contribution. The Department of Education’s formula for determining what you can afford to pay for college,
COA – EFC = NEED … Confusing?
Developing a college financing plan as early as possible will help you:
Get your arms around one of the biggest expenditures in your life.
Identify tax-efficient alternatives to paying for college that save more dollars for your other goals.
Most importantly, to reduce stress and anxiety.
Option 1: Current Assets
Cash or cash flow
Lose future value forever
Return to Option 2
Option 2: Borrow
Parents-Federal, Private, Co-sign?
Students-Stafford loans…How much?
Option 3: Self Financing/ Family Bank
Invest in “Freedom Accounts”
Collateralize loans for college and large family purchases