Financial Aid and Your Savings

[Excerpted from Savingforcollege.com’s Family Guide to College Savings]

In order to determine the investment mix that offers the most favorable impact on your child’s federal financial aid eligibility, let’s first look at how the formula for computing EFC works. The formula counts the following financial resources as being available to pay college expenses:

• 20% of a student’s assets (money, investments, business interests, and real estate)
• 50% of a student’s income (after certain allowances)
• 2.6%- 5.6% of a parent’s assets (money, investments, certain business interests, and real estate, based on a sliding income scale and after certain allowances)
• 22%-47% of a parent’s income (based on a sliding income scale and after certain allowances)

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